Doma, Chatterjee, Mr. Ms. Abhishek Kr. Pandey Mr. Raman Yadav, Advocates. Sayanti v. RELIANCE INDUSTRIES LIMITED ORS

Judgment

1. The Union of India (through the Ministry of Petroleum & Natural Gas of the Government of India)1, by virtue of the present appeal under Section 37 of the Arbitration and Conciliation Act, 19962 read with Section 13(1) of the Commercial Courts Act, 2015, seeks to assail the order dated 09.05.20233 passed by the learned Single Judge in O.M.P. (COMM) 487/2018, whereby the application under Section 34 of the Act preferred by it, against the Arbitral Award dated 24.07.20184 rendered by a 2:1 majority of the Arbitral Tribunal5 was rejected by the learned Single Judge. Factual Narrative: 2. The UOI on 12.04.2000, entered into a Production Sharing Contract6 with both M/s. Reliance Industries Limited7, who is the respondent no. 1 before us and one Niko Limited8, who is the respondent no. 3 before us, in respect of Block Kg-DWN-98/3 situated in the Krishna-Godavari Basin off the coast of Andhra Pradesh9 , with a Participating Interest of 90% and 10% respectively. Soon thereafter, by way of a supplementary contract dated 1hereinafter referred to as ‘UOI’ [Respondent before the learned Arbitral Tribunal; petitioner before the learned Single Judge] 2hereinafter referred to as ‘Act’ 3hereinafter referred to as ‘impugned order’ 4hereinafter referred to as ‘Arbitral Award’ 5hereinafter referred to as ‘AT’ 6hereinafter referred to as ‘PSC’ 7hereinafter referred to as ‘RIL’ [Claimant before the learned Arbitral Tribunal; respondent before the learned Single Judge] 8hereinafter referred to as ‘Niko’ 9hereinafter collectively referred to as ‘Reliance Block’ FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23

21.02.2011, RIL transferred a portion of its ‘Participating Interest’ under the PSC in favor of one British Petroleum Exploration Limited10 , the respondent no. 2 before us. 3. In the said PSC, RIL and Niko as the ‘contractor’ had the right to take Cost Petroleum in accordance with the provisions of Article 15 of the said PSC; the right to take its Participating Interest share of Profit Petroleum in accordance with the provisions of Article 16 of the same PSC; the right to receive its Participating Interest share of any incidental income and receipts arising from Petroleum Operations and the obligation to contribute its Participating Interest share of cost and expenses including Contract Cost. 4. The UOI, also entered into another PSC with one Cairn Energy India Limited11 in respected of the Block KG-DWN-98/2 and also with Oil and Natural Gas Corporation Limited12 qua Block KG-OS-IG. Later on, ONGC acquired rights from CEIL qua Block KG-DWN-98/2. Interestingly, both the Block KG-OS-IG and Block KG-DWN-98/213 turned out to be adjoining blocks to the Reliance Block. 5. On 25.09.2000, RIL was granted a Petroleum Exploration License 14 qua the Reliance Block w.e.f., 07.06.2000 for a period of seven years, whereafter, from September 2001 till March 2002, RIL carried out 3D seismic survey in the Reliance Block and notified it to the UOI. 10hereinafter referred to as ‘BPEL’ 11hereinafter referred to as ‘CEIL’ 12hereinafter referred to as ‘ONGC’ 13hereinafter collectively referred to as ‘ONGC Block’ 14hereinafter collectively referred to as ‘PEL’ FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23

6. On 26.11.2002, preliminary results qua Original Gas in Place15 was prepared by one M/s. DeGolyer and MacNaughton16 and forwarded by RIL to the UOI. The above was then followed by a Final Report by the very same D&M to the Director General of Hydrocarbons17 7. Thereafter, though, the very same D&M also submitted an Appraisal on 31.01.2003. Report on 06.11.2003 for Niko 18 however, the same was neither forwarded to the UOI nor the DGH. 8. Thereafter, on 26.05.2004 RIL submitted an Initial Development 19 qua 3 wells, i.e., Well 1 (D1), Well 2 (D2) and Well 3 (D3) situated Plan in the Reliance Block, to the UOI. The said IDP was approved by the UOI in November 2004. Subsequently, RIL submitted an addendum to the above IDP20 on 20.10.2006 to the Management Committee appointed in terms of Article 6 of the PSC, who eventually approved it in December 2006 itself. 9. It was only then on 01.04.2009 that RIL commenced commercial production of gas in the Reliance Block in accordance with the two aforesaid approvals granted to it in IDP and AIDP. Genesis involved: 10. It was during the existence of PSC and though RIL was working in the Reliance Block and the ONGC was working in the ONGC Block, certain disputes arose, whence ONGC addressed a letter dated 22.07.2013 15hereinafter collectively referred to as ‘OGIP’ 16hereinafter collectively referred to as ‘D&M’ 17hereinafter collectively referred to as ‘DGH’ 18hereinafter collectively referred to as ‘D&M 2003 Report’ 19hereinafter collectively referred to as ‘IDP’ 20hereinafter collectively referred to as ‘AIDP’ FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23 to the UOI stating that there was “… …evidence of lateral continuity of gas pools… …” inter-se the Reliance Block and the ONGC Block i.e., the blocks were connected and there was migration of gas inter-se them. 11. The above led to filing of W.P.(C) 3054/2014 by ONGC before this Court against the UOI and RIL, primarily claiming that since the gas reservoirs of the Reliance Block and the ONGC Block were inter- connected, it resulted in the migration of natural gas, and that RIL had been ‘unjustly enriched’ by producing and selling the migrated gas from the ONGC Block. 12. In the meanwhile, during the pendency of the said W.P.(C) 3054/2014, ONGC and RIL entered into an “Agreement for Project Management of Independent Third-Party Study” without prejudice to the rights and contentions of the parties under the PSC, appointing D&M vide letter of Award dated 03.07.2014 to undertake an independent third-party study of the alleged continuity and migration of gas, as contended by the ONGC, inter-se, the Reliance Block and the ONGC Block. The DGH was also appointed as a ‘Facilitator’ thereof. 13. Later on, a learned Single Judge of this Court vide order dated

10.09.2015, disposed of the said W.P.(C) 3054/2014 with certain directions to the parties for co-operating with D&M and also to furnish all information so required by the D&M for the study of connectivity, and furthermore that UOI would take a decision within a period of six months of the submission of the D&M Report qua the issue of alleged connectivity and migration of gas, as raised by ONGC therein. FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23

14. The relevant portion of the said order dated 10.09.2015 passed by the

learned Single Judge of this Court in said W.P.(C) 3054/2014 is as under:- “18. Accordingly, the petition is disposed of with the following directions: (I) All parties concerned shall co-operate fully with M/s. DeGolyer & MacNaughton, being the independent agency appointed by the respondent No.1 UOI, and shall promptly furnish all information, particulars and data required to enable and assist the said agency to submit the report as soon as possible; (II) Upon report being submitted, copies thereof would be supplied to the interveners, petitioner, respondent No.3 RIL and / or such other persons who may be found entitled thereto; (III) The interveners, petitioner as well as the respondent No.3 RIL would be entitled to make their representations to the Government of India with respect to the said report and the Government of India shall, for taking decision on the action if any required on the said report, follow such procedure as it may be required to take and deem necessary, having regard to the principles of transparency, fairness and natural justice; (IV) The respondent No.1 UOI shall take a decision on the action to be taken on the basis of the report aforesaid within a period of six months of the submission thereof by M/s. DeGolyer & MacNaughton; (V) The party/s remaining aggrieved from the decision so taken / not taken by the respondent No.1 UOI / Government of India shall have remedies in accordance with law; (VI) The petitioner as well as interveners are also granted liberty to, if feel the need, apply for revival of this petition, subject of course to all the pleas of the respondents, including as already taken and as to the very maintainability of this petition. This direction shall however not dilute in any manner the directive aforesaid of the Government of India to the PSUs.”

15. Thereafter, the D&M submitted its Final Report dated 19.11.201521 concluding that “the integrated analyses indicated connectivity and continuity of the reservoirs across the blocks operated by ONGC and RIL”. 21hereinafter collectively referred to as ‘D&M 2015 Report’ FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23 It is for these reasons that the UOI constituted a single member committee of Hon’ble Mr. Justice A.P. Shah (Retd.)22 to consider the D&M Report 2015 and to recommend a future course of action in light of the findings therein. However, RIL aggrieved by the stand taken by the DGH before the Shah Committee addressed a letter to the UOI, and withdrew its participation in the hearings before the said Shah Committee. 16. Thereafter, on 29.08.2016 the Shah Committee issued its Final Report, based whereon, the UOI raised a Demand Notice, for USD 1,552,071,067.00 as computed provisionally along with interest till

31.03.2016 and of USD 174,905,120.00 towards revised additional cumulative Profit Petroleum claimed to be receivable till 31.03.2016, for disgorgement of unjust enrichment claimed to have been made by RIL due to the migration of gas, upon RIL. Arbitral Proceedings: 17. In response, RIL, invoking the arbitration clause in terms of Article 33 of the PSC, issued a Notice of Arbitration dated 11.11.2016 to the UOI. Whereafter, the 3 member AT was constituted, before whom RIL in its Statement of Claim sought the following reliefs: - “191.1. Declaring that Contractor has produced all hydrocarbons from its Contract Area by conducting Petroleum Operations reviewed and approved by GOI;

191.2. Declaring that Contractor has the right to produce all hydrocarbons from wells drilled in its Contract Area by conducting Petroleum Operations reviewed and approved by GOI, which may include hydrocarbons that could have migrated to those wells from an adjacent block; 22hereinafter referred as ‘Shah Committee’ FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23

191.3. Declaring that Contractor is entitled to retain all benefits from, and cost recover for, the production referenced in paragraphs 191.1 and 191.2 above in accordance with the provisions of the PSC;

191.4. Declaring that Contractor has paid GOI both Profit Petroleum and royalty for the production referenced in paragraphs 191.1 and 191.2 above in accordance with the provisions of the PSC;

191.5. Declaring that Contractor has paid GOI both Profit Petroleum and royalty for the production referenced in paragraphs 191.1 and 191.2 above in accordance with the provisions of the PSC;

191.6. Declaring Contractor paid GOI both Profit Petroleum and royalty for the production referenced in paragraphs 191.1 and 191.2 above in accordance with the provisions of the PSC and is therefore estopped from pursuing a claim for unjust enrichment against Contractor;

191.7. Declaring that GOI has no right to restitution or other relief, not having suffered any injury or other compensable harm resulting from Contractor's production of hydrocarbons that allegedly migrated to Contractor's wells in its Contract Area from the adjacent ONGC Blocks;

191.8. Ordering GOI to reimburse all of Contractor's costs incurred in connection with this arbitration, including fees and expenses of the arbitrators, legal counsel, witnesses, experts, and consultants;

191.9. Ordering GOI to pay Claimant simple interest of an amount as determined by the Tribunal on any amounts from the date of the award until the date of payment; and

191.10. Ordering that the award be immediately enforceable, notwithstanding commencement or pendency of any action to set it aside or of any other proceeding.”

18. In response thereto, first the UOI filed a simpliciter Statement of Defense, however, later raised Counter Claims as well. Arbitral Award [Majority (2:1)]: learned Arbitral Tribunal: 19. Based upon the pleadings before it, learned AT, framed the following twelve issues:- FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23 “1) Whether the Claimant’s rights and obligations under the PSC to conduct Petroleum Operations in the Contract Area prohibit the Claimant from producing and selling gas which migrated into the sub- sea reservoir lying within the Contract Area from a source outside the Contract Area? 2) [If the answer to (1) is “YES”;] Whether the Claimant is obliged to seek and obtain express permission to produce and sell migrated gas and if so, whether the Claimant obtained such permission? 3) Whether the Claimant produced and sold gas which migrated into the sub-sea reservoir lying within the Contract Area from a source outside the Contract Area. If so, to ascertain quantity? 4) Whether the Claimant produced and sold gas from the sub-sea reservoir lying within the Contract Area which extends beyond the Contract Area. If so, to ascertain quantity? 5) [If the answers to (3) or (4) is “YES”;] Whether the Claimant is entitled under the PSC to retain or recover: i. cost petroleum; and/ or ii. profit petroleum, from the production and sale of such gas. [If the answer to (5) is “NO”] Whether the Claimant has been 6) “unjustly enriched”; B. Disclosure of the 2003 D&M Report. Whether the Claimant is obliged under Articles 10, 12 and 26 of 7) the PSC to: a. Make disclosure of the 2003 D&M Report to the Respondent. including reports, analysis, Provide information and data as well as all interpretative and b. derivative data, interpretations and evaluations prepared in respect of Petroleum Operations, including interpretation and analysis, relating to connectivity of the reservoirs and/ or continuity of the channels across in the boundary of Block KG- DWN-98/3. [If the answer to Issue (7) is “YES”;] Whether the Claimant had 8) complied with such obligation. FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23 9) [If the answer to (8) is “NO”;] Whether the non-compliance amounts to a material non-disclosure constituting a breach by the Claimant of the PSC and the PNG Rules? 10) [If the answer to Issue (9) is “NO”;] Whether this prevented the Respondent from directing a joint development under Article 12 of the PSC or Rule 28 of the PNG Rules? 11) Whether the 2003 D&M report establishes connectivity of the reservoirs and/or continuity of the channels in Block KG- DWN-98/3 and the IG Block? 12) Whether the 2015 D&M Report establishes connectivity of the reservoirs and/or continuity of the channels in Block KG-DWN-98/3 and ONGC’s Blocks (the IG Block and Block KG-DWN-98/2)?”

20. While dealing with the aforesaid issues, the learned AT in 2:1 majority rendered an Arbitral Award, primarily by holding as under:- 20.1. Issue no.1: As per the learned AT there was no express prohibition against RIL from extracting the migrated gas within the contract area/ development area. Also, that the UOI may require unitization or a joint development if it takes the view that “… …the Reservoir can be more efficiently developed together on a commercial basis… …for securing the more effective recovery of Petroleum from such Reservoir… …”. In effect, the UOI would not be required to make such an order of joint development until, it is satisfied that joint development is commercially more efficient. Besides that, the learned AT also rendered that the terms of the PSC read together with Petroleum and Natural Gas Rules, 195923 make explicit that RIL as the contractor, licensee and lessee, is permitted and required to extract all available gas within its contract area/ development area for the 23hereinafter referred to as ‘1959 PNG Rules’ FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23 benefit of the UOI, even if, such gas has migrated from beyond the Contract Area. 20.2. Issue no.2: As per the learned AT, RIL did not need any further express permission to produce and sell any migrated gas that could have come into its Contract Area. 20.3. Issue nos.3 and 4: As per the learned AT, there was connectivity of reservoirs, as such the gas produced by RIL did include the gas which had migrated into the reservoir lying within the Contract Area from a source outside the Contract Area. 20.4. Issue no.5: As per the learned AT, RIL was entitled to all rights granted to it under the PSC. It was entitled to retain and recover Cost Petroleum from the gas so extracted, produced and sold. 20.5. Issue no.6: In view of the aforesaid finding in issue no.5, as per learned AT, RIL was not ‘unjustly enriched’. 20.6. Issue no.7: As per learned AT, RIL was required to disclose not only D&M 2003 Report but also, all data stipulated in Article 26.1 of the PSC, inclusive of all interpretive and derivative data, including reports, analysis, interpretations and evaluations prepared in respect of petroleum operations; and also interpretation and analysis relating to connectivity of the reservoirs and/ or continuity of the channels across in the boundary of the Reliance Block. 20.7. Issue no.8: In view of the aforesaid finding in issue no.7, as per the learned AT, RIL had failed to comply with the requirements under Article FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23

26.1 of the PSC since, it failed to provide the D&M 2003 Report to the UOI. 20.8. Issue no.9: As per the learned AT, despite having numerous opportunities to order joint development inquiry, the DGH declined to do so notwithstanding the vast amounts of interpretive data provided by RIL to DGH. It is because of this, non-compliance by RIL of the terms of the Article 26.1 of the PSC, did not amount to a material non-disclosure constituting a breach by the RIL of the PSC and 1959 PNG Rules. 20.9. Issue no.10: As per learned AT, the failure of RIL to disclose the D&M 2003 Report did not prevent the UOI from directing a joint development under Article 12 of the PSC. 20.10. Issue no.11: As per the learned AT, since the D&M 2003 Report was not intended to be a scientific investigation or examination of the operations of the Project, therefore, there is no basis for D&M’s belief that there was continuity or connectivity of the reservoirs. Thus, the D&M 2003 Report only suggests the connectivity of reservoirs and the learned AT could not find anything in the said D&M 2003 Report that established connectivity of reservoirs. 20.11. Issue no.12: As per learned AT, although gas migration estimates made in D&M 2015 Report were highly unreliable, grossly inaccurate and exaggerated, however, there was sufficient evidence to show there was some degree of connectivity. Dissenting Award: 3rd Arbitrator: FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23

21. The 3rd Arbitrator of the learned AT gave a ‘dissenting’ Award, wherein the issues involved were divided into four parts after observing as under:- “21. For the purpose of my opinion, I have divided the issues into four parts. Part-1 deals with the question whether the claimant's right and obligations under the PSC to conduct Petroleum Operations in the Contract Area prohibit it from producing and selling gas which migrated into the subsea reservoir lying within the Contract Area from a source outside the Contract Area and if this answer to this question is in affirmative, whether the claimant was under an obligation to seek and obtain express permission to produce and sell migrated gas and whether the claimant had in fact obtained such permission. Part-II deals with the question whether the claimant produced and sold gas which migrated into sub-sea reservoir lying within its Contract Area from a source outside that area, if so, to ascertain quantity of such gas. If these 2 issues are decided in affirmative then the next question is whether the claimant is entitled to retain or recover cost petroleum and/or profit petroleum from the production and sale of such gas. The related issue is whether it is a case of unjust enrichment by the clamant. Part-III addresses the Respondent's allegation that the claimant is guilty of suppression of the facts and in particularly D&M report of 2003, as averred in the counter claim. This takes care of Issues Nos. 7 to 12. Part-IV relates to the conclusions of the findings recorded under Part-J, II and Ill and the cost of arbitration.”

20.1. Part I: As per the dissenting Award, since the PSC was executed inter-se the Government of India/ UOI and RIL under Article 297 of the Constitution of India24 and other statutory provisions and in light of what has been held by the Hon’ble Supreme Court in Reliance Natural Resources Ltd. [RNRL] vs. Reliance Industries Ltd. [RIL]25 , RIL could not have extracted the natural gas “… …without the express permission of the Union of India, which permission can be granted only pursuant to a 24hereinafter referred to as “CoI” 25(2010) 7 SCC 1 FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23 rationally framed utilization policy… …”, and since D&M was itself commissioned in 2015 to determine the question of migrated gas, permission sought prior thereto was not relevant or relating to the migrated gas.

20.2. Further, as per the dissenting Award, under the PSC if a reservoir extends beyond Block boundaries, RIL may either seek permission to enlarge its Development Area, or jointly develop the area with the contractor of the adjoining block i.e., ONGC Block, or relinquish its rights to such reservoir, and there can be no effective lease or enjoyment of an area covered by a reservoir, if such reservoir is being drained by a different person/ entity on its block boundary namely by RIL of the ONGC Block.

20.3. Part II: As per the dissenting award, since RIL had participated in the 2015 D&M Report proceedings and was aware of the methodology of the study and did not object to it at the relevant point of time, it was estopped from urging anything to the contrary as also, in view of the Article 33.2 of the PSC the D&M 2015 was binding upon RIL. Moreover, since the D&M 2015 Report was binding on the parties, the quantification of migrated gas determined therein was conclusive.

20.4. Part III: As per the dissenting Award, RIL was obligated under the PSC and the 1959 PNG Rules to disclose the D&M 2003 Report along with all data relating to continuity or connectivity which the RIL failed to do. Although the said D&M 2003 Report may not have conclusively established reservoir connectivity, it strongly suggested the same. Accordingly, the said non-disclosure was material in nature. FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23

20.4. Part IV: As per the dissenting Award, in view of the findings in Part I, as also the principle of ‘unjust enrichment’, RIL was indeed ‘unjustly enriched’. Section 34, The Arbitration and Conciliation Act, 1996 proceedings:

21. Aggrieved by the findings in the majority Arbitral Award rendered by the learned AT, the UOI filed an application under Section 34 of the Act for setting aside the majority Arbitral Award wherein, it primarily urged that firstly, the said Arbitral Award “… …suffers from patent illegality” since, despite the learned AT having rendered that RIL was in breach of the Article 26.1 of the PSC, went on to hold that it was not a material breach, particularly whence, RIL was guilty of suppressing D&M 2003, D&M 2004 and D&M 2005 Report(s) and due to the said suppression on the part of RIL, the DGH/ UOI was not able to exercise its options of joint development of the Reliance Block and the ONGC Block; secondly, that the said Arbitral Award “… …is in conflict with the Public Policy of India… …” as the learned AT erred in holding that RIL cannot be made accountable for extracting and selling gas outside the Contract Area since this proposition is in the teeth of the Public Trust Doctrine26 and, as the said doctrine was part of the “public policy of India”, as also in view of the non- disclosure and suppression of the D&M 2003 Report and the law laid down by the Hon’ble Supreme in Common Cause vs Union of India27 that 100% disgorgement is mandatory when natural resources have been produced without any lawful/ express authority; and thirdly that there was “Non- 26hereinafter referred to as ‘PTD’ 27(2017) 9 SCC 499 FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23 Arbitrability of Disputes” as the claims of RIL fell outside the scope of the arbitration agreement, since it fell within the realm of public law and were matters of “public policy” being covered by the PTD, hence not arbitrable. 22. The said application under Section 34 of the Act came to be dismissed by the learned Single Judge vide the impugned order wherein, he formulated the following issues:- “33.1. Was the arbitration an “international commercial arbitration‟ within the meaning of section 2 (1)(f) of the A&C Act, and consequently whether “patent illegality appearing on the face of the award” is available as a ground for challenge under section 34 of the A&C Act?;

33.2 Did the arbitration involve a question of “public law” making the dispute non-arbitrable?;

33.3. Is the award in conflict with the “public policy of India”, say, for being in contravention with the fundamental policy of Indian law; or in conflict with the most basic notions of morality or justice?;

33.4. Was the transaction between the contesting parties governed by the 'public trust doctrine' with its over-arching considerations, that would warrant interference with the arbitral award on the ground that it was in conflict with the public policy of India?;

33.5. Has the arbitral tribunal taken a “possible view‟ and a view which is not “perverse”. In addressing this last proposition, it would be necessary for the court to look at the factual controversies; the evidence adduced by the contesting parties in support of their respective positions; and also the conclusions arrived at by the arbitral tribunal, without however substituting the court's own view for the view taken by the arbitral tribunal on points of fact.”

23. The learned Single Judge, while dismissing the application under Section 34 of the UOI vide the impugned order, went onto hold that the arbitration inter-se the UOI and RIL was an ‘International Commercial FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23 Arbitration’ and as such, the ground of “patent illegality” was not available, to interfere with the Arbitral Award; and since there was no disposition of title/ ownership of the natural gas, which always lied with the UOI, RIL had a limited role to explore and extract the natural resources as a licensee. Therefore, as per the learned Single Judge, the PTD was not contravened; and even though RIL was in breach of the PSC by not disclosing the D&M 2003 Report, it was not material; further that RIL divided all profits derived from the production of all-natural gas in the manner provided under the PSC; that the learned AT was correct in coming to the finding that there was indeed existence of PTD, however, RIL had acted in furtherance of such doctrine by extracting petroleum in the most “… …efficient and commercially sensible manner… …” and furthermore that the PSC “… …does not prohibit but permits… …” the extraction of the migrated gas; that the conclusions drawn by the learned AT were such that a reasonable person could reach them and as such, it was “certainly a possible view”. Section 37, The Arbitration and Conciliation Act, 1996 proceedings: Submissions of the Union of India: 24. Aggrieved thereby, the UOI preferred the present appeal under Section 37 of the Act, before us. Mr. R. Venkataramani, learned senior Advocate and the learned Attorney General of India and Mr. K.K. Venugopal, learned senior Advocate and also the ex-learned Attorney FAO(OS) (COMM) 201/2023 Signature Not Verified Digitally Signed By:BABLOO SHAH Signing Date:14.02.2025 20:16:23 General of India along with Mr. Gopal Jain, senior Advocate, all appearing on behalf of the UOI28 have primarily urged that the Arbitral Award is not an International Commercial Arbitration, more so, since the same itself categorically records that “… …we fully accept and recognize that the named claimant in this arbitration is RIL and that Niko is not formally a party to this arbitration… …”, which, because of non-challenge by the RIL is final and binding on it. For the aforesaid proposition, learned Sr. Advocates for the UOI, placed reliance upon Larsen and Toubro Limited Scomi Engineering BHD vs. Mumbai Metropolitan Region Development Authority29. Similarly, learned Senior Advocates also placed reliance upon Perkins Eastman Architects DPC vs. HSCC (India) Limited30 , wherein, the Hon’ble Supreme Court has held that if the lead member of an arbitration proceedings is an Indian company, then the arbitration will not be treated as an International Commercial Arbitration. They then went onto urge that if the lead member in an arbitration is an Indian entity, then the arbitration has to be treated as a domestic arbitration. 25. Based thereon, learned Sr. Advocates for the UOI urged that the reliance on West Bengal Ors. vs Associated Contractors 31 by the learned Single Judge is misplaced. Moreover, and in view thereof, particularly considering that the Arbitral Award being a domestic arbitration, the test of ‘patent illegality’ is available under Section 37 of the Act.