Supreme Court Allows Centre to Withdraw SLP in Vedanta Rajasthan Oil Block Dispute After Final Arbitral Award

August 5, 2026 : The Supreme Court has permitted the Union Government to withdraw its Special Leave Petition (SLP) challenging the Delhi High Court’s decision in the long-running dispute with Vedanta Ltd over the Rajasthan RJ-ON-90/1 oil and gas block. The Court observed that the petition had become infructuous after the arbitral tribunal delivered its final award in the matter.

A Bench of Justices Manoj Misra and Vijay Bishnoi allowed the Centre’s request to withdraw the petition after the Union submitted that the proceedings had lost their relevance due to subsequent developments in the arbitration. While dismissing the SLP as withdrawn, the Supreme Court clarified that the Union would remain free to pursue all rights and remedies available under law.

The dispute arises from the interpretation of a Production Sharing Contract (PSC) executed in 1995 between the Union of India, ONGC and Shell India Production Development Company for exploration and production activities in the Rajasthan RJ-ON-90/1 oil block. Vedanta Ltd later acquired Shell’s participating interest in the project.

The controversy relates to Vedanta’s recovery of exploration, development and production costs under the PSC. Differences between the parties were referred to arbitration, and on August 22, 2023, the arbitral tribunal delivered a Final Partial Award (FPA). The tribunal interpreted key provisions of the PSC but left the determination of the actual financial liability for a later stage if the parties failed to reach a settlement.

Following the award, Vedanta prepared its quarterly profit petroleum accounts based on the tribunal’s interpretation of the PSC. The Union Government objected and sought interim relief to restrain Vedanta from making such accounting adjustments until the financial consequences of the award were finally quantified.

The arbitral tribunal declined to grant interim relief, prompting the Centre to approach the Delhi High Court under Section 37 of the Arbitration and Conciliation Act, 1996.

On July 11, 2025, the Delhi High Court dismissed the Union’s appeal and upheld the tribunal’s decision. The High Court ruled that although the Final Partial Award was declaratory and did not quantify the monetary liability, its interpretation of the contractual provisions became binding on the parties from the date of the award unless stayed by a competent court.

The High Court also rejected the Centre’s argument that Vedanta was unilaterally enforcing the arbitral award by preparing its quarterly profit petroleum accounts. It held that Vedanta was merely complying with its contractual obligations under the PSC in accordance with the arbitral tribunal’s interpretation.

The Union Government subsequently challenged the High Court’s judgment before the Supreme Court. During the hearing, the Centre informed the Court that the Final Partial Award was already under challenge before the Delhi High Court and that, in the meantime, the arbitral tribunal had delivered its final award.

In view of these developments, the Centre sought permission to withdraw the SLP while reserving all legal rights and remedies. Accepting the request, the Supreme Court observed that continuing the proceedings would serve no useful purpose and accordingly dismissed the petition as withdrawn.