NEW DELHI, July 22 -- Vedanta Ltd's attempt to retain its offshore oil and gas block in Gujarat suffered a setback on Wednesday after the Delhi High Court upheld the Centre's decision to deny the company a contract extension and transfer the asset to state-run Oil and Natural Gas Corporation Ltd (ONGC).

Justice Purushaindra Singh Kaurav dismissed Vedanta's challenge to the Ministry of Petroleum and Natural Gas's decision rejecting its request for a 10-year extension of the production sharing contract (PSC) for the CB-OS/2 offshore block in Gujarat's Cambay Basin.

The ruling also upheld the Centre's order directing Vedanta to cease petroleum operations and hand over the block to ONGC.

Soon after the judgment was pronounced, Vedanta's se...