Point of Law; Contract - Extention of Contract - Terms conditions - There cannot be extension of Production Sharing Contract unconditionally, on same terms and conditions which were prevail

JUDGMENT :

D.N.PATEL, Chief Justice

1. Being aggrieved and feeling dissatisfied by the judgment and order of the learned Single Judge dated 31st May, 2018 in W.P.(C) No.11599/2015, the original respondent Nos. 1 and 2 have preferred the present Letters Patent Appeal. Learned Single Judge has vide the impugned judgment allowed the writ petition and directed appellant No.1 herein/Union of India to extend the tenure of the contract in question for a period of 10 years beyond its current term i.e. 14th May, 2030 on the same terms and conditions as existed on 15th May, 1995, when the contract was initially executed. The contention of the appellants herein, however, was that on extension of the tenure of the contract, the Government of India (hereinafter referred to as ‘GoI’) is entitled to 10% increase in the share in ‘Profit Petroleum’ under the Production Sharing Contract. As the learned Single Judge has not accepted the contention of the original respondent Nos. 1 & 2, the present appeal has been preferred.

2. Extension of the Production Sharing Contract (hereinafter referred to as ‘PSC' for the sake of brevity) dated 15th May, 1995 for Rajasthan Block (RJ-ON-90/1), and the terms of its extension including interpretation of its Clauses, especially Article 2.1, is the core issue for consideration before this Court. For the sake of convenience, original respondent nos. 1 and 2 are collectively referred to as appellants and Directorate General of Hydrocarbons (appellant No.2), wherever required to be separately referred is referred to as DGH. The original petitioners are referred to as petitioners. Petitioner No.1 in the writ petition was Cairn India Ltd. and is now known as Vedanta Ltd. and is respondent No.1 herein. Oil and Natural Gas Corporation Ltd. (respondent No.4) is referred to as ONGC.

BRIEF FACTUAL CONSPECTUS

3. At the outset, it needs to be pointed out that the question involved in this appeal is an extension of a Production Sharing Contract between the original petitioner (Respondent herein) and the Government of India with regard to exploration, exploitation and sale of petroleum and natural gas. The Production Sharing Contract, by its very nature, is a different nature of contract where a private party shares the national wealth/natural mineral by exploiting, excavating and selling the same and gives to the Government of India its share called “profit petroleum”. This contract, therefore, cannot be considered as mere regular commercial contract in view of the fact that all such natural resources are held by the Government of India for and on behalf of People of India and as a trustee. Undisputedly, the Hon’ble Supreme Court has read ‘public trust doctrine’ in case of natural resources which are ‘vested’ in the Government of India as a trustee.

The following conspectus of facts needs to be borne in mind, which are not in dispute-

(a) The question pertains to a Production Sharing Contract which is entered into by Union of India in discharge of its sovereign function and entered into and executed in the name of Hon’ble President of India as a trustee of the citizens of the country.

(b) The term of Production Sharing Contract having the initial period of 25 years between the Appellant-Union of India and the respondent company has expired in the year 2020 as the initial contractual period commenced from the year 1995.

(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 con