In a major setback to the Centre, the Delhi High Court on Tuesday dismissed a petition that accused Mukesh Ambani-led Reliance Industries Limited (RIL) and its partners of committing an “insidious fraud” and “unjust enrichment of over $1.729 billion” by siphoning gas from deposits they had no right to exploit.
The case dates back to 2016. On November 4, 2016, the Union Oil Ministry slapped a demand of $1.47 billion on the RIL-BP-Niko consortium for “unfairly” producing natural gas belonging to ONGC.
It claimed the RIL-led consortium sold the gas that migrated from adjacent ONGC blocks – Godavari PML and KG-DWN-98/2.
The Centre said that the consortium, which includes Reliance Industries, UK-based BP Plc, and Niko Resources of Canada, produced about 338.332 million British thermal units of gas that migrated or seeped from adjoining ONGC blocks into RIL’s KG-D6 block.
On Tuesday, Justice Anup Jairam Bhambhani, while upholding the international arbitration award of July 24, 2018, ordered in favour of the RIL-led consortium and said “no interference” is called for, a report in The Economic Times said.
RIL’s KG-D6 block and ONGC’s blocks are adjacent to each other in the Bay of Bengal. In 2018, an international arbitration tribunal rejected the Oil ministry’s claim and also awarded $8.3 million in compensation to the consortium.
What the government had said
The Centre in its petition had sought to strike off of the arbitration award.
Attorney General KK Venugopal, who appeared from the government, said that “the award strikes at the heart of the public policy and has given a premium to a contractor (RIL) that has amassed vast wealth by committing an insidious fraud as well as a criminal offence…”
Order by international arbitration tribunal
The case was filed before a three-member tribunal headed by Singapore-based arbitrator Lawrence Boo. The tribunal, favouring RIL-led consortium, rejected the Centre’s claim.
It said that the production sharing contract (PSC) doesn’t prohibit the contractor from producing gas — irrespective of its source — as long as the producing wells were located inside the contract area.
It also held that the consortium was not liable to pay any amount to the government and had also directed the latter to pay $8.3 million as the cost of arbitration to the consortium.
RIL owns the KG-D6 block, where it has with 60 per cent interest. BP and Niko Resources hold 30 per cent and 10 per cent interests, respectively.
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