Bombay HC Rejects CBI Probe into Reliance Gas Theft

In a ruling with profound implications for India's energy sector litigation, the Bombay High Court on March 27 dismissed a petition seeking a Central Bureau of Investigation (CBI) probe against Reliance Industries Limited (RIL) and its Chairman, Mukesh Dhirubhai Ambani, for allegedly stealing over USD 1.55 billion worth of natural gas from Oil and Natural Gas Corporation (ONGC) fields in the Krishna Godavari (KG) Basin. A bench comprising Chief Justice Shree Chandrashekhar and Justice Suman Shyam pronounced the order in open court, refusing relief to petitioner Jitendra P. Maru, who had urged registration of an FIR for offenses including theft, dishonest misappropriation, and criminal breach of trust. The decision caps a contentious saga blending commercial arbitration, technical disputes over gas migration, and attempts to criminalize corporate conduct, underscoring judicial caution in escalating civil energy disputes into criminal matters.

The dismissal, though details of the order remain unavailable publicly, aligns with courts' growing reticence to mandate probes absent compelling prima facie criminality, especially in high-stakes sectors like oil and gas where technical complexities often blur lines between sharp business practices and outright fraud.

The Krishna-Godavari Basin Gas Dispute: A Decade-Long Saga

The KG Basin, off the coast of Andhra Pradesh, ranks among India's most prolific hydrocarbon frontiers. In the early 2000s, RIL's transformative discoveries in its KG-D6 block under a Production Sharing Contract (PSC) with the government propelled it to energy giant status, promising to reshape India's gas landscape. However, disputes erupted over gas allegedly flowing from adjacent ONGC blocks into RIL's wells—a phenomenon RIL attributes to natural "migration," while critics decry deliberate engineering.

ONGC first flagged unauthorized extraction in 2013, reporting it to the Government of India. The petitioner alleged that from 2004 to 2013-14, RIL orchestrated a scheme involving sideways drilling from its contracted deep-sea wells into ONGC's reservoirs, siphoning gas undetected. This, Maru claimed, constituted a "massive organized fraud," with the conspiracy purportedly hatched in Mumbai, vesting Bombay High Court with jurisdiction under Article 226 of the Constitution.

The stakes are enormous: The AP Shah Committee later pegged the pilfered gas at over USD 1.55 billion, plus USD 174.9 million in interest—a sum that could strain even RIL's formidable balance sheet and ripple through public sector finances.

Petitioner's Grave Allegations

Jitendra Maru, an activist and Indian citizen, filed the public interest litigation (PIL) invoking the High Court's extraordinary writ powers. He sought directions to the CBI and Union of India to:

Register an FIR under relevant Indian Penal Code (IPC) sections for theft (Section 378), dishonest misappropriation (Section 403), criminal breach of trust (Section 405), and conspiracy (Section 120B).
Conduct searches and seize documents, including drilling data, PSCs, D&M reports, and Shah Committee findings.
Prosecute RIL, Ambani, directors, and unknown accomplices.

Maru described the process as a “massive organised fraud,” arguing that RIL's actions breached trust reposed under government contracts and caused willful loss to ONGC, a public entity. The plea emphasized Mumbai's role as RIL's headquarters, positioning the Bombay HC as the appropriate forum despite parallel Delhi proceedings.

Earlier, the court had issued notices to CBI and the Centre, eliciting responses that likely informed the bench's dismissal.

Damning Reports from Experts

Maru's case hinged on two authoritative probes:

De Golyer and MacNaughton (D&M) Report : This independent Texas-based consultancy confirmed RIL had tapped gas from ONGC wells without permission . Their technical analysis debunked RIL's migration defense, pointing to reservoir connectivity engineered via drilling trajectories.
AP Shah Committee Report : Headed by retired Delhi High Court Justice A.P. Shah, it quantified the extraction at USD 1.55 billion, applying conservative pricing and interest. As per sources: "Subsequently, the AP Shah Committee quantified the stolen gas at over USD 1.55 billion, with accrued interest of USD 174.9 million."

RIL countered that gas was migratory under PSC terms, but these reports lent credence to allegations of deliberate diversion, fueling calls for criminal scrutiny.

Arbitration Award Overturned on Public Policy Grounds

Parallel to criminal pleas ran a civil arbitration. RIL secured a favorable arbitral award against ONGC, but the Delhi High Court Division Bench, in a February 14, 2025 order, allowed the Union's appeal and set it aside. The court held: "The court concluded the award was against public policy and had set aside the order in favour of Reliance."

This invokes Section 34(2)(b)(ii) of the Arbitration and Conciliation Act, 1996, where awards conflicting with India's "public policy"—including fundamental policy of contract law or fraud—face invalidation. The ruling revived ONGC's claims but stopped short of criminal referral, highlighting a judicial preference for civil remedies in commercial pacts.

High Court Proceedings

The Bombay bench heard arguments post-notices to respondents. Maru pressed for CBI intervention, citing unrebutted reports and Delhi HC's public policy finding as evidence of fraud. However, absent the order, inferences point to standard grounds: lack of cognizable offense, ongoing civil remedies, or jurisdictional overreach amid Delhi's primacy in arbitration matters.

As one source noted: "A bench of Chief Justice Shree Chandrashekhar and Justice Suman Shyam refused relief to the petitioner, Jitendra Maru."

Legal Ramifications and Judicial Reasoning

The dismissal exemplifies key principles:

Criminal Threshold in Commercial Disputes : Post- Lalita Kumari v. State of UP (2014), courts verify cognizability before directing FIRs (CrPC Section 156(3)). Here, gas migration may be tortious/negligent but not ipso facto criminal without mens rea proof.
Jurisdictional Nuance : Mumbai's claim via conspiracy origin clashes with Delhi's arbitration locus, risking forum-shopping.
Public Policy Interplay : Delhi HC's ruling aids civil recovery but doesn't mandate criminality; courts avoid double-barreling absent fresh evidence.
PIL Abuse Risks : Frequent PILs seeking agency probes burden courts, prompting stricter scrutiny ( State of Uttar Pradesh v. Harishankar , 2023).

RIL's defense—that gas migrated naturally per geology—resonates with ArcelorMittal Nippon Steel v. Essar Steel (2021), prioritizing commercial interpretation.

Implications for Energy Sector Litigation and Arbitration

For legal professionals, this reinforces arbitration's primacy in PSC disputes, tempered by public policy safeguards. Energy lawyers must audit drilling tech against "no-drainage" covenants, anticipating D&M-style forensics.

It signals wariness toward criminalizing technical lapses: India's 3,000+ pending corruption cases (many corporate) underscore probe fatigue. Investors in KG Basin—vital for India's 2030 net-zero goals—gain reassurance against frivolous FIRs, but ONGC's plight highlights PSUs' vulnerability.

Practitioners should eye appeals; Maru may approach Supreme Court under Article 32/136. RIL faces potential civil damages, while regulators like DGH may tighten block approvals.

Looking Ahead

The Bombay HC's rejection closes one chapter but not the book. With Delhi HC's arbitration set-aside, ONGC pushes for recovery, potentially via SLRA or fresh arbitration. For Mukesh Ambani's Reliance, it's a tactical win preserving reputation amid green energy pivots.

This saga underscores India's maturing jurisprudence: Balancing commercial certainty with accountability in a USD 100B+ energy market. Legal eagles will watch for SC intervention, which could redefine "fraud" in extractives.