Supreme Court Steers Reliance-Centre KG Basin Gas Battle Towards Mediation, Appoints Justice Ranjana. P. Desai as Mediator
A multi-year, multi-forum dispute over USD 1.74 billion and the ownership of migrated gas gets a new route to resolution.
(By Syed Ali Taher Abedi)
New Delhi, 30 October 2026: After years of arbitration and appellate litigation, the Supreme Court of India has referred the contest between Reliance Industries Limited (RIL) and the Union Government over natural gas extraction in the Krishna-Godavari (KG) basin to mediation.
A bench of Chief Justice of India Surya Kant, Justice Joymalya Baghchi and Justice V. Mohana asked former Supreme Court judge Justice Ranjana Prakash Desai to act as mediator. The bench also asked her to work with two domain experts, whose names are to be proposed by the parties.
Why the Court Stepped In
The Court noted that both sides had repeatedly sought adjournments to explore a negotiated settlement, but these efforts had not produced a workable outcome.
Attorney General for India R. Venkataramani, appearing for the Union, and Senior Advocate Kapil Sibal, appearing for RIL, confirmed that their discussions had not resolved the matter.
In light of this, and at the parties’ own request, the Court appointed a mediator instead of proceeding directly to a full hearing.
The Dispute in Brief
The controversy centres on allegations that RIL drew natural gas that had migrated from a neighbouring block operated by the Oil and Natural Gas Corporation (ONGC) into RIL’s own block.
ONGC contended that the reservoirs in the two blocks were hydrocarbon-connected, allowing gas to flow across the boundary.
A technical study by DeGolyer and MacNaughton reportedly found such connectivity. The Union Government then constituted a committee under former Supreme Court judge Justice A.P. Shah. Acting on that committee’s findings, the Government issued RIL a demand notice for roughly USD 1.74 billion plus interest, for the alleged extraction of migrated gas.
The Arbitral Award and the High Court’s Reversal
RIL challenged the demand in arbitration under the Production Sharing Contract (PSC) that governs its operations.
By majority, the tribunal found that RIL had committed certain contractual breaches, but held that they were not serious enough to be a material violation justifying the relief the Government sought.
The Union challenged that award in the Delhi High Court. In February 2025, a Division Bench set it aside for patent illegality. It reasoned that the Government, as custodian of the nation’s natural resources, could not be taken to have consented to the extraction of migrated gas merely because it stayed silent.
The High Court stressed that the State holds natural resources in trust for the people, and that their extraction must conform to the governing legal and contractual framework. It also rejected the idea that the alleged contractual violations were trivial.
RIL’s challenge to that decision is now before the Supreme Court as SLP (C) No. 17584/2025, titled Reliance Industries Limited v. Union of India & Ors.
What This Means
The referral does not decide the merits of the dispute. It gives the parties a structured, expert-assisted attempt at settlement before the apex court takes up the legal questions around arbitral finality, patent illegality and the State’s trusteeship over natural resources. If mediation fails, the matter returns to the Court for adjudication.
