SC appoints Justice Desai as mediator in KG basin gas dispute

1. At a Glance

• The Supreme Court appointed former SC judge Justice Ranjana Prakash Desai as sole mediator in the Krishna-Godavari (KG) basin gas migration dispute between Reliance Industries Ltd (RIL) with its consortium partners, and the Union government [1].
• This is a test case for court-referred mediation in a high-value commercial dispute between the Centre and a private company. Mediation came in after talks between the parties failed [1].
• UPSC relevance: ADR mechanisms (arbitration, mediation, conciliation), Production Sharing Contracts (PSCs) in hydrocarbons, contract enforcement and ease of doing business, and judicial case management.

2. Why in the News

• Friday, 30 October 2026: a Special Bench of the SC appointed Justice Desai as sole mediator. It was reported in The Hindu (Chennai edition, 31 October 2026, p. 18) [1].
• The Attorney-General R. Venkataramani, for the Centre, told the court the parties could not reach "a viable solution" among themselves [1].
• The Bench called the dispute "very complex" and asked the mediator to take help from two domain experts, to be suggested by the parties [1].

3. Background & Evolution

• KG basin: a hydrocarbon-bearing sedimentary basin off the Andhra Pradesh coast, formed by the Krishna and Godavari river deltas [2].
• KG-D6 block: awarded to RIL under the New Exploration Licensing Policy (NELP), the first round in 1999–2000. Niko Resources was an early partner and BP joined in 2011 [2].
• 2013: ONGC alleged that gas had migrated from its adjoining blocks (KG-DWN-98/2 and the Godavari PML) into RIL's KG-D6 wells [2].
• 2015: the independent consultant DeGolyer & MacNaughton (D&M) found that the reservoirs were connected and that gas had migrated [2].
• 2016: the Justice A.P. Shah Committee said RIL had been "unjustly enriched". The Centre then claimed about US$1.55 billion from the RIL–BP–Niko consortium [2].
• July 2018: an international arbitral tribunal ruled for RIL by a 2:1 majority, rejecting the Centre's claim [2].
• May 2023: a single judge of the Delhi High Court dismissed the Centre's challenge under Section 34 of the Arbitration and Conciliation Act, 1996 [2].
• February 2025: a Delhi HC Division Bench, hearing an appeal under Section 37, set aside the arbitral award. RIL then appealed to the SC [2].
• October 2026: the SC referred the dispute to mediation under Justice Desai [1].

4. Core Static Facts

• Key terms:
• Gas migration: hydrocarbons flowing across block boundaries through connected reservoirs.
• Unjust enrichment: gaining at another's expense without legal basis.
• Sole mediator vs arbitrator: a mediator facilitates a settlement and gives no binding award; an arbitrator adjudicates and gives a binding award [2].

5. Multi-Dimensional Analysis

Legal / Constitutional

• The SC moved from adjudication to facilitated settlement after the parties failed to settle on their own [1].
• A settlement reached in mediation can avoid long litigation over an award's validity (Sections 34 and 37 of the 1996 Act) [2].
• Supporting framework: the Mediation Act, 2023 treats mediated settlements as enforceable like decrees; Section 89 CPC and the SC's inherent powers allow referral [2].

Economic

• Resolving the dispute affects investor confidence in India's upstream oil and gas sector and the credibility of PSC-based contracts [2].
• The Centre's claim of about US$1.55 billion has fiscal stakes for the government and balance-sheet stakes for RIL and BP [2].
• Shows the need for unitisation clauses in exploration contracts, where adjoining operators jointly develop a shared reservoir [2].

Scientific / Technological

• The court asked for two domain experts [1]. Questions of reservoir connectivity, gas volumes and drainage need geoscience and reservoir-engineering expertise [2].
• The dispute shows the role of independent reservoir studies (such as D&M) and of the DGH's technical oversight [2].

Ethical / Governance

• The Centre litigating against a private operator raises questions about contract sanctity, regulatory capacity and the public interest in natural resources. Natural resources are held in public trust, as the SC held in the Natural Resources Allocation Reference of 2012 [2].
• The AG assured "full cooperation" to the mediator, a sign of good faith from the state in the process [1].

Administrative

• Choosing a mediator "well-versed in commercial matters" shows a focus on domain-competent ADR [1].
• Points to the need for institutional mediation capacity for disputes between the government and companies [2].

6. Recent Developments (last 12-18 months)

• February 2025: the Delhi HC Division Bench set aside the 2018 arbitral award, which had favoured RIL; RIL appealed to the SC [2].
• 24 November 2025: Justice Surya Kant took office as Chief Justice of India [2].
• 30 October 2026: the SC Special Bench appointed Justice Ranjana Prakash Desai as sole mediator with two domain experts. The AG said settlement talks had failed and RIL agreed to the mediator [1].

7. Prelims Hooks

• Justice Ranjana Prakash Desai, a former SC judge, was appointed sole mediator in the KG basin gas migration dispute [1].
• The appointment was made by a Special Bench: CJI Surya Kant, Justices Joymalya Bagchi and Vipul Pancholi [1].
• The parties are Reliance Industries Ltd and its consortium partners vs the Union government [1].
• The Centre was represented by Attorney-General R. Venkataramani [1].
• RIL was represented by A.M. Singhvi [1].
• The mediator is to be assisted by two domain experts suggested by the parties [1].
• The SC described the dispute as "very complex" [1].
• The Attorney-General is appointed under Article 76 and is the highest law officer of the Union [2].
• The Mediation Act, 2023 is India's first standalone mediation law [2].
• KG-D6 is a deep-water block off Andhra Pradesh, operated by RIL with BP [2].
• The Justice A.P. Shah Committee (2016) examined the KG gas migration issue [2].
• The Directorate General of Hydrocarbons (DGH) works under MoPNG [2].
• Justice Desai also chaired the J&K Delimitation Commission and the Uttarakhand UCC drafting committee [2].

8. Why the Government Finds It Hard to Say Yes to a Deal

• The Centre's own claim keeps getting bigger, so there is no agreed starting number
• The 2016 claim was about US$1.55 billion [2].
• After the Delhi HC Division Bench ruled for the Centre, the petroleum ministry raised a demand of US$2.81 billion [5].

• The mediator must first get both sides to agree on what is actually being negotiated. That is hard when one side's number has almost doubled.

• A court win makes the government less willing to give anything up

• In February 2025, Justices Rekha Palli and Saurabh Banerjee set aside the award for patent illegality (an obvious legal error on the face of the award). They also held it was against public policy and the public trust doctrine (the idea that the State holds natural resources on behalf of the people) [4].
• After that ruling, Petroleum Minister Hardeep Puri said the government would pursue the US$2.81 billion demand "till the end" [6].

• Any officer who now agrees to take less is giving up money a High Court has said belongs to the public.

• Officials fear being investigated if they settle

• A petition in the Bombay HC asks for a CBI probe into what it calls gas "theft" from ONGC's blocks, and the court has issued notice on it [9].

• If a criminal allegation is still open, an officer who signs a compromise can later be accused of favouring a private company. Fear of this kind of probe is a known reason the government avoids settling.

• The law adds an extra approval step for government parties

• The Mediation Act, 2023 covers commercial disputes where a government is a party. A government party can sign a settlement only after the competent authority (the officer or body legally empowered to approve) gives prior written consent [10].
• So the AG's promise of "full cooperation" [1] does not bind the Union to any outcome. The final yes has to come from above.

9. Should a Public Resource Claim Be Settled Behind Closed Doors?

• The strongest objection
• The Delhi HC treated this as a public trust matter: gas under the seabed belongs to the people, not to the government of the day [4].
• Mediation is private, and the Mediation Act keeps what is said during mediation confidential [10].

• Critics can therefore argue that a claim the court tied to the public's resources should not be traded away in a closed room without public reasons being given.

• What is right about this objection

• A court judgment explains its reasoning and can be challenged. A mediated settlement does neither in the same way.

• In 2021, the Rajya Sabha Standing Committee on the Mediation Bill had already criticised the government's open-ended power to add types of disputes to mediation, calling it unbridled [11]. Disputes involving the State were a sensitive area from the start.

• Why the reference can still be defended

• The Supreme Court has not given up control. It kept the case on its list for hearing after four weeks [3], so a failed mediation returns to adjudication.
• The competent-authority consent rule means a settlement needs formal approval from the government [10]. It is not a private bargain made by a lawyer in the room.

• The court asked for two domain experts [1]. That makes it more likely any figure agreed is based on reservoir science rather than on how strongly each side bargains.

• The fair middle position

• The terms of a settlement, and the reasons for them, should be put on record before the Supreme Court. That way the public can see what was given up, even if the talks themselves stay confidential.

10. Thirteen Years On: Why Arbitration Never Gave a Final Answer

• Every level of review gave a different answer
• The tribunal ruled for RIL 2:1 in 2018. A single judge upheld the award in 2023. The Division Bench overturned it in 2025 [2][4].
• The dissenting arbitrator said RIL needed government approval before earning revenue from migrated gas [4]. The Division Bench later took the side of that minority view.

• Arbitration is meant to end a dispute with one decision. Here it became just the first round of a long court fight.

• Calling the award 'domestic' opened a wider door to challenge it

• The Division Bench held the arbitration was domestic, not international, because RIL, the lead partner, is an Indian company, even though BP and Niko are foreign [4].
• Under the 1996 Act, patent illegality is a ground for setting aside a domestic award, but not an award from an international commercial arbitration [2].

• So the domestic label decided which grounds of attack were available, and foreign partners in Indian consortiums may now worry about it.

• The Supreme Court itself first resisted mediation

• Final hearings began on 19 May 2026. On 20 May the SC refused to pause them, even though the companies were pushing for mediation [7].
• Days later it accepted RIL's plea for conciliation [8]. When those talks failed, it appointed a mediator [1].
• Each switch of forum adds months. The Bench has set no deadline for the mediation [3], while the Mediation Act generally allows 120 days, extendable by 60 [10].

11. What Must Change Before the Next Gas Dispute

• MoPNG and PSUs should choose the dispute forum when the contract is written, not after the fight starts
• In 2026, the Rajya Sabha Standing Committee on Personnel, Public Grievances, Law and Justice found that public sector undertakings do not think about institutional arbitration (arbitration run by a permanent centre with fixed rules, not an ad hoc tribunal) when drafting contracts [12].
• It recommended making the IIAC (India International Arbitration Centre) the default forum in commercial contracts [12].

• Future exploration contracts should name the forum, the timelines and a mediation step in advance.

• The Law Ministry should bring the whole Mediation Act into force

• The same 2026 committee urged the government to quickly notify the parts of the 2023 Act not yet in force [12].

• It also found PIMS (Pre-Institution Mediation and Settlement, compulsory mediation before filing a commercial suit) is underused [12]. That suggests mediation is still not part of how the State normally handles disputes.

• The government should protect officials who settle in good faith

• As long as a CBI probe plea is pending [9], an officer has every reason to let the court decide rather than sign a compromise.
• A clear rule should protect a settlement approved by the competent authority and backed by expert evidence from later vigilance action, unless there is proof of bad faith. Without that, mediation involving the State will keep failing for the reason it failed here: the parties could not reach a viable solution on their own [1].

12. Anchors for Answers

• Data: US$1.55 billion was the original claim (2016) [2]; the ministry's demand after the 2025 HC ruling was US$2.81 billion [5]
• Report/Committee: Justice A.P. Shah Committee (2016); Rajya Sabha Standing Committee report on the Mediation Bill, 2021 [11]; Rajya Sabha Standing Committee report on Institutional Mechanism for the ADR Ecosystem (2026) [12]
• Law/Case: Arbitration and Conciliation Act, 1996, Sections 34 and 37; Mediation Act, 2023 (government parties need competent-authority consent; 120+60 day limit) [10]; Delhi HC Division Bench, February 2025: patent illegality, public trust doctrine, award held domestic [4]
• Scheme: Pre-Institution Mediation and Settlement (PIMS) under the Commercial Courts Act, 2015, which the 2026 committee found underused [12]

13. Mains Relevance

• GS-II: structure and functioning of the judiciary; dispute redressal mechanisms and institutions; ADR.
• GS-III: infrastructure (energy: oil and gas); investment models; mobilisation of resources.
• GS-IV (minor): public trust in natural resources; probity in government–business relations.
• Question stems: 1. "Court-annexed mediation can reduce the pendency of complex commercial disputes involving the State." Critically examine this in light of the Mediation Act, 2023. 2. Disputes such as the KG basin gas migration case expose gaps in India's Production Sharing Contract regime. Discuss the reforms needed for upstream hydrocarbon contracts. 3. Repeated litigation over arbitral awards undermines India's goal of becoming an international arbitration hub. Analyse with examples.

14. Related Topics to Study Next

• Mediation Act, 2023: the statutory basis for settlements reached in mediation.
• Arbitration and Conciliation Act, 1996 (Sections 34 and 37): the grounds for challenging and appealing arbitral awards.
• NELP → HELP / OALP: the shift from production-sharing to revenue-sharing in hydrocarbon licensing.
• Unitisation of shared reservoirs: the technical and contractual fix for migration disputes.
• Public Trust Doctrine and the 2012 Natural Resources Allocation Reference: state ownership of natural resources.
• Attorney-General of India (Article 76): the constitutional office that represented the Centre.
• Commercial Courts Act, 2015 and pre-institution mediation: the wider ADR push in commercial litigation.
• Article 142: the SC's power to do "complete justice", including flexible ways of resolving disputes.

15. NCERT Concepts to Revise

• Mediation (Polity): The Supreme Court sent the dispute to a mediator, who helps the parties settle without imposing a binding decision.
• Mediation Act 2023 (Polity): This is the statute that makes mediated settlements enforceable like court decrees, the legal basis for such referrals.
• Arbitration (Polity): The dispute began with a 2018 arbitral award that courts later set aside; arbitration differs from mediation.
• Alternative dispute resolution (Polity): Mediation and arbitration are both ADR routes; this gives the wider framework behind the court's move.
• Krishna-Godavari basin (Geography): The dispute concerns gas migrating within this east-coast basin, home to the KG-D6 block.
• Complete justice power (Polity): Article 142 lets the Supreme Court craft flexible remedies like court-referred mediation to do complete justice.

16. Common Errors / Trap Areas

• Mediator vs arbitrator: Justice Desai is a mediator. She facilitates a settlement and does not deliver a binding award [1][2].
• Parties: the current dispute is RIL and its consortium vs the Union government, not RIL vs ONGC. ONGC's 2013 complaint started the matter [1][2].
• Attorney-General vs Solicitor-General: the Centre was represented by the AG (R. Venkataramani) [1].
• Location: the KG basin lies off Andhra Pradesh, on the east coast. Do not confuse it with the Mumbai High or Cauvery basins [2].
• Desai's other roles: she is linked to the J&K Delimitation Commission (2020–22) and the Uttarakhand UCC committee. Do not mix these up with this mediation [2].