Delhi High Court Reverses Arbitration Ruling; Government's $1.55 Billion Claim Weighs on Reliance Industries
India’s most valued company, with a market capitalisation of Rs 15.61 lakh crore, sees its stock price fall over 4.24 per cent year-to-date, erasing Rs 70 thousand crore from its market cap. In the last six months, the stock has declined 22.79 per cent
Reliance Industries Ltd (RIL) Shares opened lower on Tuesday’s trading session at Rs 1,165 from the previous close and further slipped to the day’s low of Rs 1,159 by 11:00 AM. Negative sentiment built around the stock as RIL disclosed that the Ministry of Petroleum and Natural Gas has raised a demand of $2.81 billion from the company, along with BP Exploration (Alpha) Limited and NIKO (NECO) Limited, over a dispute regarding gas migration from ONGC’s blocks to the KG-D6 block.
The claim is related to a long-standing legal battle dating back to 2018 when the Government of India alleged that the KG-D6 Consortium, led by RIL, had gained from gas migration from ONGC’s fields, leading to a demand of approximately $1.55 billion.
On March 4, 2025, RIL’s stock dropped 1 per cent to an intraday low of Rs 1,159.25 on the BSE following the company’s disclosure that the Division Bench of the Delhi High Court had reversed a prior arbitration ruling that was in its favor. The judgment reinstates the government's claim against RIL and its consortium partners.
Previously, RIL and BP Exploration (Alpha) Limited and NIKO (NECO) Limited had won an arbitration case against the Government of India concerning the gas migration dispute. A single judge of the Delhi High Court had upheld this ruling on May 9, 2023, dismissing the government’s challenge.
DSIJ's 'Large Rhino' service recommends blue chip stocks of Large Cap companies that have leadership positions in their category. If this interests you, do download the service details here.
However, in an appeal filed by the Government of India, the Division Bench of the Delhi High Court overturned the arbitration ruling on March 3, 2025. As a result of this decision, the Ministry of Petroleum and Natural Gas has now raised a fresh demand of $2.81 billion against the production-sharing contract (PSC) contractors—RIL, BP Exploration (Alpha), and NIKO (NECO).
RIL, in an official statement, has maintained that the Division Bench’s judgment and the resulting demand are legally unsustainable. The company intends to challenge the ruling and expects no financial liability from this dispute.
Despite RIL’s stance, investor sentiment has taken a hit, contributing to the stock's decline. So far in 2025, RIL’s stock price has corrected by 4.24 per cent on a year-to-date basis, wiping out over Rs 70 thousand crore from its market capitalisation. Over the last six months, the stock has dropped by 22.79 per cent.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice.