Bombay High Court Dismisses Plea for CBI Investigation into Reliance Industries Alleged Gas Diversion Case Involving $1.55 Billion ONGC Losses

Bombay High Court Dismisses Petition Against Reliance Industries Ltd

On March 27, the Bombay High Court dismissed a petition seeking a Central Bureau of Investigation (CBI) probe against Reliance Industries Ltd and its Chairman Mukesh Ambani for allegedly diverting more than $1.55 billion worth of natural gas from neighboring Oil and Natural Gas Corp (ONGC) wells in the Krishna Godavari Basin, off the coast of Andhra Pradesh.

The petition, filed by Jitendra P Maru, requested the court to order the CBI to take action against RIL and its directors. The dispute began in July 2013 when ONGC, suspecting reservoir connectivity between its KG-D5 and G-4 blocks and RIL's KG-D6, wrote to the Directorate General of Hydrocarbons stating that a detailed geological and geophysical interpretation of data from the Godavari and KG-DWN-98/2 blocks showed evidence of lateral continuity of gas pools into KG-D6.

RIL is the operator of the KG-D6 block with 60% interest, while BP holds 30%. The remaining 10% is with Niko Resources. In its defence, RIL claimed that the gas was 'migratory', meaning it naturally moved between blocks, giving the company the right to extract it.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

The Bombay High Court's decision is the latest development in a long-standing dispute between RIL and ONGC. In July 2018, an international arbitration tribunal rejected the Indian government's claim of $1.55 billion against RIL and its partners, awarding $8.3 million compensation to the three partners. The Delhi High Court upheld the arbitration award in May 2023, stating that the tribunal's award is not in conflict with the public policy of India.

The government had challenged the arbitration award before a single bench of the Delhi High Court, seeking it be set aside as it "strikes at the heart of the public policy and has given a premium to a contractor (Reliance that has amassed vast wealth by committing an insidious fraud as well as criminal offence)..." The Delhi High Court division bench set aside the single bench ruling in February 15, stating that the arbitral award is contrary to the settled position of law.