The Delhi High Court quashes an international arbitration award that had dismissed government claims of ‘insidious fraud’ and ‘unjust enrichment’ against Reliance Industries
The resounding victory of the Central Government’s legal team, led by the Attorney General of India A.R. Venkatramani reinforced by the active participation of the eminent jurist and the former Attorney General of India KK Venugopal, under the astute administrative guidance of Union Petroleum & Natural Gas Minister Hardeep Singh Puri, in the Delhi High Court verdict against Mukesh Ambani’s Reliance Industries Ltd. (RIL), has decisively dismantled allegations of favouritism levelled against the Modi government.
This landmark ruling categorically refutes opposition claims that the government promotes select business houses, reaffirming its commitment to transparency, fairness, and the rule of law in corporate governance and policymaking. In a landmark judgment dated February 14, 2025, the Delhi High Court delivered a decisive verdict in the case of Union of India vs Reliance Industries Ltd. (RIL), addressing long-standing allegations of crony capitalism and favouritism towards major industrialists by the current government.
This 79-page judgment not only exonerates the government from accusations of bias but also underscores the integrity of India’s judicial system and the competence of its political and legal leadership. Background of the Case The dispute centres around the Production Sharing Contract (PSC) executed between the Union of India and Reliance Industries Ltd. in 2000, about the exploration and extraction of natural gas in the Krishna-Godavari basin.
The Ministry of Petroleum and Natural Gas alleged that RIL had engaged in “unjust enrichment” by extracting and selling gas that had purportedly migrated from fields operated by the state-owned Oil and Natural Gas Corporation (ONGC) to RIL’s adjacent block. The government sought compensation, contending that RIL’s actions resulted in significant financial losses to the state exchequer.Details of Judgement The Delhi High Court’s single judge judgment in Union of India vs. Reliance Industries Ltd. examined the allegations of unjust enrichment, contractual breaches, and fraud against RIL, ultimately dismissing them due to a lack of concrete evidence.
The court upheld the findings of the international arbitration tribunal, reaffirming that RIL operated within the bounds of the Production Sharing Contract (PSC) and could not be held liable for natural gas migration beyond its control. However, the Division Bench of the Delhi High Court has quashed an arbitral award that had dismissed the Central government’s claims against Reliance Industries Limited (RIL) and its foreign partners. The government had accused the conglomerate of “insidious fraud” and “unjust enrichment” amounting to over $1.729 billion by allegedly extracting natural gas from deposits beyond its entitlement.
The Bench, comprising Justices Rekha Palli and Saurabh Banerjee, overturned the ruling of a single judge, who had, in May 2022, set aside the Petroleum Ministry’s allegations. The court determined that the international arbitration award dated July 24, 2018, which had favoured the RIL-led consortium, was “contrary to public policy” in India. This decision marks a significant legal setback for RIL, as it reinstates the government’s claims concerning unauthorised gas extraction.
The ruling also strengthens the government’s position in regulatory disputes within the oil and gas sector. With the arbitral award nullified, the matter may now proceed further in Indian courts, potentially leading to fresh legal battles over financial liabilities and resource allocation in the country’s hydrocarbon sector. Beyond the legal nuances, the judgment serves as a crucial precedent for future contracts, emphasising the importance of precision in drafting and adherence to arbitration mechanisms for dispute resolution. It underscores the independence of the judiciary in adjudicating disputes involving powerful corporate entities and government bodies, dispelling claims of crony capitalism.
The case also highlights the competence of the central government’s legal representation, particularly the diligence of Attorney General AR Venkatramani and Union Petroleum & Natural Gas Minister Hardeep Singh Puri in defending the government’s stance. It further reflects the abysmally woeful performance of the RIL legal team in defending the case. Furthermore, the ruling reassures investors about India’s commitment to the rule of law, ensuring that legal processes remain transparent and evidence-driven.
By challenging the political narrative of undue favouritism towards industrialists, the judgment reinforces the integrity of India’s governance, corporate regulations, and media responsibility in shaping public discourse.
Conclusion
The Delhi High Court’s latest judgment in Union of India vs Reliance Industries Ltd. is a testament to the robustness of India’s legal system and its capacity to adjudicate high-stakes disputes impartially. It dispels allegations of governmental bias towards prominent industrialists, affirming that decisions are grounded in evidence and legal merit. The ruling also underscores the importance of adhering to contractual obligations and the role of arbitration in resolving intricate commercial conflicts. As India continues to navigate its path towards economic growth, this judgment reinforces the principles of fairness, transparency, and the rule of law as cornerstones of its democratic ethos.
(The writer is a prominent columnist and Public Policy Expert; the views expressed are personal)
