SC appoints ex-judge Ranjana Desai to mediate ONGC-RIL gas dispute

The appointment follows the court’s earlier efforts to encourage the parties to explore an out-of-court settlement

The Supreme Court on Friday appointed its former judge, justice Ranjana Prakash Desai, to mediate the high-stakes Krishna-Godavari (KG) basin gas migration dispute between the Centre and a Reliance Industries Limited (RIL)-led consortium, after being informed that settlement talks between the two sides had failed to yield a viable solution.

A bench, comprising Chief Justice of India (CJI) Surya Kant and justices Joymalya Bagchi and Vipul M Pancholi, requested justice Desai to act as the sole mediator and take the assistance of two domain experts, one each proposed by the parties, to explore an amicable resolution to the long-running dispute over extraction of natural gas with state-run Oil and Natural Gas Corporation (ONGC).

The appointment follows the court’s earlier efforts to encourage the parties to explore an out-of-court settlement. The matter had been adjourned on several occasions after the consortium expressed its willingness to approach the Union government for conciliation or mediation.

However, attorney general R Venkataramani informed the bench on Friday that the discussions had not succeeded. “Settlements have not come through. There are two courses available: this court can decide the matter on merit or appoint a mediator to explore the possibility of settlement,” Venkataramani told the bench.

Senior advocate Kapil Sibal, appearing for RIL, suggested that the court could instead appoint a mediator empowered to seek expert assistance and decide the dispute.

Acceding to the joint request, the bench also, favoured mediation, citing Justice Desai’s experience in handling complex commercial matters.

“We can ask justice Ranjana Prakash Desai to mediate given her expertise in dealing with commercial matters. Personally, I have seen her handling very complex matters of commercial nature,” the bench observed.

Senior advocate Abhishek Manu Singhvi, also appearing for the consortium, agreed that the mediator should have expert assistance. The bench said justice Desai could appoint two domain experts, as suggested by the parties, to assist her in the exercise.

In its order, the court recorded that both sides had earlier sought to explore an amicable settlement and that the matter had consequently been adjourned from time to time. “We are today informed that parties themselves are unable to find a viable solution. On their behalf, we request former judge of this court, justice Ranjana Prakash Desai, to act as the sole mediator,” stated the order.

The bench left it to justice Desai to determine the schedule for the proceedings, declining to impose a timeline after the attorney general suggested that one be fixed for the parties to make their presentations. Counsel for both sides and the attorney general assured the court of their assistance. The parties were asked to contact Justice Desai during the day or on Saturday to fix a date in accordance with her schedule.

Justice Desai, who retired from the Supreme Court in October 2014, had a judicial career spanning the Bombay High Court and the top court. She was elevated as a judge of the Bombay High Court in 1996 and served as a judge of the Supreme Court from September 2011 until her retirement. During her tenure, she dealt with a wide range of matters, before subsequently heading several important commissions and committees, including Appellate Tribunal for Electricity and Delimitation Commission of India.

The dispute centres on allegations that natural gas from ONGC’s offshore blocks migrated into the adjoining KG-D6 block operated by the RIL-led consortium and was extracted between 2009 and 2013. The Union government has sought disgorgement of the gains allegedly made by the consortium, claiming nearly $1.5 billion, besides approximately $174 million in interest.

The controversy emerged in 2013 when ONGC alleged that the consortium had drilled wells close to the boundary of its fields and benefited from gas that had migrated from its reservoirs, resulting in what it described as “unjust enrichment”. The consortium has consistently denied any wrongdoing, arguing that the movement of hydrocarbons across underground reservoirs is a natural geological phenomenon driven by pressure differences and cannot be prevented through artificial means.

The litigation originates from a production sharing contract executed in 2000 between the Centre and the consortium for exploration and extraction of natural gas in the KG basin off the Andhra Pradesh coast. Commercial production from the KG-D6 block began in April 2009. At the relevant time, RIL held a 60% participating interest, while BP Plc and Niko Resources held 30% and 10%, respectively.