AMIT SHARMA, J.

1. The present petition under Articles 226 and 227 of the Constitution of India, 1950, has been filed seeking the following prayers: -

2. Brief facts necessary for the disposal of the present petition, as stated by the petitioner, are as under: -

The PI of the parties concerned has changed over the tenure of PSC and now the petitioner (operator) has 40% PI, Invenire Petrodyne Limited has 10% and respondent No.4/ONGC has 50% PI in the PSC.

iii) In 2017, respondent No.1 approved and enacted a policy for the grant of extension of the PSCs signed by Govt. of India awarding Pre-New Exploration Licensing Policy (Pre-NELP) Exploration Blocks to have a transparent and defined framework for granting extension vide Notification dated 07.04.2017 published in Extraordinary Part I, Section 1 of the Gazette of India.

iv) As per the policy for the grant of Extension to the PSCs regarding exploration blocks the submission, consideration, and approval of request for extension of Contract was provided under Clause (1). The Clause (1) of the extension policy reads as under: -

v) While the PSC was subsisting and in terms of the aforesaid extension policy, the Petitioner applied for extension of PSC in its favour vide application on 28.06.2021. The term of PSC expired on 29.06.2023. Respondent No.1 vide letter dated 05.07.2023 granted an interim extension of 3 months to the petitioner for continuing with the petroleum operations in Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 4 of 120 Signing Date:06.01.2026 20:05:22 respect of CB-OS/2 block w.e.f. 30.06.2023 by addressing the following letter to the contracting parties: -

d) The Effective Date of the Addendum of PSC, if executed, towards extension of the PSC, shall be on and from 30.06.2023 as per the Extension Policy dated 07.04.2017 of Government of Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 5 of 120 Signing Date:06.01.2026 20:05:22 India.

3. This has approval of the competent authority."

vi) The aforesaid interim extension was extended in favour of the petitioner on 17.10.2023, 30.01.2024, 29.04.2024, and lastly, on 27.06.2024. Thereafter, respondent No.2/DHG directed the petitioner to halt all drilling related activities/services in the subject oil block as there was no valid PSC or interim approval post 29.09.2024 and on 19.12.2024, respondent No.2 directed the petitioner to halt/drop all plans relating to drilling activities immediately in absence of valid PSC extension and Petroleum Mining License (PML) in the block and that, in view of the same, the petitioner is not authorized to perform petroleum operations in the block.

vii) Vide letter dated 30.01.2025, the petitioner informed respondent No.2/DGH that it has deferred the operational activities in pursuance of the aforesaid directions received from the latter. Subsequently, vide letter/rejection order dated 19.09.2025 issued by respondent No.1, the application for extension of PSC of Block CB-OS/2 filed on behalf of the petitioner on 28.06.2021 under the extension policy dated 07.04.2017 was rejected and following directions were issued to the petitioner/operating contractor: -

x) The arbitration clause as envisaged in Article 33 of the PSC was not invoked by the petitioner as the tenure of 25 years of the PSC had expired on 29.06.2023 and even the interim extensions granted to the petitioner has been discontinued from 29.09.2024 and the said PSC is no longer subsisting. Hence, the present petition has been filed assailing the impugned rejection order.

SUBMISSIONS ON BEHALF OF THE PETITIONER/OPERATING CONTRACTOR

3. Following submissions have been made by learned Senior Counsel appearing on behalf of the petitioner in support of the present petition: -

ii) Learned Senior Counsel for the petitioner has further submitted that, while the PSC was subsisting and even during the interim extensions after 29.06.2023, respondent No.1 never took any objection nor complained about the performance or non-performance its contractual obligations. There was never any issue of lack of performance of the petitioner as contractual operator. He has further submitted that respondent No.1 has passed the Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 9 of 120 Signing Date:06.01.2026 20:05:22 impugned rejection order on the basis of wholly irrelevant and extraneous considerations. It is pointed out that the conditions for consideration and prerequisites for evaluation of application for grant of extension of PSC and criteria for evaluation of request as provided under Clauses 3 & 4, respectively, of the extension policy has not been taken into consideration by respondent No.1, at all, while passing the impugned rejection order.

iii) Learned Senior Counsel has raised three contentions in support of the case of the petitioner. Firstly, that the said order has been sought to be assailed on the ground of the legitimate expectation as no due consideration has been given to the fact of past performance of the petitioner under PSC from 1998 to 2023 and the five interim extensions given to the petitioner. Secondly, the arbitrariness in the decision taken by respondent No.1 as the same is based on the material which was never brought to the notice of the petitioner, and the manner in which the petitioner has been sought to be ousted from the contract area by directing it to hand over the onshore as well as offshore operations undertaken under the PSC at the subject area to respondent No.4/ONGC on "as is where is basis". Thirdly, it is the case of the petitioner that no opportunity of hearing was provided by respondent Nos.1 and 2 with respect to the alleged dues/outstanding amount and grounds mentioned in the impugned letter. It is therefore, submitted that this overall conduct of respondent Nos.1 and 2 in arbitrarily rejecting the extension application of the petitioner can be reviewed under Article 226 of the Constitution of India. Reliance has been placed on Sivanandan C.T. & Ors.

v. High Court of Karnataka & Ors.1, to contend that in view of the past relationship between the parties for 27 years including 2 years of interim extensions, as well as the parameters for evaluation of the application of extension under Extension Policy of 2017, the petitioner has legitimate expectation that it's application for extension would have been allowed. Reliance has been placed on following paragraphs of Sivanandan C.T. (supra): -

In a nutshell, an individual who claims a benefit or entitlement based on the doctrine of legitimate expectation has to establish : (i) the legitimacy of the expectation; and (ii) that the denial of the legitimate expectation led to the violation of Article 14."

iv) He has further submitted that as per first ground of rejection, the petitioner though in terms of Article 2.1 of the PSC does not has any entitlement to the grant of extension, however, the rejection of application for extension in terms of extension policy has to be on relevant considerations otherwise the same would suffer from the vice of arbitrariness. It is further submitted that all the compliances and eligibility conditions, in terms of the extension policy, have to be evaluated as on the date when the application for extension was made by the petitioner. It has also been pointed out that respondent No.1, vide the impugned order, has taken the ground of outstanding statutory or other dues to it in terms of Clause 3.2 (g) of the Policy, however, there were no such dues or short payment of royalty as well as the profit petroleum payable by the petitioner to respondent No.1. In this regard, the case of the petitioner is that amount mentioned in the impugned letter, i.e., payment of profit petroleum due to recovery of excess drilling cost and Geostatistical inversion study amounting to USD 14.54 Million and deduction of SAED (Special Additional Excise Duty) unilaterally from Govt.'s share of profit petroleum amounting to USD 10.13 Million for Q2 of FY 2022-23 to Q2 of FY 2024-25 and dues for settlement of past audit exceptions and approval of accounts by Management Committee to the tune Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 12 of 120 Signing Date:06.01.2026 20:05:22 of USD 1.54 Million upto 2020-21, have been arbitrarily considered as ground of rejection by respondent No.1 as the same were never raised while the PSC was subsisting nor during the period while the interim extensions were granted to the petitioner till 29.09.2024. It is also the case of the petitioner that PSC in Article 33 provides for Arbitration and Article 30 of PSC provides for Termination of Contract. Attention of this Court has been drawn towards Article 30.2 of PSC which provided for "Circumstances in which Government May Terminate" wherein, it has been mentioned that the PSC can be terminated by the Government upon giving 90 days written notice of its intention to do so. Further attention has been drawn towards the following clauses of Article 30.2 of PSC: -

"30.2 Circumstances in which Government May Terminate **** **** ****

(d) has -assigned any interest in the Contract without the prior consent of the Government as provided in Article 28; or

(e) fails to make any monetary payment required by law with respect to Petroleum Operations (but not otherwise) or under this Contract by the due date or within such further period after the due date as may be specified in this Contract, the Operating Agreement or Law; or

(f) fails to comply with or . contravenes the provisions of this Contract in a material particular; or **** **** ****"

In view of the aforesaid clause of PSC, it is the submission of learned Senior Counsel for the petitioner that the respondent No.1 had not raised any claim with respect to any of the dues as mentioned in the impugned letter, as noted hereinbefore and thus, the same cannot be a ground of rejection of the application of extension of PSC filed by the petitioner and the impugned letter has been passed arbitrarily on the basis of wholly extraneous and irrelevant considerations. It is further submitted that after the application seeking extension was filed by the petitioner in 2021, there was no discussion with respect to the dues mentioned in the impugned rejection letter and the same were brought to its notice in 2025 itself.

v) Further, learned Senior Counsel has submitted that if respondent No.1 was not inclined to provide extension of the PSC to the petitioner, then, why 5 interim extensions were granted to the petitioner. It is further submitted that direction of respondent No.1 to the petitioner to hand over custody and possession of the block to ONGC and cease and desist from carrying out any further petroleum operations is not possible as the petroleum operations are Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 14 of 120 Signing Date:06.01.2026 20:05:22 continuing and the same cannot be turned off immediately. It is not possible to shut down the operations immediately and close the offshore as well as onshore activities. Learned Senior Counsel has handed up a compilation of documents wherein; photographs of the subject oilfield have been annexed. It is contended that the subject site is in the middle of the ocean and the iron pillars have been rigged into the ocean bed and the same cannot be removed instantly as has been directed by respondent No.1 vide the impugned rejection letter/order. It is thus, the case of the petitioner that the subject site does come within the purview of Public Premises Act, 1971, as well and the respondent No.1 ought to have file a suit for eviction of the petitioner under the provisions of Transfer of Property Act, 1882 , in accordance with law. Reliance has been placed on following observations of Hon'ble Supreme Court in Express Newspapers (P) Ltd. v. Union of India2 : -

Ltd. having acted upon the grant of permission by the lessor i.e. the Union of India, Ministry of Works & Housing to construct the new Express Building with an increased FAR of 360 together with a double basement was clearly not an unauthorised occupant within the meaning of Section 2(g) of the Act which runs as under:

86. The Express Buildings constructed by Express Newspapers Pvt. Ltd. with the sanction of the lessor i.e. the Union of India, Ministry of Works and Housing on plots Nos. 9 and 10, Bahadurshah Zafar Marg demised on perpetual lease by registered lease-deed dated March 17, 1958 can, by no process of reasoning, be regarded as public premises belonging to the Central Government under Section 2(e) . That being so, there is no question of the lessor applying for eviction of the Express Newspapers Pvt. Ltd. under Section 5(1) of the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 nor has the Estate Officer any authority or jurisdiction to direct their eviction under sub-section (2) thereof by summary process. Due process of law in a case like the present necessarily implies the filing of suit by the lessor i.e. the Union of India, Ministry of Works & Housing for the enforcement of the alleged right of re-entry, if any, upon forfeiture of lease due to breach of the terms of the lease."

vi) Reliance has also been placed by learned Senior Counsel for the petitioner on Section 4 of the Oil Fields (Regulation and Development) Act, 1948, and it is submitted that the present case is of lease and not 'license' and the petitioner is a lessee, and therefore, cannot be removed from the subject oil block site without following the due process of law. It is submitted that the Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 16 of 120 Signing Date:06.01.2026 20:05:22 subject oil field is a leasehold site and on account of the infrastructure build at the subject site onshore or offshore, it is an 'immovable property' falling within the meaning of Transfer of Property Act, 1882 , as well as General Clauses Act, 1897 , and thus, the petitioner cannot be ousted from the subject oil block in the manner directed by respondent No.1. Attention of this Court has been drawn towards the definitions of "immovable property", "attached to the earth" under Transfer of Property Act, 1882 , and definition of "immovable property" under General Clauses Act, 1897 .

vii) During the course of arguments on 25.09.2025, learned Senior Counsel for the petitioner, has submitted that the liability to pay the aforesaid amount is not entirely of the petitioner and the same has to be paid by all the contracting parties in correspondence to their participating interest as per PSC and the petitioner is ready and willing to pay its share of the aforesaid amount, under protest as the same has also been done earlier on 12.09.2025, subject to respondent No.1 providing extension of the PSC to the petitioner for a period of 10 years as has been sought in the prayers clause of the present petition. In view thereof, it is submitted that the present petition be allowed and the reliefs sought in the present petition be granted to the petitioner.

viii) Reliance has been placed by learned Senior Counsel in support of the case of the petitioner on the following judgments: -

We disagree with the finding of the High Court that the Committee had the opportunity to meet the allegations contained in the order of supersession.

**** **** **** In our view the principles of natural justice know of no exclusionary rule dependent on whether it would have made any difference if natural justice had been observed. The non-observance of natural justice is itself prejudice to any man and proof of prejudice independently of proof of denial of natural justice is unnecessary. It ill comes from a person who has denied justice that the person who has been denied justice is not prejudiced. As we said earlier where on the admitted or indisputable facts only one conclusion is possible and under the law only one penalty is permissible, the court may not issue its writ to compel the observance of natural justice, not because it is not necessary to observe natural justice but because courts do not issue futile writs. We do not agree with the Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 19 of 120 Signing Date:06.01.2026 20:05:22 contrary view taken by the Delhi High Court in the judgment under appeal.

**** **** ****

26. In the light of the discussion we have no option but to hold that the Order dated February 27, 1980, of the Lt. Governor superseding the New Delhi Municipal Committee is vitiated by the failure to observe the principle audi alteram partem. The question is what relief should be given to the appellant? The term of the Committee is due to expire on October 3, 1980 which means that just a few days more are left for the term to run out. If now the order is quashed and the Committee is directed to be reinstated with liberty to the Lt. Governor to proceed according to law -- this should be our order ordinarily -- it may lead to confusion and even chaos in the affairs of the municipality. Shri Sorabjee, learned Counsel for the appellant, had relieved us of our anxiety by stating:

In view of the aforesaid, it is submitted that the petitioner ought to have been provided an opportunity to explain or clear the outstanding dues as mentioned in the impugned rejection order as the same were put to it only for the first time in 2025.

b) In Kumari Shrilekha Vidyarthi & Ors. v. State of UP & Ors. 4 , reliance has been placed on following paragraphs: -

c) Reliance has been placed on Allied Motors Ltd. v. Bharat Petroleum Corporation Ltd.5 , to contend that the State while dealing with public cannot act arbitrarily and its action must be in conformity with principles of reasonableness and relevance. Reliance has been placed on following portion of the aforesaid judgment: -

adherence of the guidelines of the respondent Corporation.

60. On consideration of the totality of the facts and circumstances of this case, it becomes imperative in the interest of justice to quash and set aside the termination order of the dealership. We, accordingly, quash the same. Consequently, we direct the respondent Corporation to hand over the possession of the petrol pump and restore the dealership of petrol pump to the appellant within three months from the date of this judgment."

d) Reliance has been placed on M.P. Power Management Company Limited v. Sky Power South East Solar India Private Limited & Ors.6 , to contend that an order or decision would be arbitrary if the same is not based on any principle or it shows caprice or it has been passed without any reasonable rational and if there is total non-application of mind with respect to 6 (2023) 2 SCC 703 Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 23 of 120 Signing Date:06.01.2026 20:05:22 rights of parties and public interest. Reliance has been placed on following portion of the aforesaid judgment: -

68. No doubt, we must also notice para 28 of ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. , (2004) 3 SCC 553] which serves as an admonition against considering the availability of the remedy under Article 226 as an absolute charter to invoke jurisdiction in all cases : ( ABL case [ ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. , (2004) 3 SCC 553] , SCC p. 572, para 28) "28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 of the Constitution of India, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 24 of 120 Signing Date:06.01.2026 20:05:22 Constitution is plenary in nature and is not limited by any other provisions of the Constitution. The High Court having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. The Court has imposed upon itself certain restrictions in the exercise of this power. (See Whirlpool Corpn. v. Registrar of Trade Marks [Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1] .) And this plenary right of the High Court to issue a prerogative writ will not normally be exercised by the Court to the exclusion of other available remedies unless such action of the State or its instrumentality is arbitrary and unreasonable so as to violate the constitutional mandate of Article 14 or for other valid and legitimate reasons, for which the Court thinks it necessary to exercise the said jurisdiction."

81. We have already concluded that PPA is not a statutory contract. However, that would not be the end of enquiry. Dr A.M. Singhvi, learned Senior Counsel, would point out that the contract, not being a statutory contract, assumes relevance only for the purpose of deciding as to whether the Court should relegate the writ applicant, to alternate remedies. In other words, while the Court would retain its discretion to entertain the petition or decline to do so, in the facts of each case, there is no absolute taboo against the Court granting relief, even if the challenge to the termination of a contract is made in the case of a contract, which is not statutory in nature, when the offending party is the State. In other words, the contention is that the law in this field has witnessed an evolution and, what is more, a revolution of sorts and a transformatory change with a growing realisation of the true ambit of Article 14 of the Constitution of India. The State, he points out, cannot play the Dr Jekyll and Hyde game anymore. Its nature is cast in stone. Its character is inflexible. This is irrespective of the activity it indulges in. It will continue to be haunted by the mandate of Article 14 to act fairly. There has been a stunning expansion of the frontiers of the Court's jurisdiction to strike at State action in matters arising out of contract, based, undoubtedly, on the facts of each case. It remains open to the Court to refuse to reject a case, involving State action, on the basis that the action is, per se, arbitrary.

82. We may cull out our conclusions in regard to the points, which we have framed:

82.5. After the contract is entered into, there can be a variety of circumstances, which may provide a cause of action to a party to the contract with the State, to seek relief by filing a writ petition.

82.6. Without intending to be exhaustive, it may include the relief of seeking payment of amounts due to the aggrieved party from the State. The State can, indeed, be called upon to honour its obligations of making payment, unless it be that there is a serious and genuine dispute raised relating to the liability of the State to make the payment. Such dispute, ordinarily, would include the contention that the aggrieved party has not fulfilled its obligations and the Court finds that such a contention by the State is not a mere ruse or a pretence.

82.7. The existence of an alternate remedy, is, undoubtedly, a matter to be borne in mind in declining relief in a writ petition in a contractual matter. Again, the question as to whether the writ petitioner must be told off the gates, would depend upon the nature of the claim and relief sought by the petitioner, the questions, which would have to be decided, and, most importantly, whether there are disputed questions of fact, resolution of which is necessary, as an indispensable prelude to the grant of the relief sought. Undoubtedly, while there is no prohibition, in the writ court even deciding disputed questions of fact, particularly when the dispute surrounds demystifying of documents only, the Court may relegate the party to the remedy by way of a civil suit.

82.8. The existence of a provision for arbitration, which is a forum intended to quicken the pace of dispute resolution, is viewed as a near bar to the entertainment of a writ petition [see in this regard, the view of this Court even in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. , (2004) 3 SCC 553] explaining how it distinguished the decision of this Court in State of U.P. v. Bridge & Roof Co. (India) Ltd. [State of U.P. v. Bridge & Roof Co. (India) Ltd., (1996) 6 SCC 22] , by its observations in SCC para 14 in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. , (2004) 3 SCC 553] ].

82.9. The need to deal with disputed questions of fact, cannot be made a smokescreen to guillotine a genuine claim raised in a writ petition, when actually the resolution of a disputed question of fact is unnecessary to grant relief to a writ applicant.

82.10. The reach of Article 14 enables a writ court to deal with arbitrary State action even after a contract is entered into by the State. A wide variety of circumstances can generate causes of action for invoking Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 27 of 120 Signing Date:06.01.2026 20:05:22 Article 14. The Court's approach in dealing with the same, would be guided by, undoubtedly, the overwhelming need to obviate arbitrary State action, in cases where the writ remedy provides an effective and fair means of preventing miscarriage of justice arising from palpably unreasonable action by the State.

82.11. Termination of contract can again arise in a wide variety of situations. If for instance, a contract is terminated, by a person, who is demonstrated, without any need for any argument, to be the person, who is completely unauthorised to cancel the contract, there may not be any necessity to drive the party to the unnecessary ordeal of a prolix and avoidable round of litigation. The intervention by the High Court, in such a case, where there is no dispute to be resolved, would also be conducive in public interest, apart from ensuring the fundamental right of the petitioner under Article 14 of the Constitution of India. When it comes to a challenge to the termination of a contract by the State, which is a non- statutory body, which is acting in purported exercise of the powers/rights under such a contract, it would be over simplifying a complex issue to lay down any inflexible rule in favour of the Court turning away the petitioner to alternate fora. Ordinarily, the cases of termination of contract by the State, acting within its contractual domain, may not lend itself for appropriate redress by the writ court. This is, undoubtedly, so if the Court is duty-bound to arrive at findings, which involve untying knots, which are presented by disputed questions of facts. Undoubtedly, in view of ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. , (2004) 3 SCC 553] , if resolving the dispute, in a case of repudiation of a contract, involves only appreciating the true scope of documentary material in the light of pleadings, the Court may still grant relief to an applicant. We must enter a caveat. The Courts are today reeling under the weight of a docket explosion, which is truly alarming. If a case involves a large body of documents and the Court is called upon to enter upon findings of facts and involves merely the construction of the document, it may not be an unsound discretion to relegate the party to the alternate remedy. This is not to deprive the Court of its constitutional power as laid down in ABL [ABL International Ltd. v. Export Credit Guarantee Corpn. of India Ltd. , (2004) 3 SCC 553] . It all depends upon the facts of each case as to whether, having regard to the scope of the dispute to be resolved, whether the Court will still entertain the petition.

82.12. In a case the State is a party to the contract and a breach of a contract is alleged against the State, a civil action in the appropriate forum is, undoubtedly, maintainable. But this is not the end of the matter. Having regard to the position of the State and its duty to act fairly and to eschew arbitrariness in all its actions, resort to the constitutional remedy on the cause of action, that the action is arbitrary, is permissible (see in this regard Shrilekha Vidyarthi v. State of U.P. [Shrilekha Vidyarthi v. State of U.P., (1991) 1 SCC 212 : 1991 SCC (L&S) 742] ). However, it must be made clear that every case involving breach of contract by the State, cannot be dressed up and disguised as a case of arbitrary State action. While the concept of an arbitrary action or inaction cannot be cribbed or confined to any immutable mantra, and must be laid bare, with reference to the facts of each case, it cannot be a mere allegation of breach of contract that would suffice. What must be involved in the case must be action/inaction, which must be palpably unreasonable or absolutely irrational and bereft of any principle. An action, which is completely mala fide, can hardly be described as a fair action and may, depending on the facts, amount to arbitrary action. The question must be posed and answered by the Court and all we intend to lay down is that there is a discretion available to the Court to grant relief in appropriate cases.

82.13. A lodestar, which may illumine the path of the Court, would be the dimension of public interest subserved by the Court interfering in the matter, rather than relegating the matter to the alternate forum.

82.14. Another relevant criteria is, if the Court has entertained the matter, then, while it is not tabooed that the Court should not relegate the party at a later stage, ordinarily, it would be a germane consideration, which may persuade the Court to complete what it had started, provided it is otherwise a sound exercise of jurisdiction to decide the matter on merits in the writ petition itself.

82.15. Violation of natural justice has been recognised as a ground signifying the presence of a public law element and can found a cause of action premised on breach of Article 14. (See Sudhir Kumar Singh [State of U.P. v. Sudhir Kumar Singh , (2021) 19 SCC 706 : 2020 SCC OnLine SC 847] )."

SUBMISSIONS ON BEHALF OF RESPONDENT NO.2/DHG

4. Learned Attorney General for India, while refuting the submissions made by learned Senior Counsel on behalf of the petitioner, has made the following submissions: -

ii) It is submitted that in 2017, Government of India, has enacted a Policy for Grant of Extension to the Production Sharing Contract (PSCs) signed by it for awarding Pre-New Exploration Licensing Policy (Pre-NELP) Exploration Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 30 of 120 Signing Date:06.01.2026 20:05:22 Blocks, by which procedure and criteria on which application for extension of an already existing PSC were to be assessed was provided. It is further submitted that said Policy provided for Fisal Parameters for Extension, Prerequisites for Evaluation, Criteria for Evaluation, on the basis of which any such application for extension is to be considered and in the present case, the application of the petitioner for extension was not found satisfactory in terms of the said policy. Even as per this policy, no right for extension of PSC was vested in the petitioner, who is merely a contractor, and therefore, no question of providing exclusive right of hearing to the petitioner arise. It is the case of respondent No.2/DGH that, in fact, the petitioner was granted various opportunity of being heard and thus, respondent No.2 had complied with the principles of natural justice while passing the impugned rejection order. Attention of this Court has been drawn towards the letters forming part of correspondences between the petitioner and respondent No.2 from 2021 onwards. Learned AGI has further submitted that the petitioner has not approached this Court with clean hands and has suppressed material facts and various communications forming part of correspondences amongst the parties concerned have not been placed on record by the petitioner to enable this Court for proper adjudication of the matter. He has further submitted that the subject oil premises/site belong to respondent No.4/ONGC as the same has been vested with right of lessee and therefore, no obligation as such has been casted, either statutory or otherwise, on the respondent No.2/DGH to take recourse under Public Premises Act, 1971, for eviction of petitioner from subject site.

iii) Learned AGI has further submitted that as per the Extension Policy, Clause 3 provides for Prerequisites for Evaluation, Clause 4 provides for Criteria for Evaluation of Request and Clause 5 provides that in the event of failure to comply with any of the conditions, mentioned in clauses 3 and 4, Government shall have the option to invite fresh bids for further development of the area and to award the field to the most competitive bid and while doing so, Government would also take into account pending arbitration while considering extension requests. He further submitted that the natural resources of this country belong to people of India and the Government is merely a custodian and no one has a vested right to continue with the prolonged excavation of said resources and claim extension of PSC in its favour as a matter of right. Reliance has been placed on following observations of Hon'ble Supreme Court in Natural Resources Ltd. v. Reliance Industries Ltd.7 : -

A mechanism is provided under the PSC between the Government and the contractor (RIL, in the present case). The PSC shall override any other contractual obligation between the contractor and any other party.

**** **** ****

231. The principal themes in Production Sharing Contracts would appear to be that the sovereignty over the petroleum produced continues to be with the nation, and the contractor bears varying levels of and forms of risk with respect to exploration activities and what is allowed to be recovered as costs (called contract costs) and to what extent in each year (called cost petroleum). According to Daniel Johnston, who was cited by learned Solicitor General Gopal Subramanium:

(emphasis supplied) **** **** ****

240. Within the context of international law, there has emerged a body of thought under the broad rubric of human rights, that the people as the true owners of natural wealth and resources, ought to exercise a "permanent sovereignty" i.e. the power to make laws, over such resources to ensure national development and well-being of the people. The responsible use of such natural resources for the well-being of the people of a nation has been seen as an important aspect of maintenance of international peace and a part of their right to "self-determination"

Any contract including a PSC which does not take into its ambit stated principles may itself become vulnerable and fall foul of Article 14 of the Constitution.

**** **** ****

253. As discussed earlier, it is clear that a wide variety of instruments have come to be called Production Sharing Contracts and there is no specific concordance between that title and what is actually shared pursuant to a PSC. In light of that discussion and the general acceptance that revenues are also shared in the context of Production Sharing Contracts, the insistence of RNRL that only production i.e. physical volume of gas can be shared under any Production Sharing Contract may have to be held to be unsustainable.

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255. Article 1.28 of the PSC defines "cost petroleum" to mean "the portion of total value of the crude oil, condensate and natural gas produced and saved from the contract area which the contractor is entitled to take in a particular period, for the recovery of contract costs as provided in Article 15". Article 1.77 of the PSC defines "profit Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 35 of 120 Signing Date:06.01.2026 20:05:22 petroleum" to mean "the total value of crude oil, condensate and natural gas produced and saved from the contract area in a particular period, as reduced by cost petroleum and calculated as provided in Article 16". Reading Articles 2.2 , 8 , 15 and 16 of the PSC together, it would have to be concluded that under this PSC the contractor is only entitled to cost petroleum and share of profit petroleum in terms of realised value from sale of petroleum i.e. natural gas in this case, and not to a share in physical quantities of petroleum.

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317. However wide the powers of the courts may be, they cannot be so wide as to order supply of gas in contravention of government policies, the constitutional obligations that the GoI must bear in mind when formulating such policies and in contravention of broader public interest. The Division Bench erred by holding that certain quantum of natural gas stood allocated to RNRL. The error is on account of both a misinterpretation of the PSC and also public law. Apart from that, both the learned Single Judge and the Division Bench below have erroneously held that the MoU's gas supply section be read into the scheme thereby effectively substituting the phrase "suitable arrangements" in Clause 19 to mean the gas supply provisions of the MoU. We hold that those conclusions were erroneous. We disagree with the propositions of learned counsel for RNRL that the ratio in S.K. Gupta [(1979) 3 SCC 54] would support such a result."

In view of the aforesaid, it is contended that no transfer of title had ever taken place in favour of the petitioner and the Government receives only just and fair compensation by letting out the excavation of natural resources while working on the principle of sustainable development and making an endeavour to preserve the natural resources for future generations.

iv) Learned AGI while addressing the argument of petitioner being 'lessee' under PSC has drawn attention of this Court towards the following recitals/covenants mentioned at the very outset of PSC dated 30.06.1998: -

In view of the aforesaid definitions, it is submitted that the contract costs (1.23) is inclusive of development costs, exploration costs, and production costs and once the contract costs is recovered, there is no other right of the petitioner which subsists in the petroleum block or PSC.

vi) Attention of this Court has also been drawn towards the following definitions enumerated in 'Article 1: Definitions' of the PSC: -

It is, therefore, submitted that term 'lease' has not been defined in the PSC and the subject site/Petroleum block has been termed as 'contract area'. The petitioner being a contractor only has 'participating interest' in the undivided share expressed as percentage under the Contract and the operating agreement.

vii) Learned AGI has drawn attention of this Court towards Article 2:

In view of the aforesaid, it is submitted that this discretionary and permissive of term 'may be' is used keeping in mind the public trust doctrine, which is underlying premise of the contract emanating from Article 297 of the Constitution. It, thus, submitted that even broader interpretation of the extension policy as well as the terms of PSC does not provide an impression of any legitimate expectation on behalf of respondent No.2 to provide an extension of PSC as a matter of right. It has been further argued that the doctrine of Legitimate Expectation would not be applicable to the present category of cases as the Government is merely acting as a custodian of the natural resources and has to make best of them. Learned AGI further submitted that all the 10 blocks of petroleum excavation sites under the extension policy have to be dealt with fairly by respondent No.2.

viii) Attention of this Court has been drawn towards Articles 13 , 13.8 , 13.9 , 14.1 , 14.8 , 14.7 , 14.9 , 27 , 27.1 , 27.4 , 28.7 of the PSC and in view of these Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 41 of 120 Signing Date:06.01.2026 20:05:22 covenants of the PSC, it is submitted by learned AGI that the same are based on Article 297 of the Constitution and public trust doctrine, and thus, there is no vested right in excavation contracts.

ix) During the course of proceedings in the present case on 04.12.2025, learned Senior Counsel for the petitioner has submitted that the latter has paid an amount of 7.34 million USD to respondent No.2 as its share of 40% PI as the same was a ground of rejection of the petitioner's application seeking extension. He further submitted that SAED as claimed by respondent No.2 has already been paid, and thus, if the non-payment of dues was a ground to reject the petitioner's application for extension, then, the same have been paid and now, respondent No.2 may consider to review their decision. Learned AGI has confirmed that they have received the money; however, the same will not be consideration for granting extension of PSC to the petitioner.

x) Learned AGI has drawn attention of this Court towards Clause 3.2 of the Extension Policy wherein it has been provided that the application of extension of contract should fulfil the certain conditions for consideration. It is further submitted that as per Clause 3.2(g), all statutory dues and payment to Government should have been cleared and the contractor should not be a defaulter to the Government on any account and as per Clause 4 which provides for criteria for evaluation of request for extension, the performance of the contractor should be satisfactory for the request of extension to be favourably considered. He further submitted that as per Clause 5 of the policy in the event of failure to comply with any of the conditions mentioned in Clauses 3 and 4, Government has the option to invite fresh bids for further Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 42 of 120 Signing Date:06.01.2026 20:05:22 development of the area and to award the field to the most competitive bid. Further, as per Clause 9 of the policy, providing for other conditions, Government has right not to extend PSC without assigning any reason thereof and the conditions stipulated in the policy will override the existing provision of the PSC. The said relevant Clauses of the extension policy read as under: -

Wherever PSC does not provide for SRF and SRP, the Contractor should propose SRF and SRP as a part of extended Contract.

5. In the event of failure to comply with any of the above conditions, mentioned in clauses 3 and 4 above, Government shall have the option to invite fresh bids for further development of the area and to award the field to the most competitive bid. Government would also take into account pending arbitration while considering extension requests.

a) Government shall have the right to stipulate any further conditions specific to any particular Production Sharing Contract.

b) Government shall reserve the right not to extend PSC without assigning any reason thereof.

c) The condition stipulated in this policy will override the existing provision of the PSC.

d) In case any contractor is not agreeable to this policy then the field will be considered for rebidding, on as is where is basis. Government would also have the right to assign the same to National Oil Companies (NOCs) i.e. ONGC or OIL."

In view of the aforesaid provisions of extension policy, learned AGI has submitted that, the scheme of policy enacted by respondent No.1 emanates from Article 297 of the Constitution and is based on 'public trust doctrine' that all natural resources of this country vests in the people of India and the government is merely a custodian of the same. It is further submitted by learned AGI that this extension policy governs 10 Exploration Blocks details of which has been annexed along with the policy and therefore, the option to revisit its decision would be highly prejudicial and will include highly cumbersome procedure.

xi) Learned AGI has placed on record some communications/correspondences by way of an affidavit dated 08.12.2025 sent by respondent Nos.1 and 2, after the application for extension was made Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 44 of 120 Signing Date:06.01.2026 20:05:22 by the petitioner whereby, petitioner who was put to notice with respect to its defaults, short payment of profit petroleum, applicable royalty and to make good of the same. Reliance has been placed on letter dated 21.09.2021, addressed to petitioner and ONGC/respondent No.4 wherein, the audit exceptions reported by the auditor, for which necessary compliance and corrective action was required on the part of operator/contractor, that is, petitioner, were notified and annexed with the said letter. It is further submitted that in the said letter, it was brought to notice of the petitioner that, since it has applied for extension of PSC and one of the conditions for extension of the same is that all statutory dues and payment due to the Government should have been cleared and the contractor should not be defaulter to the Government or any account, and in such condition, replies to the Audit Exceptions shall be provided and contractors account/consequential adjustments to the Government's share of Profit Petroleum shall be made at the earliest. It is pointed out that the petitioner despite being informed of making timely payment of Government's share of Profit Petroleum has not done so. The relevant portion of the said letter dated 21.09.2021 reads as under: -

xii) Attention of this Court has been drawn towards the letter dated 22.03.2022, with respect to the short payment of profit petroleum and royalty dues to Government of India in respect of the subject oil field. In this letter, it has been recorded that the contractor/petitioner had submitted its response vide letter dated 14.01.2022, whereby, it did not agree to any of the audit exceptions except for Audit Exception No. 6 (Inadmissible cost recovery of local community charges). The relevant portion of the letter dated 22.03.2022 reads as under: -

3. The Profit Petroleum share payable to Government has been recomputed after correct allocation of common expenditure between the Development Areas, exclusion of cost incurred beyond Delivery Point along with the exclusion of the inadmissible Cost recovery of local community charges. The Short-paid Profit Petroleum payable to the Government amounts to US$ 27,149,542 (as on 31.03.2019) (prov.)

4. The Contractor is required to remit the unpaid Profit Petroleum of US$ 27,149,542 (provisional) as above, along with applicable interest @ LIBOR plus 2% liable under Section 1 .7.3 of Appendix C of PSC till the date of actual remittance of such dues forthwith in favour of the Government of India.

5. The Licensee/Lessee of the Block has already been requested to remit the short-paid Royalty (reference is invited to DH letter dated 14.09.2021, wherein the short-paid amount of INR 120,94,79,889 (provisional) upto the Financial year 2020-21 calculated upto 31.03.2021 along with applicable penal Royalty as per PNG rules was already communicated). The Licensee/Lessee is again requested to remit the short-paid Royalty along with penal royalty."

xiii) Reliance has been placed on a letter dated 28.09.2022 whereby respondent No.1 in consultation with respondent No.2/DGH had examined the request of the petitioner with respect to adjustment of the amount payable towards Special Additional Excise Duty "SAED" and after examining the said Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 47 of 120 Signing Date:06.01.2026 20:05:22 request for adjustment from the dues to the government of India, on account of profit petroleum were found unreasonable and untenable. It is submitted that by this letter it was drawn to the attention of the petitioner that PSC is a contract related to exploration and exploitation of a natural resource which is vested with the Union of India under Article 297 of the Constitution of India and that the Government of India, without prejudice, has specifically reserved all its rights and remedies under PSC as well as under law, equity, or otherwise, in respect of all the matters. The relevant portion of the said letter reads as under: -

xiv) Attention of this Court has further been drawn towards letter dated 08.05.2023, with respect to audit exceptions for the subject oil block for the year 2019-20. It is the case of the respondent No.2 that by way of this letter it was brought to the notice of the petitioner as it is in default and there is short payment of profit petroleum to the share of government along with interest. It is further submitted that with this letter, prior years' Audit exceptions which were still pending at the petitioner/operator's end were also annexed and it was directed to send compliance report immediately on prior years' Audit exceptions. It is the case of respondent No.2 that there were total 37 audit exceptions which were held by the petitioner against the dues payable by it to the Government of India under PSC and same was well within the knowledge of the petitioner as it was put to notice time and again every year; however, the petitioner chose not to pay the said dues and deliberately kept them pending.

xv) Reliance has also been placed on a letter dated 28.01.2025, addressed to the petitioner by respondent No.2/DGH with respect to short payment of Government of India's share of profit petroleum on account of adjustment of SAED in respect of the subject oil field. The averments made in the said letter read as under: -

This conduct of Vedanta is serious breach of the agreed terms and conditions of the PSC causing huge financial losses to Central Exchequer.

Vedanta / CEHL is once again called upon to deposit the short paid GOI share of PP amounting to USD 10.13MM along with applicable interest on account of SAED adjustment made while remitting the GOI share of PP till 30.09.2024 within 7 days of the receipt of this letter. In case the amount is not paid within 7 days, GOL may initiate actions under Article 30 of the PSC.

The forgoing is without prejudice to the GOT's right under the PSC and applicable law."

xvi) Learned AGI, while placing reliance on the aforesaid letters/correspondences exchanged between the petitioner and respondents, has argued that the petitioner was well aware of their outstanding dues and defaults under PSC towards Government of India including SAED, profit petroleum etc., from the day, it preferred application seeking extension of policy in 2021 which continued during the period of interim extensions granted to the petitioner after the expiry of PSC on 29.06.2023 till the passing of impugned rejection letter on 19.09.2025, and still the amounts mentioned in the impugned letter were not deposited by the petitioner, despite repeated reminders and opportunities given for rectifying such defaults. It is the case of respondent No.2 that the aforesaid letters show that the conduct of the petitioner during the extension period was not satisfactory and the said letters have not been placed on record by the petitioner alongwith the present petition.

xvii) It is further submitted that as per Article 27.4 of the PSC, the title of the assets purchased by the contractor/petitioner for use in petroleum operations Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 50 of 120 Signing Date:06.01.2026 20:05:22 was to be in proportion to their Participating Interests; however, ONGC/respondent No.4 had vested right of full title and ownership in the said assets. Further, the assets owned by the contractor/petitioner were to be vested in ONGC when 95% of the cost of the original asset acquired has been written off in accordance with the depreciation rates as the schedule specified in Companies Act . It is therefore, submitted that on recovery of costs of the assets acquired by the contractor/petitioner, such assets were to be vested in full title and ownership of ONGC/respondent No.4 and the petitioner/contractor no right to claim any kind of ownership right on the assets existing at the subject oil field or which have been acquired by it during the subsistence of PSC. As per learned AGI, the rationale behind the same is public trust doctrine as all the natural resources vests in the citizens of this country and the Government is merely acting as a custodian/trustee of such resources and its endeavour is to get best out of them.

xviii) With respect to the reliance placed by learned Senior Counsel for the petitioner on the doctrine of Legitimate Expectation, learned AGI has submitted that there was neither any practice nor any promise by respondent Nos.1 and 2 from which it could be inferred that the petitioner was to be granted extension under PSC as has been allegedly claimed by it. Further, there was no standard procedure to presume that there was Legitimate Expectation. It is the case of the respondent No.2 that petitioner's application seeking extension of PSC was to be assessed on the basis of the parameters and yardsticks provided under the extension policy, as noted hereinbefore, and as per said policy, no right for extension was conferred on the petitioner. It is further submitted that as per Clauses 3.2(g), 5, and 9 of the policy, the Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 51 of 120 Signing Date:06.01.2026 20:05:22 exercise of authority under the policy cannot be questioned and the same is ought to be seen from the context of public trust doctrine and thus, no argument of unreasonableness can be considered by the Court. He further submitted that in absence of any vested right to extension, doctrine of Legitimate Expectation cannot be invoked to compel or presume a renewal or continuance of PSC. It is further the case of respondent No.2 that by way of the present petition, the petitioner attempts to seek a post facto hearing based on shortfalls on its part. Further, the interim permissions/provisional extensions pending consideration of petitioner's application seeking extension does not create, confer, or crystallise any vested right or Legitimate Expectation in favour of the petitioner and any administrative indulgence or tolerance on part of the Government cannot be construed as waiver, acquiescence, or estoppel.

xix) Reliance has been placed on a judgment of learned Division Bench of this Court in Union of India v. Vedanta Ltd. and Ors. 8 , wherein while dealing with an appeal against the judgment passed by learned Single Judge directing Union of India to extend the tenure of the contract in question for a period 10 years beyond it's the then existing tenure on the same terms and conditions when the contract was initially executed. The grievance of the appellant/UOI therein was that the learned Single Judge had directed the extension of the tenure of the contract/PSC on the same terms and conditions as existed in 1995, and without any increase in share of profit petroleum. The contention of UOI was that on extension of the tenure of the contract/PSC, it 8 2021 SCC OnLine Del 1336 Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 52 of 120 Signing Date:06.01.2026 20:05:22 is entitled to 10% increase in the share in 'Profit Petroleum' under PSC. The brief facts of the said judgment read as under: -

c) There is a provision for extension of tenure/period of this contract in the Production Sharing Contract.

d) The said extension clause in the Production Sharing Contract viz. Article 2.1 of PSC makes it clear that any subsequent extension (after initial period of 25 years) shall be only "subject to applicable laws".

e) Union of India does not object to the request of the Respondent for 10 years extension.

f) Government of India, has, however, as a trustee of national wealth and natural resources made an all-India policy dated 7th April, 2017 in which it is stipulated that if a private party seeks extension of contract in all Production Sharing Contracts after initial contract period is over, such an extension would be granted on payment of additional 10% profit to the Government of India. As per the all-India policy of the Central Government, in case of an extension after the original contract, extension will be granted only if the Government gets 10% more of profit petroleum.

At this juncture, it needs to be noted that under the Production Sharing Contract, private party is required to pay a particular percentage to the Government of India which is called "profit petroleum".

The Government of India, as a national policy applicable to all extensions of all such blocks in the country after 2017, has decided to extend the PSCs only if there is an increase in profit petroleum by 10%.

g) This policy is applicable to all petroleum blocks in the country and not only to the Respondent herein.

h) The said policy which is framed in exercise of statutory powers as well as Constitutional powers discussed hereunder, is not challenged by the original petitioner-respondent herein.

i) Not only the policy is not under challenge, the quantification of addition in the profit petroleum viz. 10% increase is also not questioned, either as arbitrary or irrational or even excessive.

j) The only argument canvassed by the original petitioner (Respondent herein) and accepted by the learned Single Judge is that the Respondent herein is entitled to an extension as of right, without any condition.

In view of the aforesaid position, the question involved is how a contract involving Government of India, its right to put condition in larger national interest and as a trustee of natural resources in which the natural resources "vest" constitutionally needs to be interpreted by a Constitutional Court."

In the aforesaid facts, after hearing learned counsels for the parties and perusing the record, learned Division Bench had observed and held as under: -

44. It is undisputed between the parties that petitioners are private oil companies and Respondent No. 4 herein/ONGC is a national oil company. PSC is a contract entered into by the Government of India in discharge of its sovereign powers and the same is executed in the name of Hon'ble President of India. The preamble of the PSC unambiguously provides that it has been entered into for the purpose of ".. petroleum resources which may exist in India be discovered and exploited with utmost expedition in the overall interest of India....".

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67. In view of the aforesaid dicta of the Hon'ble Supreme Court, it can be safely held by us that "right to extension of a contract is a valuable right of the Contractor but such a right is not an absolute right". The words "as may be mutually agreed between the parties"

68. The terms of the PSC therefore clearly entail change of terms and conditions of the PSC during the extended period and it is not open to the Courts in a judicial review under Article 226 of the Constitution of India to rewrite the contract between the parties or revisit its terms and conditions. The Courts, as held by the Hon'ble Supreme Court, cannot Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 55 of 120 Signing Date:06.01.2026 20:05:22 substitute their own understanding or wisdom for the understanding of the commercial terms of the parties to the contract which is explicit in the provisions of the contract. The learned Single Judge has by the impugned judgment directed extension of the tenure of the PSC for a further period of 10 years, on same terms as existed earlier, overlooking the power of the State to vary the condition. This is impermissible in the eyes of law.

69. We find merit in the contention of the appellants that the Government may enter into various contracts, some may have public element and some may be purely in the realm of private contracts, but, while entering into a contract with respect to natural resources, the Constitutional imperative and the public interest will outweigh the contractual stipulations. The Policy dated 7 April, 2017 provides that it applies to all existing PSCs and also provides a mechanism for their extension. The direction in the impugned judgment is, therefore, contrary to the policy, which is unchallenged. Likewise, there is also merit in the contention that the petitioners do not have an unfettered right to demand extension of the PSC on unilateral terms which suit their interest, overlooking the interest of the State, which is a Trustee of the natural resources under a Constitutional mandate.

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73. The learned Solicitor General had also contended that indirectly and subtly the prayers of the petitioners in the writ petition were based upon principles of promissory estoppel and legitimate expectation, and were misconceived as in Government contracts, wherein overwhelming public interest is involved, concerning the utilization of natural resources held in public trust, the said doctrines, viz, promissory estoppels and legitimate expectations cannot be invoked. We are in complete agreement with the contentions raised by the learned Solicitor General, especially when the decision of Union of India for the extension of the period of PSC on the condition of 10% higher Government share in Profit Petroleum is by way of Policy Decision, uniformly applicable to all PSCs in the Country and has its genesis in public interest and Constitutional mandate.

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77. For all the aforesaid reasons, we hold that there cannot be extension of the Production Sharing Contract unconditionally, on the same terms and conditions which were prevailing 25 years ago i.e. on 15th May, 1995, the effective date. By issuing a mandamus to the contrary, the learned Single Judge has erred in law and the impugned judgment deserves to be set aside.

78. As a cumulative effect of the aforesaid facts, reasons, provisions of the PSC and the judicial pronouncements, we hereby set aside the impugned judgment of the learned Single Judge dated 31 May, 2018 in W.P.(C) No. 11599/2015.

79. It needs to be recorded that the parties have addressed the arguments on merits and had categorically submitted that objections/grounds regarding maintainability of the petition were not pressed."

In view of the aforesaid observations, it has been contended by learned AGI that in Government contracts, wherein overwhelming public interest is involved, concerning the utilization of natural resources held in public trust, the doctrine of legitimate expectations cannot be invoked and the extension policy which is uniformly applicable to all PSCs in the country has its genesis in public interest and Constitutional mandate. It is further submitted that the Government has to make an effort to get the best price for the valuable natural resources of the country as the same cannot be thrown away and such stand of the Government cannot be made subject to judicial review under writ jurisdiction.

xx) Reliance has also been placed on judgment passed by learned Coordinate Bench of this Court in Himalayan Flora and Aromas Ltd. v.

MCD9, wherein MCD had declined to extend the contracts/allotments of the petitioners therein for display of advertisements through unipoles for a further period of two years. The petitioners therein had raised an argument of Legitimate Expectation and the same was rejected by observing that there cannot be any Legitimate Expectation in contractual matters. The relevant paragraphs of the said judgment read as under: -

2025: DHC: 4034 Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 58 of 120 Signing Date:06.01.2026 20:05:22 Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 59 of 120 Signing Date:06.01.2026 20:05:22 **** **** ****

14. The petitioners have not been able to establish that the decision taken by the respondent is arbitrary, unreasonable or discriminatory, in any way. The decision taken by the respondent is plausible, and has been undertaken in exercise of the authority and discretion vested in it. The petitioners cannot claim extension of contract as a matter of right, merely on the basis of satisfactory performance of contract for the initial three years of the contract. The terms of the contract are categorical in their stipulation that the application for extension of contract does not entitle any right of extension of contract. It is clearly stipulated that the Commissioner, MCD or any officer authorized by him, shall be at liberty to grant or reject request for extension of contract. The reasons given by the respondent for rejection of the request of the petitioners for grant of extension are tenable, and this Court will not go into the merits of the said decision , in the absence of any arbitrariness or unreasonableness.

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16. The fact that on previous occasions, extensions have been granted by the respondent to the petitioners or other contractors, does not connote that the respondent is bound to grant such extensions for subsequent contracts also, when a uniform decision has been taken by the respondent to not grant such extensions. No instance has been brought forth before this Court that the respondent is not following its decisions uniformly, by granting extensions to other contractors during the current year, while denying the same to the petitioners. When uniform decisions are being taken by the respondent and no discriminatory treatment has been meted out to the petitioners, no ground is made out to interfere with the decision taken by the respondent in exercise of the authority vested in it.

17. It has been held time and again that Courts ought to exercise judicial restraint in respect of the decisions made by various authorities. In the absence of constitutional or legal violations, the Courts should respect the policy choices made by the authorities. If the decision is within the W.P.(C) 5350/2025 & W.P.(C) 5360/2025 Page 17 of 24 executive's legal authority and has been made following proper procedures, the Courts ought not to interfere, even if the said decision appears unwise or imprudent. It is not the role of the Courts to question the wisdom or fairness of such decisions. Thus, in the case of Kirloskar Ferrous Industries Limited and Another Versus Union of India and Others, 2024 SCC OnLine SC 3192, it has been held as follows:

(Emphasis Supplied) **** **** ****

20. The contention of the petitioners that the subsequent tenders floated by the MCD also contain similar clause regarding extension of contract for two years after initial period of three years, does not benefit the petitioners in any manner. The said clause of the subsequent tenders simply connotes the discretion vested in the MCD for extension of contract, after the initial period of three years, which discretion shall be exercised by the MCD on rational basis. Existence of such a clause for extension does not indicate that such extension has to be granted mandatorily by the MCD.

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25. Considering the aforesaid detailed discussion, no error is found in the decision of the respondent/MCD in declining to extend the contract of the petitioners, for further period."

It is therefore, contended by learned AGI that there cannot be any Legitimate Expectation in contractual matters. It is submitted that a higher standard of judicial non-interference has to be followed in the present case as it involves exploitation of natural resources and 'satisfactory performance' Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 63 of 120 Signing Date:06.01.2026 20:05:22 throughout the term of PSC cannot be sole basis on which contract can be extended further.

xxi) Learned AGI has further submitted that an appeal, LPA 351/2025, by the petitioner/appellant therein against the aforesaid judgment of learned Coordinate Bench in Himalayan Flora and Aromas Ltd. (supra) was also dismissed by learned Division Bench of this Court by observing as under10: -

2025: DHC: 4454-DB Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 64 of 120 Signing Date:06.01.2026 20:05:22 xxii) Learned AGI has, therefore, submitted that there is no fundamental right to carry on a trade with Government of India and the petitioner cannot claim exclusive right to trade with Government of India. It has also been argued that this Court cannot go into the question whether a different view could have been taken by respondent Nos.1 and 2, on the petitioner's extension application as there was no Legitimate Expectation on the part of respondent Nos.1 and 2 as there was neither any practice nor promise nor any statutory obligation on the said respondents to grant extension of PSC in favour of the petitioner. It is also submitted that the extension policy did not provide any promise for absolute right of extension.

xxiii) Reliance has also been placed on the judgement of Hon'ble Supreme Court in Army Welfare Education Society v. Sunil Kumar Sharma11 , to contend that the doctrine of Legitimate Expectation cannot govern the operation of contracts between the parties as in such cases doctrine of promissory estoppel is applicable. It is contended by learned AGI that the Legitimate Expectation was a device created in order to maintain check on arbitrariness in States' action; however, it cannot be made applicable to purely administrative decisions. Attention of this Court has been drawn towards the following observations in Army Welfare Education Society v. Sunil Kumar Sharma (supra): -

The High Court held that the writ petition was maintainable and the said view was upheld by this Court in the aforesaid judgment.

46. The discussion which is relevant for our purposes is contained in paras 15 to 20 of Andi Mukta Sadguru [Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani , (1989) 2 SCC 691] . However, we would like to reproduce paras 15, 17 and 20, which read as under: ( Andi Mukta Sadguru [Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani , (1989) 2 SCC 691] , SCC pp. 698-700) Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 66 of 120 Signing Date:06.01.2026 20:05:22 "15. If the rights are purely of a private character no mandamus can issue. If the management of the college is purely a private body with no public duty mandamus will not lie. These are two exceptions to mandamus. But once these are absent and when the party has no other equally convenient remedy, mandamus cannot be denied. It has to be appreciated that the appellant Trust was managing the affiliated college to which public money is paid as government aid. Public money paid as government aid plays a major role in the control, maintenance and working of educational institutions. The aided institutions like government institutions discharge public function by way of imparting education to students. They are subject to the rules and regulations of the affiliating university. Their activities are closely supervised by the University authorities. Employment in such institutions, therefore, is not devoid of any public character. [ See, The Evolving Indian Administrative Law by M.P. Jain (1983), p. 226.] So are the service conditions of the academic staff. When the University takes a decision regarding their pay scales, it will be binding on the management. The service conditions of the academic staff are, therefore, not purely of a private character. It has super-added protection by University decisions creating a legal right-duty relationship between the staff and the management. When there is existence of this relationship, mandamus cannot be refused to the aggrieved party.

17. There, however, the prerogative writ of mandamus is confined only to public authorities to compel performance of public duty. The "public authority" for them means every body which is created by statute -- and whose powers and duties are defined by statute. So government departments, local authorities, police authorities, and statutory undertakings and corporations, are all "public authorities". But there is no such limitation for our High Courts to issue writs "in the nature of mandamus". Article 226 confers wide powers on the High Courts to issue writs in the nature of prerogative writs. This is a striking departure from the English law. Under Article 226 , writs can be issued to "any person or authority". It can be issued "for the enforcement of any of the fundamental rights and for any other purpose".

20. The term "authority" used in Article 226 , in the context, must receive a liberal meaning unlike the term in Article 12. Article Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 67 of 120 Signing Date:06.01.2026 20:05:22 12 is relevant only for the purpose of enforcement of fundamental rights under Article 32. Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non-fundamental rights. The words "any person or authority" used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party. No matter by what means the duty is imposed. If a positive obligation exists mandamus cannot be denied."

(emphasis supplied)

47. In para 15 the Court in Andi Mukta Sadguru [Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani , (1989) 2 SCC 691] spelled out two exceptions to the writ of mandamus viz.: (i) if the rights are purely of a private character, no mandamus can issue; and (ii) if the management of the college is purely a private body "with no public duty", mandamus will not lie. The Court clarified that since the Trust in the said case was an aided institution, because of this reason, it discharges public function, like government institution, by way of imparting education to students, more particularly when rules and regulations of the affiliating university are applicable to such an institution, being an aided institution. In such a situation, the Court held that the service conditions of academic staff were not purely of a private character as the staff had superadded protection by the University's decision creating a legal right and duty relationship between the staff and the management. Further, the Court explained in para 20 that the term "authority" used in Article 226 , in the context, would receive a liberal meaning unlike the term in Article 12 , inasmuch as Article 12 was relevant only for the purpose of enforcement of fundamental rights under Article 32 , whereas Article 226 confers power on the High Courts to issue writs not only for enforcement of fundamental rights but also non-fundamental rights. What is relevant is the dicta of the Court that the term "authority" appearing in Article 226 of the Constitution would cover any other person or body performing public duty. The guiding factor, therefore, is the nature of duty imposed on such a body, namely, public duty to make it exigible to Article 226.

48. In K. Krishnamacharyulu [K. Krishnamacharyulu v. Sri Venkateswara Hindu College of Engg. , (1997) 3 SCC 571 : 1997 SCC (L&S) 841] , this Court again emphasised that where there is an interest created by the Government in an institution to impart education, which is a fundamental right of the citizens, the teachers who impart the education get an element of public interest in performance of their duties. In such a situation, remedy provided under Article 226 would be available to the teachers.

49. However, both the decisions referred to above pertain to educational institutions and in the said cases, the function of imparting education was treated as the performance of the public duty, that too by those bodies where, the aided institutions were discharging the said functions like government institutions and the interest was created by the Government in such institutions to impart education.

50. In Satimbla Sharma [Satimbla Sharma v. St Paul 's Senior Secondary School, (2011) 13 SCC 760 : (2012) 2 SCC (L&S) 75] , the school therein was initially established as a mission school by Respondent 2. The school adopted the 10+2 system in 1993 and got affiliated to the Himachal Pradesh Board of School Education. Before Independence in 1947, the school was receiving grant-in-aid from the British Indian Government and thereafter from the Government of India up to 1950. Between 1951 and 1966, the school received grant-in-aid from the State Government of Punjab. After the State of Himachal Pradesh was formed, the school received grant-in-aid from the Government of Himachal Pradesh for the period between 1967 and 1976. From the year 1977-1978, the Government of Himachal Pradesh stopped the grant-in-aid. In such circumstances, the teachers of the school were paid less than the teachers of the government schools and the Government-aided schools in the State of Himachal Pradesh. This led to filing of a writ petition in the High Court of Himachal Pradesh seeking a direction to pay the salary and allowances on a par with the teachers of government schools and the Government-aided schools. A learned Single Judge of the High Court allowed the writ petition and directed the respondents therein to pay to the writ petitioners therein salary and allowances on a par with their counterparts working in the government schools from the dates they were entitled to and at the rates admissible from time to time. Respondents 1 and 2 therein preferred letters patent appeal before the Division Bench of the High Court. The appeal came to be allowed and the writ petition filed by the teachers was dismissed."

xxiv) Reliance has also been placed by learned AGI on State of Rajasthan v. Sharwan Kumar Kumawat 12 , to contend that the decision taken by the Government in accordance with a policy in public interest cannot be fettered by applying the principle of Legitimate Expectation. It is contended that the same is a very weak right and if Government decides to introduce fair play, then, one cannot claim entitlement merely on the basis of pending application for extension and long relationship. Attention of this Court has been drawn towards the following observations in Sharwan Kumar Kumawat (supra): -

(emphasis supplied) Fundamental right

18. The question of applicants not having fundamental right in mining is no longer res integra, Monnet Ispat & Energy Ltd. v. Union of India [Monnet Ispat & Energy Ltd. v. Union of India, (2012) 11 SCC 1] may shed some light : (SCC pp. 81-82, para 133) "No fundamental right in mining

133. The appellants have applied for mining leases in a land belonging to the Government of Jharkhand (erstwhile Bihar) and it is for iron ore which is a mineral included in Schedule I to the 1957 Act in respect of which no mining lease can be granted without the prior approval of the Central Government. It goes without saying that no person can claim any right in any land belonging to the Government or in any mines in any land belonging to the Government except under the 1957 Act and the 1960 Rules. No person has any fundamental right to claim that he should be granted mining lease or prospecting licence or permitted Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 71 of 120 Signing Date:06.01.2026 20:05:22 reconnaissance operation in any land belonging to the Government. It is apt to quote the following statement of O. Chinnappa Reddy, J. inHind Stone[State of T.N. v. Hind Stone , (1981) 2 SCC 205] (SCC p. 213, para 6) albeit in the context of minor mineral, '6. ... The public interest which induced Parliament to make the declaration contained in Section 2 ... has naturally to be the paramount consideration in all matters concerning the regulation of mines and the development of minerals.' He went on to say : ( Hind Stone case [ State of T.N. v. Hind Stone , (1981) 2 SCC 205] , SCC p. 217, para 10) '10. ... The statute with which we are concerned, the Mines and Minerals (Development and Regulation) Act , is aimed ... at the conservation and the prudent and discriminating exploitation of minerals. Surely, in the case of a scarce mineral, to permit exploitation by the State or its agency and to prohibit exploitation by private agencies is the most effective method of conservation and prudent exploitation. If you want to conserve for the future, you must prohibit in the present.' "

(emphasis supplied)

20. Kerala State Beverages (M&M) Corpn. Ltd. v. P.P. Suresh [Kerala State Beverages (M&M) Corpn. Ltd. v. P.P. Suresh, (2019) 9 SCC 710 : (2019) 2 SCC (L&S) 821] : (SCC pp. 719-20, paras 14-20) "B. Legitimate expectation

14. The main argument on behalf of the respondents was that the Government was bound by its promise and could not have resiled from it. They had an indefeasible legitimate expectation of continued employment, stemming from the Government Order dated 20-2-2002 which could not have been withdrawn. It was further submitted on behalf of the respondents that they were not given an opportunity before the benefit that was promised, was taken away. To appreciate this contention of the respondents, it is necessary to understand the concept of legitimate expectation.

15. The principle of legitimate expectation has been recognised by this Court in Union of India v. Hindustan Development Corpn. [Union of India v. Hindustan Development Corpn., (1993) 3 SCC 499] If the promise made by an authority is clear, unequivocal and unambiguous, a person can claim that the authority in all fairness should not act contrary to the promise.

16. M. Jagannadha Rao, J. elaborately elucidated on legitimate expectation inPunjab Communications Ltd. v. Union of India [Punjab Communications Ltd. v. Union of India, (1999) 4 SCC 727] . He referred (at SCC pp. 741-42, para 27) to the judgment inCouncil of Civil Service Unions v. Minister for the Civil Service [Council of Civil Service Unions v. Minister for the Civil Service, 1985 AC 374 : (1984) 3 WLR 1174 (HL)] in which Lord Diplock had observed that for a legitimate expectation to arise, the decisions of the administrative authority must affect the person by depriving him of some benefit or advantage which : ( Punjab Communications case [ Punjab Communications Ltd. v. Union of India , (1999) 4 SCC 727] , SCC p. 742, para 27) '27. ... (i) he had in the past been permitted by the decision- maker to enjoy and which he can legitimately expect to be permitted to continue to do until there have been communicated to him some rational grounds for withdrawing it on which he has been given an opportunity to comment; or

(ii) he has received assurance from the decision-maker that they will not be withdrawn without giving him first an opportunity of advancing reasons for contending that they should not be withdrawn.' (AC p. 408)

17. Rao, J. observed in this case, that the procedural part of legitimate expectation relates to a representation that a hearing or other appropriate procedure will be afforded before the decision is made. The substantive part of the principle is that if a representation is made that a benefit of a substantive nature will be granted or if the person is already in receipt of the benefit, that it will be continued and not be substantially varied, then the same could be enforced.

18. It has been held by R.V. Raveendran, J. inRam Pravesh Singh v. State of Bihar [Ram Pravesh Singh v. State of Bihar, (2006) 8 SCC 381 : 2006 SCC (L&S) 1986] that legitimate expectation is not a legal right. Not being a right, it is not enforceable as such. It may entitle an expectant : (SCC p. 391, para

15) Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 74 of 120 Signing Date:06.01.2026 20:05:22 '15. ... (a) to an opportunity to show cause before the expectation is dashed; or

(b) to an explanation as to the cause for denial. In appropriate cases, the courts may grant a direction requiring the authority to follow the promised procedure or established practice.' Substantive Legitimate Expectation

19. An expectation entertained by a person may not be found to be legitimate due to the existence of some countervailing consideration of policy or law. [ H.W.R. Wade & C.F. Forsyth : Administrative Law (Eleventh Edn., Oxford University Press, 2014).] Administrative policies may change with changing circumstances, including changes in the political complexion of Governments. The liberty to make such changes is something that is inherent in our constitutional form of Government.

[Hughes v. Deptt. of Health & Social Security, 1985 AC 776, 788 :

20. The decision-makers' freedom to change the policy in public interest cannot be fettered by applying the principle of substantive legitimate expectation. [Findlay, In re, 1985 AC 318 : (1984) 3 WLR 1159 (HL).] So long as the Government does not act in an arbitrary or in an unreasonable manner, the change in policy does not call for interference by judicial review on the ground of a legitimate expectation of an individual or a group of individuals being defeated."

(emphasis in original and supplied)"

This extract is taken from Sugati Beach Resort Pvt. Ltd. v. Union of India , 2017 SCC OnLine Bom 9418 : (2018) 1 Mah LJ 939 at page 941 It is not in dispute that the lease was for a period of twenty years and the same expired in May, 2017. The clauses relevant in the context of the present dispute are clauses 2, 11, 16, 25 and 28 which read thus:

(emphasis supplied)

6. Perusal of the above clauses clearly indicate that the rights as conferred under the lease agreement on the petitioner to use and utilize the lease property were restricted. It is not in dispute that the lease period was initially for twenty years and there is no mandate under the agreement, for the respondent to renew the same in favour of the petitioner. In any case clause 2 which uses the word "may be renewed" is however would be subject to the conditions as contained in clause 28. The parties have agreed to qualify clause (2) by clause (28) by which the Collector, Diu reserves the right to amend, revoke or modify the lease at his discretion and also withdraw all or any of the conditions at any stage without assigning any reason whatsoever.

7. On the above clear terms as contained in the lease agreement entered between the parties, we do not find that the approach of the respondent-Union Territory Administration is in any manner arbitrary or contrary to law in issuing the order dated 13 October, 2017 in deciding not to grant further extension of lease to the petitioner but to initiate bidding process through retender for entering into a fresh lease. In any event the action to reauction the said government property for a fresh lease to be entered into is being done after completion of twenty years of lease and it is not something premature before the lease period could expire. The petitioner had adequate notice in view of the terms and conditions of the lease deed that at the end of the lease period of twenty years, a consequence of this nature is the fall out of the agreed terms and conditions of the lease deed. It also cannot be accepted that the petitioner being in this business is not aware of the policy of the Union Territory Administration.

8. We are also not impressed on the submission as urged on behalf of the petitioner that there is legitimate expectation of the petitioner for extension of lease in favour of the petitioner. This for the reason that if it was to be so then, clause (2) and clause (28) of the lease deed would not have been framed in the manner they appear in the lease deed, or clause 28 of the lease deed would not have formed part of the lease deed. We Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 77 of 120 Signing Date:06.01.2026 20:05:22 also cannot accept the contention of the petitioner only because certain construction is made and amounts are spent, there would be legitimate expectation of continuation of lease period. Whatever expenditure was incurred or investment made during past twenty years during the subsistence of the lease, was for commercial exploitation of leased property and the petitioner has already reaped financial benefits by commercial use of the lease land in a tourist place like Diu. We, therefore, outrightly reject the submissions of the petitioner on legitimate expectation.

9. We are of the clear opinion that there is nothing arbitrary in the order dated 13 October, 2017 passed by the respondents calling upon the petitioner to vacate the suit premises and to grant an opportunity to the petitioner to enter into an ad hoc agreement of three months to continue in the premises till the tender process is completed. It appears to be the policy of the respondents to avail of a maximum benefit from the Government property and gain more revenue by initiating a new tender process. There would be nothing wrong in such a policy if the Union Territory Administration in public interest desires to enhance its revenue in such a manner. It therefore cannot be said that such a policy would breach any of the legal rights much less fundamental rights of the petitioner. There cannot be any fundamental right guaranteed to the petitioner to compel the respondent-Union Territory Administration to enter into a lease only with the petitioner. It is not the case that the petitioner is precluded from participating in fresh tender which may be floated by the Union Territory Administration and compete with the other market players. However, the intention of the petitioner is to avoid such fresh participation in the fresh bids to be invited by the Union Territory Administration and in some manner hang on to the property raising such untenable contentions as noted by us above.

10. Apart from the above observations, we are also surprised at the approach of the petitioner to invoke the jurisdiction of this Court under Article 226 of the Constitution when the dispute that the petitioner is raising is purely under a lease deed, a contract between the parties, and the contentions as raised are in the nature of a challenge to the terms and conditions of the contract on a spacious plea that the lease deed created an absolute right in the petitioner for extension of the lease, however, which we see none."

In view of the aforesaid, it is submitted that there would be nothing wrong in a policy if the Government in public interest desires to enhance its revenue and merely, because the petitioner has made certain construction or substantial investment or spent amount for improvement in a leasehold property, it cannot on said basis, claim Legitimate Expectation of continuation of PSC in its favour.

xxvi) Reliance has also been placed on the judgment of Hon'ble Supreme Court in Silppi Constructions Contractors v. Union of India & Anr.14 , to contend that the Courts should exercise a lot of restraint while exercising their powers of judicial review in contractual or commercial matters as the same are purely administrative decisions and falls within the realm of contract. These decisions are neither judicial nor quasi-judicial and the State must be given sufficient leeway in this regard. Attention of this Court has been drawn towards the following paragraphs: -

The answer to this lies in the eligibility criteria for other contractors referred to above wherein it has been clearly mentioned that they should Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 80 of 120 Signing Date:06.01.2026 20:05:22 meet the enlistment criteria of Class "SS" MES Contractors. Even otherwise it would be a travesty of justice if enlisted contractors should only be limited companies and unlisted unknown contractors, could be a firm, individual, etc. This is not the purpose of the criteria.

35. In view of the above discussion, we find no merit in the petitions which stand dismissed vide order dated 21-6-2019. Application(s), if any, shall also stand dismissed."

Thus, it is contended that merely because extensions were granted to the petitioner, the same would not lead to conclusion that the petitioner's application for extension must be allowed.

xxvii) At last, learned AGI has submitted that the petitioner in their petition had suppressed material facts and had not placed on record letters/correspondences, as pointed out hereinbefore, which would be relevant for the adjudication of the present petition. The issues raised by the petitioner are disputed questions of facts for which they could have invoked arbitration in terms of the PSC as well as Extension Policy and this Court under Article 226 of the Constitution cannot exercise its jurisdiction to adjudicate on such questions. It is the case of respondent No.2 that if the present petition is allowed, the same would defeat the larger public interest as the Government as a trustee/custodian could do best of the natural resources to generate revenue as it has power to call for competitive bids in terms of the Extension Policy. It is further pointed out that no right was vested in the petitioner to claim extension for a period of 10 years either in the PSC or in the Extension Policy. It is further submitted that the impugned decision was purely administrative in nature and the petitioner is at liberty to take part in the fresh bids which would be called by respondent Nos.1 and 2. Thus, it is submitted Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 81 of 120 Signing Date:06.01.2026 20:05:22 that the present petition be dismissed as the same is not maintainable in the present form.

xviii) Reliance has also been placed by learned AGI on following judgments in support the aforesaid submissions: -

For short, 'SRA' Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 84 of 120 Signing Date:06.01.2026 20:05:22 REJOINDER SUBMISSIONS ON BEHALF OF THE PETITIONER

6. Learned Senior Counsel for the petitioner have made the following rejoinder submissions: -

Attention of this Court has been drawn towards Sections 4, 5, 6, 12 of Oil Fields (Regulation and Development) Act, 1948, and it is contended that the PSC emanates from these provisions, and therefore, it has statutory force. It is further submitted that initially the subject oil field was leased out to respondent No.4/ONGC, and PSC had four parties with their respective Participating Interests (PI) and it is respondent No.4/ONGC which has defaulted in payment of profit petroleum and royalty to the Government of India during the period of interim extensions provided to the petitioner from 2023 till September 2025. As per petitioner, it was only a co-lessee with respondent No.4/ONGC during the said period. Attention of this Court has also been drawn towards Articles 77 , 166 , 297 , 298 , 299 of the Constitution of India and it is contended that origin of PSC and power of Government to Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 85 of 120 Signing Date:06.01.2026 20:05:22 enter into contract for exploration of natural resources of the country emanates from these provisions and thus, the same is in nature of a statute and has statutory force and amenable to writ jurisdiction under Article 226 of the Constitution of India.

ii) Learned Senior Counsel, while placing reliance on a judgment of learned Division Bench of this Court in Union of India v. Vedanta Ltd. and Ors. (supra)24, has submitted that in the said case, it has been held that the Extension Policy of 2017 enacted by respondent No.1 is in the nature of statute and has statutory force. Reliance has been placed on following paragraphs of the said judgment : -

57. The executive power of the Government to regulate and distribute the manner of sale of Natural Resources has been upheld by the Hon'ble Supreme Court in several decisions. Under Entry No. 53 of List-I of Schedule VII read with Article 39(b) of the Constitution of India, the Union has the power, jurisdiction and authority to take a policy decision as has been done in the present case by issuing the policy decision dated 7th April, 2017, to subserve the common good. Article 39(b) of the Constitution of India is extracted hereinunder for ready reference:--

58. It has been held by Hon'ble Supreme Court in Reliance Natural Resources Ltd. v. Reliance Industries Ltd. (supra) in paragraphs 77 and 78 as under:--

(Emphasis supplied)

59. Further, in Energy Watchdog v. CERC, reported as (2017) 14 SCC 80, in paragraphs 48 and 57, Supreme Court held as under:--

(emphasis supplied)

60. We were informed by the Solicitor General that the policy which is applicable uniformly to all the PSCs entered into by the Government was framed after due consideration with the stakeholders, including the respondents herein. The policy has been framed under the Rules of Business under Article 166 of the Constitution of India and under the aegis of the Cabinet Committee of Economic Affairs. Thus, in view of the source of power to issue the policy and the aforesaid judgments, we find force in the contention of the appellants that the policy decision of the Union of India dated 7 April, 2017 has statutory force."

In view of the aforesaid, learned Senior Counsel for the petitioner has submitted that the aforesaid case had arisen out of dispute between the same Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 88 of 120 Signing Date:06.01.2026 20:05:22 parties regarding similar PSC. In the aforesaid circumstances, wherein dispute was with respect to the entitlement of UOI to 10% increase in the share in profit petroleum under PSC on account of extension of its tenure, it has been held by learned Division Bench that the Extension Policy of 2017 has statutory force. It is thus, the case of the petitioner that respondent Nos.1 and 2 cannot lay emphasis on the fact that the dispute(s) arising out of the said Extension Policy are not amenable to writ jurisdiction.

iii) It is, therefore, the case of the petitioner that the extension policy has statutory force and the source of PSC is in Constitution and the same is not an ordinary contract. It is submitted that non-extension of PSC in favour of the petitioner will have huge economic impact as the business involved in more than Rs.1 Lakh Crore and a large number of workers/persons employed by the petitioner would then be rendered unemployed. It is further the case of the petitioner that even in purely contractual relationship, it is to be seen that how Government has entered into contract and any arbitrariness in taking decision under such contracts, which has statutory force, can be subject to judicial review under Article 226 of the Constitution. Reliance has been placed following portion of judgment of learned Coordinate Bench of this Court in W.P. (C) No. 11599/2015 in Vedanta Limited & Ors. v. Union of India & Ors.25 : -

It is further submitted that learned Coordinate Bench in the aforesaid case in similar circumstances had entertained the writ petition and the same was also upheld by learned Division Bench.

iv) On facts, learned Senior Counsel has submitted that the decision of respondent Nos.1 and 2 in rejecting the application of the petitioner seeking extension of PSC was arbitrary as no dispute was ever raised by said respondents during the 25 years of their relationship with the petitioner. It is further submitted that respondent Nos.1 and 2 had not adhered to the timeline provided in Clause 1 of the extension policy with respect to submission, consideration and approval of request for extension of contract. As per said Clause, after submission of the application respondent No.2/DGH had to make recommendation to respondent No.1/MoPNG within six months of such submission. It is pointed out that it was not done so in the present case. It is further the case of the petitioner that as per Clause 2 which provides for Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 91 of 120 Signing Date:06.01.2026 20:05:22 'Fiscal Parameters for Extension', and particularly in Clause 2.1 thereof, the petitioner has been paying the Government share of profit petroleum during the period of interim extension of PSC after 2023 at 10% higher rate what was existing under PSC before 2023. It has been argued that the same would have been a relevant consideration for extension of PSC in favour of the petitioner; however, respondent Nos.1 and 2 have not taken into account the same in the rejection letter/order. It is further submitted that the petitioner was granted five interim extensions after expiry of PSC on 29.06.2023 till the rejection of it's application seeking extension and the performance of the petitioner, during the said period and even 25 years of relationship was not taken into account. It is further submitted that the letters relied upon by learned AGI to show that the petitioner was in default for payment of profit petroleum to the share of Government is an afterthought as no issues were ever raised with respect to such payments prior to the petitioner's filing of application seeking extension of PSC. It is further submitted that if the situation was such that there were issues of payment of profit petroleum or for that matter royalty (this as per petitioner was to be paid by ONGC) to the Government, then question which arises is that why five extensions were granted to the petitioner and if same was the case, then no interim extension should have been granted to the petitioner. It is further submitted that it is only after the application for extension was moved by the petitioner, issues with respect to payment of profit petroleum and outstanding dues were raised by the aforesaid respondents and the same has been done in an arbitrary manner as it was merely an afterthought. Without prejudice to the aforesaid contentions, it has been submitted that the petitioner has, in fact, paid all its dues as referred to in the impugned rejection letter corresponding to its participating interest Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 92 of 120 Signing Date:06.01.2026 20:05:22 under PSC. It is pointed out that respondent No.2/DGH, in complete disobedience of its own policy, had not followed the timeline within which it had to submit its recommendation to respondent No.1/MoPNG and the said recommendation by respondent No.2 which was to be submitted within six months of submission of application by the petitioner/contractor was submitted on 29.12.2021. It is further pointed out that the application for grant of extension of PSC was not only submitted by the petitioner; however, same was submitted by all the parties to the existing PSC. Attention of this Court has been drawn towards the note of contentions filed on behalf of respondent no.4/ONGC wherein, it has been stated that, "There were no default lapses on part of Respondent-ONGC and the dues and outstanding amount referred to in the impugned rejection letter were attributable to the petitioner alone", and it is submitted that the aforesaid stand of respondent no.4 is incorrect and contrary to the arrangement as provided under PSC as the royalty under PSC was to be paid by the lessee/ONGC and the petitioner's liability was only to pay profit petroleum corresponding to its participating interest. It is further submitted that, in case, there is any shortfall in payment of royalty to the Government, then the same will be attributable to respondent No.4/ONGC as after expiry of PSC in 2023, ONGC had not paid the same. It is further submitted that if only hurdle in allowing the application of the petitioner for extension of PSC was default in payment of royalty and profit petroleum, then, the same was not attributable to the petitioner as there were no dues on behalf of the petitioner when application for extension of PSC was made. Attention of this Court has been drawn towards the following averments made in additional affidavit dated 19.12.2025 filed on behalf of the petitioner: -

It is further submitted that as per impugned rejection letter, the dues were of royalty and not of profit petroleum and even otherwise, the petitioner in order to resolve all the disputes as pointed out hereinabove, has, during the pendency of the present petition, paid all the outstanding dues as stated in the impugned rejection letter. It is the case of the petitioner that the reasons stated in the impugned rejection letter/order were merely an afterthought inasmuch as the recommendations of respondent no.2/DGH were absent with respect to the issues with management of mineral oil operations, continuation of petroleum operations without PSC, lease or interim permission, and, creation of encumbrance on assets of the block as mentioned in sub-clauses a, b , c, of Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 94 of 120 Signing Date:06.01.2026 20:05:22 paragraph (iv) of the impugned rejection letter/order. It is further pointed out that the aforesaid dues were not brought to the notice of the petitioner, prior to the filing of extension application. It is further the case of the petitioner that respondent Nos.1 and 2, while acting in arbitrary manner, had directed the petitioner to handover the possession to ONGC and cease from carrying out any further petroleum operation operations at the subject oil block; however, it has not taken into account that respondent No.4/ONGC had not paid Rs.455 Crores in 2021 and was itself in default of payment of royalty. Attention of this Court has been drawn towards a letter dated 13.09.2021 addressed to ONGC by respondent No.2/DGH with respect to payment of requisite royalty under the provisions of Oil Fields (Regulation and Development) Act, 1948, and it is contended that respondent No.4/ONGC was in default of payment of royalty to the Government and this non-payment of royalty along with penalty royalty was the only consideration in rejection of petitioner's application for extension. In view of the same, it is submitted by learned Senior Counsel for the petitioner that the non-payment of royalty along with penalty royalty was attributable to respondent No.4/ONGC and not the petitioner.

v) Learned Senior Counsel for the petitioner has also drawn attention of this Court towards DGH's recommendation dated 29.12.2021 regarding the petitioner's application seeking extension of PSC and it is submitted that in the said letter/recommendation, respondent No.2/DGH had recommended that the petitioner/contractor may be directed to forthwith clear the pending statutory dues and fulfil the prescribed conditions under the Extension Policy as pointed out hereinbefore, for consideration of application for extension of PSC submitted by the petitioner. It is pointed out that the petitioner has during Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 95 of 120 Signing Date:06.01.2026 20:05:22 the pendency of the present petition paid all the dues as mentioned in the impugned rejection letter/order corresponding to its PI.

vi) Attention of this Court has also been drawn towards the recently enacted Petroleum and Natural Gas Rules, 2025, particularly on Rules 5 and 10 which provides for application for grant of petroleum lease and extension of term of petroleum lease respectively. Rule 10(8) provides that, on the expiry of period of 180 days, if the application for extension has not been decided by Central Government or the State Government the same shall be deemed to have been approved. Thus, it is contended that necessity of prompt decision on such application has been now given statutory force, and therefore, the unnecessary delay on part of respondent No.2/DGH in deciding the petitioner's application of extension suffers from vice of arbitrariness.

vii) It is further submitted that the case of the respondent no.2 that they are well within their right to invite fresh bids for development of area and award the field to most competitive bid is contrary to the extension policy as a respondent Nos.1 and 2 had not taken into account Clauses 3.2 (e) & (f) and 4.1 of the extension policy and has arbitrarily rejected the petitioner's application for extension. It is submitted by learned Senior Counsel for the petitioner that Clause 5 of the policy is attracted in the event of failure to comply with conditions mentioned in Clauses 3 and 4; however, in the present case, the past performance of the petitioner, the technical expertise report submitted along with the application seeking extension, and the cumulative a achievement of drilled wells in production since inception, have not been taken into account by respondent Nos.1 and 2.

viii) Learned Senior Counsel for the petitioner has responded to the judgments relied on by learned AGI during the course of arguments by way of following submissions: -

i) With respect to Silppi Constructions Contactors (supra), it is submitted that even in contractual relations, the State is obligated to act fairly and reasonably. It is submitted that the petitioner has complied with all the requirements of extension policy of 2017 and the default is on the part of ONGC in respect of its liability to pay royalty.

ix) In view of the aforesaid submissions, it is submitted on behalf of the petitioner that the petition is maintainable in the present form and it is prayed that if this Court finds that the writ is maintainable then, a status quo order may be granted and respondent Nos.1 and 2 be directed to reconsider the application of the petitioner seeking extension of PSC by giving a proper hearing in accordance with the extension policy before respondent No.2/DGH and notice may be issued in the present petition and respondents be given an opportunity to file reply.

7. Learned AGI for respondent No.2/DGH, while rebutting the aforesaid arguments raised by learned Senior Counsel on behalf of the petitioner, has submitted that the present case is not with respect to termination or grant of contract and the impugned rejection letter/order is purely an administrative decision on the basis of the parameters laid down in policy for grant of extension of PSC and the principles of reasonableness, fairness, and justness are not applicable to the present case. It is further submitted that the parameters provided in the extension policy have not been fulfilled in the present case and therefore the application of the petitioner seeking extension of PSC was rejected. It is further the case of respondent no.2 that the present petition has been filed by the petitioner by suppressing material facts and non- disclosure of material which had bearing on the outcome of the decision of the case. Reliance has been placed on letter dated 21.09.2021 with respect to Government Audit for 2018-19 of subject oil block whereby, attention of the petitioner was drawn towards the fact that all statutory dues and payment due to the Government should have been cleared and the contractor/petitioner should not be defaulter to the Government or any account. It is, therefore, Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 100 of 120 Signing Date:06.01.2026 20:05:22 submitted that non-payment of royalty was not the only consideration in rejecting the application of the petitioner for extension of PSC. It is further submitted that after recommendations were made by respondent no.2/DGH on 29.12.2021, several letters with respect to short payment of profit petroleum and royalty dues to Government of India were addressed to the petitioner along with audit reports. However, said dues were not cleared by the petitioner. It is further the case of respondent no.2 that the petitioner could have invoked arbitration in terms of Clause 6 of the extension policy, if it felt that the decision of rejection was not in accordance with the policy. Thus, it is submitted that the present petition is not maintainable and the same may be dismissed.

8. Learned ASG for respondent no.4/ONGC has submitted that the letter dated 13.09.2021 issued by respondent No.2/DGH with regard to non- payment of royalty by ONGC was subsequently withdrawn and the test for the maintainability of the present petition is that whether the reliefs sought by the petitioner can be granted. It is further submitted that the interim extensions had given no right to the petitioner to continue with PSC and the same was purely an internal measure of facilitation to continue petroleum operations, pending the decision on contract extension.

9. Per contra, learned Senior Counsel for the petitioner have submitted that the present petition is maintainable as the extension policy was transparent mechanism for inviting public investment and as held by learned Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 101 of 120 Signing Date:06.01.2026 20:05:22 Coordinate Bench in Vedanta (supra)26, the extension policy had statutory force. It is further submitted that the arbitration could not have been invoked as the PSC had expired in 2023, and further, in terms of the policy, the arbitration could have been involved during the period of extensions only. It is pointed out that the interim extensions granted to the petitioner have also expired. Thus, it is submitted that the present petition is maintainable and the reliefs sought by way of the present petition can also be granted.

ANALYSIS AND FINDINGS

10. Heard learned Senior Counsel for the petitioner, learned AGI for respondent No.2/DGH and learned ASG for respondent No.4/ONGC and perused the records.

11. It has been vehemently argued that on behalf of respondent Nos. 2 and 4 that the present writ petition is not maintainable and the same should be dismissed in limine.

12. It is a matter of record that the PSC signed between the petitioner and the Government of India had a covenant with respect to the extension of the same, which reads as under: -

13. During the tenure of the PSC, the Government of India came out with the aforesaid Extension Policy titled as "Policy for the Grant of Extension to the Production Sharing Contracts signed by Government of India awarding Pre-New Exploration Licensing Policy (PreNELP) Exploration Blocks.". Object of the said extension policy at the sake of repetition and for completeness is reproduced as under: -

14. A perusal of the same would demonstrate that the said policy was brought in with its main objective as optimal exploitation of the reserves. The policy was thus introduced to enable a contractor, whose tenure of PSC is ending, to seek extension for the same by making necessary arrangements for investment/planning, which would be evaluated as per the criteria provided for in the policy. This being the objective, Clause (1) provides that the contractor should submit the application duly approved by the Operating Committee for extension to the Ministry of Petroleum and Natural Gas (MoPNG) at least two years in advance to the expiry date of the contract but Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 103 of 120 Signing Date:06.01.2026 20:05:22 not more than six years in advance. It also provides that a copy of the said application is to be sent to DGH (respondent No. 2), who would make a recommendation to the Ministry within six months of submission of the application by the contractor and the decision by the Government will be taken within three months of the receipt of the proposal from respondent No.2/DGH. This Clause signifies the importance of timeline for such extensions. The said timeline, admittedly, was not adhered to by the respondent No.1. Further, as per Clause 1 of the policy, the application for extension has to be sent with the approval of the Operating Committee. The Operating Committee as per Article 1.63 of the PSC means, the committee established by that name in the Operating Agreement pursuant to Article 7 , which provides for Operatorship, Operating Agreement and Operating Committee. The Operating Committee included a member representative of respondent No.4/ONGC.

15. The Extension policy, thereafter, in Clause 2 provides for Fiscal Parameters for Extension, Prerequisites for Evaluation (Clause 3) and Criteria for Evaluation of Request (Clause 4). Clause - 5 of the said policy reads as under: -

16. The case of respondent No. 2 is that the petitioner could not satisfy the conditions mentioned in Clauses-3 and 4, and therefore, the extension was not granted to it.

17. It is pertinent to note that Clause 9 of the Extension Policy provides as under: -

Government would also have the right to assign the same to National Oil Companies (NOCs) i.e. ONGC or OIL."

(emphasis supplied)

18. As per the aforesaid sub-clause "b", the Government has reserved its right not to extend the PSC without assigning any reasons. However, in the present case, the respondent No.1 has not exercised this right and has chosen to give reasons for non-extension. In this background, the communication/letter dated 29.12.2021 by respondent No.2/DGH to MoPNG/respondent No.1 with respect to the consideration of application for extension of PSC submitted by the petitioner/contractor is significant which has been reproduced as under: -

(emphasis supplied) It is pertinent to note that this communication was sent to respondent No.1/MoPNG as per Clause 1 of the Extension Policy with respect to recommendation by respondent No.2/DGH.

19. The aforesaid letter refers to notification issued on 13.09.2021 to respondent No.4/ONGC which reads as under: -

(emphasis supplied)

20. During the course of arguments, these communications were placed on record by learned Senior Counsel for the petitioner, and the submission on behalf of learned ASG for ONGC/respondent No. 4, in response to aforesaid letter, was that the same was subsequently withdrawn by respondent No. 2/DGH.

21. During the course of the proceedings, learned AGI has also placed on record communications by way of an affidavit between petitioner and respondent No. 2/DGH whereby, it was emphasised that the issues of statutory dues as well as short payment of profit petroleum and other issues of audit exceptions for the subject oil block had been raised. It is also a matter of record that during the pendency of the application seeking extension of PSC, the petitioner was given 5 interim extensions from 30.06.2023 to 29.09.2024.

22. It is pertinent to note that in one of the communications dated 22.03.2022 relied upon by learned AGI, addressed to the contracting parties including respondent No.4/ONGC, in paragraph 5, it was recorded as under: -

23. In another letter dated 28.01.2025 which has been placed on record, it is recorded as under: -

24. The perusal of the impugned rejection letter would reflect that the primary issues which were raised by respondent No. 2 was with regard to Clauses 3.2 (g) and 4.1 (b) of the Extension Policy which read as under: -

25. The aforesaid issues have been vehemently disputed by the petitioner. It has been contended that they were an afterthought as initially the primary issue was with respect to non-payment of royalty by ONGC/respondent No.4, which is one of the contracting parties being the lessee. On the other hand, it has been contended by learned AGI that the petitioner had not performed its obligations under the contract/PSC which had been duly noted and informed to the petitioner through various communications.

26. Thus, in these circumstances, what remedy can the petitioner avail of with respect to impugned rejection letter/order dated 19.09.2025?

26.1. The arbitration clause in the PSC is provided under Article 33 , relevant recitals/covenants of which reads as under: -"

The aforesaid arbitration clause is with respect to the dispute arising out of the performance of the PSC in respect of various terms of the same. Admittedly, no claim or dispute was raised by the Government of India seeking arbitration with respect to non-payment of royalty and penal royalty or shortfall in share of profit petroleum to the Government. The dispute here is with respect to denial of request of extension on the grounds mentioned Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 112 of 120 Signing Date:06.01.2026 20:05:22 hereinbefore, and, for such redressal there is no alternate mechanism provided for in the PSC or in the Extension Policy.

26.2. The arbitration clause provided in Clause 6 the Extension Policy reads as under: -

The aforesaid clause is in continuation to the Article 33 of the PSC and only provides that the seat of arbitration would be in Delhi, for Production Sharing Contracts, during extension period. The aforesaid clause will not be applicable in the present circumstances as the dispute is with respect to non grant of extension by respondent No.1. Thus, in the considered opinion of this Court the petitioner has no alternate efficacious remedy available qua the impugned rejection letter/order dated 19.09.2025.

27. There is no dispute with regard to the contention raised on behalf of respondent No.2 by learned AGI that the contracts of the nature like in the present case, which may be in the realm of private contracts, is with respect to natural resources, and therefore, the constitutional mandate and public interest will outweigh the right of the contractor as there is no absolute right for extension of PSC. It is also not in dispute that the PSC by its very nature cannot be considered as a mere regular commercial contract and "public trust Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 113 of 120 Signing Date:06.01.2026 20:05:22 doctrine", in cases, like the present one, pertaining to exploitation of natural resources has to be read into. It is also not in dispute that the aforesaid policy which is applicable to all petroleum blocks across the country has to be uniformly applied and that the Government will always have the right not to extend the same in larger national interest and as a trustee of natural resources which are held by the Government of India as interpreted by the Hon'ble Supreme Court in Natural Resources Ltd. v. Reliance Industries Ltd. (supra).

28. The issue raised in the present petition is whether the impugned rejection letter/order by respondent No.1/MoPNG was in consonance with the Extension Policy of 2017 framed by itself. It cannot be disputed that the policy has a statutory force and is binding on both the parties. Any decision in pursuance of that policy, as per settled law, has to be fair and reasonable. It is also not in dispute that any decision taken by the Government of India in pursuance of a statute or a policy framed thereunder can be judicially reviewed, albeit, in limited circumstances, and if, the such decision suffers from the vice of arbitrariness, then, the Constitutional Courts in exercise of Articles 226 of the Constitution can interfere with such decision.

29. This Court in exercise of Article 226 of the Constitution will be circumspect in interfering with the commercial wisdom of the Government with regard to extension and non-extension of the contract or for that matter whether the contract ought to be extended or not but it can surely for a limited purpose examine the process by which such a decision has been arrived at in case where there is an allegation of unfairness. As pointed out hereinbefore, in Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 114 of 120 Signing Date:06.01.2026 20:05:22 terms of Clause-9 the Government has reserved its right in the policy not to extend the contract without assigning any reason. However, the same has not been invoked in the present case.

30. Learned Senior Counsel on behalf of the petitioner has vehemently argued that all the reasons assigned in the final impugned decision are an afterthought inasmuch as from the very inception, the issue raised by respondent no. 2 was non-payment of statutory dues on account of short payment of royalty and penalty royalty, which as per respondent no. 2 was due from the lessee who is respondent No.4/ONGC. Various communications indeed have been placed on record by learned AGI to show that the similar issues with respect to petitioner were also raised by respondent no. 2 regarding short payment of share in profit petroleum to the Government; however, the same has been disputed by the petitioner. It is on this ground, it is contended that there was no opportunity given for the petitioner to explain its stand with regard to payment of said dues, which, during the course of present proceedings, without prejudice, has been paid.

31. At this stage, useful reference can be made to the judgment of Hon'ble Supreme Court in Manohar Lal Sharma v. Narendra Damodardas Modi and Ors.27 , wherein, the Hon'ble Supreme Court was dealing with four writ petitions filed as public interest litigations, challenging the procurement of 36 Rafale fighter jets (Medium Multi-Role Combat Aircrafts-MMCR) by Inter- Governmental Agreement (IGA) of 2016, on ground that certain newspapers 27 (2019) 3 SCC 25: 2018 SCC OnLine SC 2807 Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 115 of 120 Signing Date:06.01.2026 20:05:22 reported a statement claimed to be made by former President of France, Francois Hollande, to the effect that the French Government were left with no choice in the matter of selection of Indian Offset Partners. While disposing of the aforesaid group of writ petitions, the Hon'ble Supreme Court set out the parameters of judicial scrutiny of governmental decisions and observed and held as under: -

(emphasis supplied)

11. It is our considered opinion/view that the extent of permissible judicial review in matters of contracts, procurement, etc. would vary with the subject-matter of the contract and there cannot be any uniform standard or depth of judicial review which could be understood as an across the board principle to apply to all cases of award of work or procurement of goods/material. The scrutiny of the challenges before us, therefore, will have to be made keeping in mind the confines of national security, the subject of the procurement being crucial to the nation's sovereignty.

**** **** ****

15. It is in the backdrop of the above facts and the somewhat constricted power of judicial review that, we have held, would be available in the present matter that we now proceed to scrutinise the controversy raised in the writ petitions which raise three broad areas of concern, namely, (i) the decision-making process; (ii) difference in pricing; and (iii) the choice of IOP."

32. Following the aforesaid judgment of Hon'ble Supreme Court in Manohar Lal Sharma (supra), the learned Division Bench of Hon'ble Bombay High Court in BVG India Ltd. Through its Authorised representative Sangram Sawaant v. State of Maharashtra , through its Chief Secretary and Others28, had observed as under: -

Hence, for a given work, as to what would be the ideal terms and conditions for a contract to be entered into, is completely within the domain of the tendering authority. The Court would not have any expertise to sit in appeal over the tender conditions, the role of the Court is triggered only qua the decision making process. The decision making process would be tested on the touchstone of Wednesbury unreasonableness, malafides and apparent arbitrariness. In the event there is material before the Court indicating that any tender condition is inserted malafide or to suit the needs of a particular bidder and which violates the principles of fairness, non-discrimination and non arbitrariness as enshrined in Article 14 of the Constitution, the Court would certainly exercise powers of judicial review to test the decision making process."

33. Assuming, arguendo, if the decision in pursuance of the aforesaid Extension Policy was taken by the Government of India for awarding extension of PSC to a contractor, the same would be, undoubtedly, within the realms of commercial wisdom of the Government of India. However, if a third party in public interest points out to certain anomalies or terms which would not be in national interest, then the same could be examined by the Constitutional Court in exercise of its power of judicial review. In these circumstances, it cannot be argued that the power of judicial review of the Constitutional Court, in examining such a decision, is completely excluded. Fairness in all executive decisions is the essence of the Right to Equality as provided for under Article 14 of the Constitution of India. If any dispute is raised with respect to fairness of such an action, then, the same can be Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 119 of 120 Signing Date:06.01.2026 20:05:22 examined, albeit, for limited purposes by the Constitutional Court especially when there is no other alternative remedy.

34. In the present case, the petitioner has raised certain issues, as noted hereinabove leading upto the impugned rejection letter/order, which require consideration and the same cannot be properly adjudicated without an appropriate response/counter affidavit on behalf of concerned respondents.

35. In view of the aforesaid, submissions on behalf of respondent Nos.2 and 4 raising preliminary objection with respect to maintainability of the present petition and its dismissal in limine cannot be accepted.

36. Issue notice.

37. Let response/counter affidavit on behalf of the respondents be filed within a period of 4 weeks with an advance copy to the learned counsel appearing on behalf of the petitioner. Rejoinder thereto, if any, be filed within 2 weeks thereafter.

38. In the meantime, the parties shall maintain status quo.

39. List before Roster Bench on 27.02.2026.

40. Judgment be uploaded on the website of this Court, forthwith.

AMIT SHARMA (JUDGE) JANUARY 06, 2026/bsr/ns Signature Not Verified Digitally Signed By:NEETI KUMARI SHARMA W.P.(C) 14738/2025 Page 120 of 120 Signing Date:06.01.2026 20:05:22