SC NOTICE TO VEDANTA, 2 OTHERS ON PLEA AGAINST $499 MN RECOVERY
NEW DELHI: The Supreme Court on Wednesday issued notice to Vedanta Ltd, Ravva oil Ltd and Videocon Industries Ltd in the plea seeking stay on Delhi high court’s order allowing the enforcement of the arbitrations award allowing Vedanta Ltd and Videocon Industries Ltd to recover $499 million instead of $198 million capped by the government for development of Ravva oil and gas fields in the state of Rajasthan.
The apex court bench headed by Justice S Abdul Nazeer observed in its order, “Until further orders, parties to maintain status quo, existing as on today.”
The petition has been filed by Government of India through secretary of ministry of petroleum and natural gas against Vedanta, Ravva oil and Videocon Industries.
The bench also comprising Justices Indu Malhotra and Aniruddha Bose directed the replies to be filed before July 15 and the same to be exchanged between the parties. The case will be next heard on July 22.In the 144 page long petition, the origin of the dispute from 1993 to 2020 has been enumerated in detail.
The petition states that a Production Sharing Contract (PSC) for extracting oil and gas from an offshore field discovered and partly developed by ONGC, the National Oil Company (“NOC”), was entered into between the petitioner (Indian government) and the respondent (Cairn Indian Ltd, predecessor of Vedanta) wherein it was expressly stipulated that the respondent should carry out the enlisted works which included drilling of 21 wells at the capped cost of $188.98 million plus 5% which is known as the Base Development Cost (BDC).
Under PSCs, costs incurred by contractors in petroleum operations are ordinarily and fully recoverable from production of petroleum. However, certain PSCs, such as the one signed between the two parties, provided a cap on the amount of costs recoverable.
As such, any cost recovery beyond the limit of BDC would constitute a wrongful loss to the public exchequer and would be against the financial interests of India.