Centre cannot reject extension application on unstated rules, Vedanta tells Delhi HC

Vedanta Challenges Centre’s Extension Rejection at Delhi High Court

Theindiapostdaily.com – Mining major Vedanta Ltd has approached the Delhi High Court, arguing that the Centre cannot reject extension application on unstated rules. The company told the court on Wednesday that if the government wants to maximize revenue from Gujarat’s offshore oil and gas field, it must amend its existing policy on contract extensions rather than arbitrarily deny the company’s application based on criteria not previously communicated.

The company is currently appealing a single-judge order that upheld the Centre’s September 2025 decision to deny a 10-year extension for its CB-OS/2 block in the Cambay Basin. Senior advocates Mukul Rohatgi and Jayant Mehta, representing Vedanta, clarified that the company was not asking the court to grant an extension, but was simply seeking a fair consideration of its application under the government’s 2017 Extension Policy.

Legal Arguments and Policy Framework

“Once you have prescribed a policy, you can’t at your will change course and adopt a new course unknown to everybody,” Mehta told the court. “I have a right under the statutory policy to be fairly considered. I am not saying you must give it to me. But the consideration in the rejection is completely unfair,” he added.

Rohatgi argued that if the Centre cannot reject extension application based on unstated grounds, it must formally update its policy rather than deny the application based on unstated revenue-maximisation considerations. He pointed to Vedanta’s nearly 28-year record of operations and around $10 billion of investment in India’s oil and gas sector, arguing that its experience and investment should be considered while deciding on the extension request.

Rohatgi also challenged the Centre’s argument that it could seek better returns by bringing in another operator. India imports around 90% of its oil, and only a handful of companies have the capability to undertake offshore drilling, he said. He questioned how production could be maximised by replacing an operator that had run the field for nearly three decades with a new player, which would require fresh investment and carry production risks.

Pointing to similar extensions recently granted to other blocks, Vedanta argued that the 2017 policy remains active and cannot be selectively ignored. The company also argued that the policy already accounts for higher government revenue through a 10% markup during an extension. Therefore, revenue maximisation cannot be introduced as a separate, unstated ground for rejecting its application, it said.

The case will be heard next on 18 August, with Vedanta maintaining it is not seeking an automatic direction granting the extension, but wants the court to examine whether the rejection was legally sustainable and whether its application should be reconsidered under the applicable policy.

Case Background and Implications

The dispute stems from the government’s September 2025 decision to deny an extension for the CB-OS/2 block. The Centre cannot reject extension application on unstated rules, according to Vedanta’s legal team. The Centre cited, among other reasons, Vedanta’s unilateral deduction of the government’s share of profit petroleum to offset its special additional excise duty (SAED) liability.

Vedanta challenged the rejection before the Delhi High Court, but a single judge upheld the decision on 22 July, prompting Vedanta to appeal before the division bench. The company maintains it is not seeking an automatic direction granting the extension, but wants the court to examine whether the rejection was legally sustainable and whether its application should be reconsidered under the applicable policy.

FAQ: Understanding Vedanta’s Extension Case

What is Vedanta seeking from the Delhi High Court? Vedanta is seeking fair consideration of its extension application under the 2017 Extension Policy, arguing that the Centre cannot reject extension application on unstated rules.

Why did the Centre reject Vedanta’s extension application? The Centre rejected the application citing Vedanta’s unilateral deduction of profit petroleum share to offset SAED liability and unstated revenue-maximisation considerations.

What is the significance of the 2017 Extension Policy? The 2017 Extension Policy provides a framework for contract extensions and includes a 10% markup for higher government revenue during extensions.

When will the Delhi High Court hear the case next? The case will be heard next on 18 August 2025.

How much has Vedanta invested in India’s oil and gas sector? Vedanta has invested around $10 billion in India’s oil and gas sector over nearly 28 years of operations.