In a significant legal development, the Delhi High Court has ordered a status quo on the Union government's directive for Vedanta Ltd to stop operations and hand over a crucial offshore oil and gas block in Gujarat to the Oil and Natural Gas Corporation (ONGC). This interim order provides immediate relief to the natural resources conglomerate, putting the government's takeover plan on hold.
Court's Interim Order and Legal Proceedings
A single-judge bench of Justice Amit Sharma passed the interim order on Tuesday, January 6, 2026. The court has effectively suspended the government's September 2025 order while it examines Vedanta's legal challenge. Notices have been issued to the Union government and ONGC, and the matter is scheduled for its next hearing on 27 February 2026.
The court observed that Vedanta had raised arguable and substantive issues that warrant detailed consideration. By directing both parties to maintain the status quo, the court has ensured that the current operational situation at the block remains unchanged until a further judicial review.
Background of the Dispute and Government's Action
The case revolves around the CB-OS/2 offshore oil and gas block near Suvali in Gujarat. Vedanta has operated this block since 1998 under a Production Sharing Contract (PSC) with the Union government and consortium partners, including ONGC. The original 25-year contract term expired in June 2023.
In 2017, the government introduced a policy allowing extensions for older, pre-NELP contracts under specific conditions. Relying on this, Vedanta applied for a 10-year extension in June 2021, well before the PSC's expiry. Post-expiry, the company continued operations under multiple interim extensions granted by the government between 2023 and 2024.
The situation escalated on 19 September 2025, when the Ministry of Petroleum and Natural Gas, acting through the Directorate General of Hydrocarbons, rejected Vedanta's extension request. The government cited alleged unpaid dues and non-compliance with policy conditions. The order directed Vedanta to immediately cease operations, vacate the site, and transfer custody and all assets to ONGC on an "as-is-where-is" basis, prompting Vedanta's writ petition in the Delhi High Court.
Arguments from Both Sides and Financial Dues
Vedanta's legal challenge argued that the government's rejection was arbitrary. The company stated it applied for the extension within the stipulated timeframe, but the government delayed its decision for years while allowing operations to continue. Vedanta contended that the alleged dues, which were never formally raised earlier, are shared liabilities under the PSC among all partners. The company also emphasized that an abrupt shutdown of offshore operations would be impractical and pose safety risks, and that the order was issued without a proper hearing.
In a key move during the case's pendency, Vedanta stated it paid ₹695.49 crore on 2 December 2025 to clear all outstanding amounts cited in the rejection order, albeit under protest to resolve the dispute.
The government, in its defence, asserted that Vedanta has no inherent right to an extension of a purely contractual arrangement. It maintained that extensions are discretionary and guided by public interest, emphasizing that natural resources belong to the people. The government cited specific unpaid dues as grounds for rejection, including $14.54 million linked to profit petroleum and drilling costs, $10.13 million towards Special Additional Excise Duty (SAED) deductions, and $1.54 million relating to past audit issues. It argued that clearing all dues was a mandatory condition under the 2017 extension policy, which Vedanta failed to meet.
The Delhi High Court's intervention has now set the stage for a detailed legal examination of this high-stakes corporate-government dispute over a strategic energy asset.
