Tripura HC Sets Aside Oil India's Termination of Seismic Survey Contract, Orders Licence Renewal Decision
The High Court of Tripura quashed Oil India Limited's termination notice against a seismic data acquisition contractor, holding the action arbitrary and directing a prompt decision on petroleum exploration licence renewal.
Justice Dr. T. Amarnath Goud, sitting singly at the High Court of Tripura, Agartala, on 11 May 2026 allowed a writ petition filed by M/s Devi Engineering and Constructions Pvt. Ltd. against Oil India Limited and the Union of India, setting aside a termination notice dated 04.02.2026 that had sought to end a contract for 2D seismic data acquisition in two petroleum blocks in Tripura. The court found the termination arbitrary, violative of natural justice, and tainted by the respondents' own failure to discharge reciprocal contractual obligations. It directed Oil India Limited and the Director General of Oil India to take a decision at the earliest on renewal of the Petroleum Exploration Licences that expired on 12.04.2026, and to permit the petitioner to resume work for the balance contract period once renewal is obtained.
The Contract and the Termination Notice
M/s Devi Engineering and Constructions Pvt. Ltd., a company incorporated under the Companies Act, 2013 with its head office in Kakinada, Andhra Pradesh, emerged as the L-1 tenderer in a competitive process run by Oil India Limited. On 29.09.2025, Oil India issued a Letter of Award in favour of the petitioner for “Hiring of services for Acquisition of 100 LKM each of 2D Seismic Data” in Khubal Block (AA-ONHP-2020/1) and Langtarai Block (AA-ONHP-2020/3) of the OALP-VI Round in Tripura, under Tender No. CDG9342P26 and Contract No. 6121691. A mobilisation notice was issued on the same date.
On 13.11.2025, the petitioner deposited a bank guarantee of Rs. 1,04,38,000. The petitioner sought an essentiality certificate on 02.02.2026 — a document required for customs clearance and mobilisation of critical equipment. Oil India issued the certificate only on 10.02.2026. Before the certificate was even in the petitioner's hands, Oil India issued the impugned termination notice on 04.02.2026, informing the petitioner that the contract would stand terminated on 19.02.2026.
The petitioner replied on 08.02.2026 and again on 12.02.2026, objecting to the termination and attributing the mobilisation delay to Oil India's own failure to provide the essentiality certificate and to obtain a No Objection Certificate from the Tripura Tribal Areas Autonomous District Council (TTAADC) and the State Forest Department. Neither letter received a response, and no hearing was granted before the termination was confirmed.
Petitioner's Challenge: Arbitrariness and Prevention Doctrine
The petitioner, represented by Mr. B. N. Majumder, Senior Advocate, and Mr. S. Bhattacharjee, Advocate, challenged the termination on several grounds under Article 226 of the Constitution of India.
The central argument was that Oil India, as a State instrumentality, had itself prevented the petitioner from performing its contractual obligations by withholding the essentiality certificate and failing to secure statutory clearances. Having created the very conditions that made mobilisation impossible, Oil India could not invoke GCC Clause 44.5 or GCC Clause 44.8 to terminate the contract for non-performance. The petitioner relied on the settled principle that no party can take advantage of its own wrong.
The petitioner also argued that the termination violated the principles of natural justice. The notice gave 15 days for a reply, but the manner in which it was framed showed a predetermined decision. No personal hearing was granted, and the petitioner's detailed explanations were ignored. The termination was said to be grossly disproportionate given that the petitioner had established base camps, deployed manpower, undertaken field-level works, and demonstrated readiness to commence operations once statutory clearances were in place.
The petitioner pointed out that the overall completion period under the contract extended to June 2026, and that substantial time remained available when the termination notice was issued. It was further submitted that the petitioner had successfully executed earlier projects for Oil India without levy of damages, and that this past performance record was a relevant factor that the respondents ignored entirely.
Around 500 workers, of whom approximately 450 were permanent residents of Tripura, were employed at the worksite. The petitioner argued that arbitrary termination would deprive these workers of their livelihood and cause avoidable disruption to a public sector seismic survey forming part of national energy infrastructure.
Respondents' Defence: Licence Expiry and Frustration of Contract
Oil India Limited and the other official respondents (Respondent Nos. 2 to 8), represented by Mr. S. M. Chakraborty, Senior Advocate, raised a distinct statutory defence. They argued that the Petroleum Exploration Licences (PELs) for both blocks had expired on 12.04.2026, and that in the absence of a valid and subsisting PEL, no exploration or seismic activity could be lawfully carried out.
The respondents traced the statutory framework: Section 4A of the Oilfields (Regulation and Development) Act, 1948 prohibits any person from undertaking prospecting, exploration, or production of mineral oils except under a valid lease or licence. Rule 4 of the Petroleum and Natural Gas Rules, 1959 similarly bars prospecting without a petroleum exploration licence. Rule 10 provides that a licence is initially valid for four years, extendable for two further periods of one year each.
The Government of Tripura had originally granted PELs to Oil India for Block AA-ONHP-2020/1 on 28.02.2022 for an initial period of four years. The Directorate General of Hydrocarbons had subsequently granted a 351-day force majeure extension, extending both blocks' exploration period to 12.04.2026. Oil India had written to the Directorate General of Hydrocarbons on 03.01.2025 and again on 20.02.2026 seeking a paid extension to complete the remaining seismic work, acknowledging that continuation beyond 12.04.2026 was not permissible without formal extension.
The petitioner's own letter dated 11.04.2026 acknowledged that the PEL was valid only until 12.04.2026 and that activities had ceased on its expiry. The respondents argued that the contract had therefore become void under Section 56 of the Indian Contract Act, 1872 on account of supervening impossibility, performance having become unlawful by operation of statute. They pressed only prayer (c) of I.A. No. 03 of 2026 — modification or vacation of the interim order dated 16.02.2026 — after withdrawing the other two prayers in that application.
Significantly, the respondents' senior counsel also stated before the court that Oil India had no objection to handing over the work to the petitioner if and when the licence renewal was received.
How the Court Reasoned
The court rejected the force majeure and frustration arguments. It observed that the application for renewal had been made by Oil India to the concerned authority and was pending, and that the argument on force majeure was negatived.
On the termination notice itself, the court found that the petitioner was the L-1 tenderer who had invested heavily, procured and deployed machinery at the site, and engaged around 500 workers. The court noted that the contract period was six months and 45 days, which would have run until June 2026, and that the respondents had initiated adverse action without waiting for that period to expire and without granting a meaningful opportunity to the petitioner.
The court drew an inference from the manner in which the termination notice was framed: that the respondents were predetermined to cancel the contract awarded to the petitioner and hand it over to the L-2 tenderer. It observed that the notice, though nominally giving 15 days for a reply, was explicit in its intent to terminate, and that the respondents had acted with an ill motive to favour the next tenderer.
The court expressed concern about a broader pattern in public sector contracting, observing that higher officials at public sector undertakings sometimes devise ways to eliminate successful tenderers and redirect work to persons of their choice through tailor-made tender conditions. While the court declined to order a CBI inquiry into this particular tender at this stage, it stated that such conduct by responsible officials needed to be exposed.
The court also addressed the livelihood dimension. It noted the limited private employment opportunities in Tripura and expressed concern for the approximately 500 workers facing hardship. It observed that if contractors are put to hardship on technical grounds, it becomes difficult to attract investment and execution capacity to a State like Tripura, and that official respondents must take a magnanimous and pragmatic approach in exercising their powers for the betterment of the State and its people.
On the licence expiry, the court took the view that it was Oil India's own bounded duty to ensure that the licence was renewed and that the petitioner had hassle-free access to complete the work. The court held that it was not open for the respondents to cite licence expiry as a bar when the work was in progress and the expiry had itself occurred during the pendency of the writ petition.
Procedural Disposals
At the admission stage on 16.02.2026, the court had granted an interim order in I.A. No. 01 of 2026, suspending all further proceedings relating to the termination notice and directing Oil India to permit the petitioner to proceed with mobilisation and seismic data acquisition in Contract No. 6121691. The court had cited the livelihood of 500 workers, the balance of convenience, and the petitioner's deployment of heavy machinery and investment at the site.
Oil India filed I.A. No. 02 of 2026 seeking vacation of that interim order. When the court pointed out that I.A. No. 02 and I.A. No. 03 of 2026 were seeking common relief, the respondents' senior counsel withdrew I.A. No. 02 of 2026, which was dismissed as not pressed. In I.A. No. 03 of 2026, prayers (a) and (b) were similarly withdrawn and dismissed as not pressed, leaving only prayer (c) for consideration. The court dismissed the vacate-stay application, holding that the interim order remained valid.
Order
The High Court allowed WP(C) No. 108 of 2026 and set aside the termination notice dated 04.02.2026. The court issued the following directions:
Respondent Nos. 1 to 8 and the Director General of Oil India are directed to take a decision at the earliest on renewal of the Petroleum Exploration Licences for Blocks AA-ONHP-2020/1 and AA-ONHP-2020/3, which expired on 12.04.2026, in the light of the representations made by Oil India Corporation dated 08.02.2026 and the reminder dated 12.02.2026, if not already decided.
Oil India Corporation is directed to permit the petitioner to continue with the work under the contract for the balance period once Oil India obtains the licence renewal. The respondents are to consider and evaluate the experimental work carried out on line No. 6 (KL.00) along with all supporting data, reports, and communications submitted by the petitioner, keeping in view contractual obligations including Clauses 8.3 and 8.5.
The court clarified that if the respondents cause any hindrance or damage through their own laches, it remains open to the petitioner to avail remedies under law. All pending miscellaneous applications stand closed.