Today, the Delhi High Court dismissed a petition filed by the Union government against a consortium led by Reliance Industries Ltd regarding a gas dispute in the Krishna Godavari basin.

A bench led by Justice Anup Jairam Bhambhani, while upholding the arbitral tribunal’s 2018 order, said, “This court is accordingly not persuaded to hold that the conclusions drawn by the arbitral tribunal are such that no reasonable person would reach. Suffice it to say that the view taken by the arbitral tribunal is most certainly a possible view, which calls for no interference."

The ministry approached the court after an international arbitration panel rejected its fine of $1.55 billion on Reliance Industries and partners BP Plc and Niko Resources for allegedly selling gas that migrated from Oil and Natural Gas Corp Ltd’s (ONGC) KG blocks to their block.

“The inferences are factual conclusions arrived at by the arbitral tribunal, which cannot be second-guessed by this court in the exercise of its powers under Section 34 of the Arbitration & Conciliation Act," the court observed.

Following this, Reliance invoked Section 33 of the production sharing contract (PSC), initiating an arbitration against the ministry in 2016. In its 2018 order, the arbitral tribunal gave a majority verdict of 2:1 in favour of Reliance.

This verdict said, “Reliance is fully entitled to produce all hydrocarbons resulting from petroleum operations conducted within its contract area, which may include hydrocarbons that could have migrated from an adjacent block."

According to the tribunal’s findings, the PSC permits Reliance to produce gas which migrates into the sub-sea reservoir lying within the contract area from an outside source.