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INDIA
BUSINESS WORLD -
DECEMBER 2005
THE MONTH THAT WAS
NTPC TAKES GAS DISPUTE TO COURT
The NTPC-RIL battle over the gas supply contract reached courts with the power company filing a legal suit against RIL for not agreeing to sign the gas sale and purchase agreement (GSPA).
NTPC, which is left with no firm gas supply contract for its Kawas and Gandhar power projects following RIL's dilly-dallying, has urged the court to stop RIL from selling or committing gas to any other customer in the interim period. “NTPC has sought interim relief requesting the Honourable Court to direct RIL not to sale/commit/offer gas to any other customer without meeting its obligations to NTPC.” The legal suit has been filed in the High Court of Judicature of Bombay.
Sources said that the court will have to take a view whether the contract between RIL and NTPC is already in vogue. NTPC has alleged that RIL “has not agreed to sign the GSPA based on the terms agreed during the bidding process and also not proceeded to perform the contract.”
Sources maintain that RIL may argue that the contract is yet to be in vogue as the two have not yet signed the gas sales agreement. Under such circumstances, Reliance is only required to pay demurrage of just $4 million for forfeiting the bid.
However, Reliance's failure to honour the contract may send wrong signals to the industry as both the companies are listed entities and dishonouring contractual obligations may dent their corporate image.
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