RELIANCE INDUSTRIES (RIL) FILES SPECIAL PETITION IN SUPREME COURT

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MUKESH Ambani firm Reliance Industries (RIL) have filed a special leave petition (SLP) in the Supreme Court, challenging the Bombay High Court order of June 15 that asked it to supply gas to the Anil Ambani-controlled Reliance Natural Resources (RNRL) at $2.34 per million metric British thermal unit (mmBtu), 44% lower than the government approved price. The move followed a petition filed by RNRL in the apex court, seeking speedy implementation of the Bombay High Court order.

   RIL senior counsel Milind Sathe said, “We have filed SLP in the apex court against the Bombay high court order. We cannot sign any gas deal without government approval. RIL is just contractor and cannot work against government policy.” A person close to RIL said the Bombay High Court order lacks clarity on price, tenure and quantify of gas to be sold to RNRL.

   While the RNRL SLP wants the Supreme Court to issue a direction to RIL to implement the HC order, the RIL petition seeks to set aside the June 15 order. In its petition, RIL has made RNRL and the government respondents to the case. This means the government will become party to the proceedings. It’s government’s role will be critical as it owns all natural resources and has set a price and utilisation list, on the basis of priority.

   This complicated legal case between the warring Ambani brothers over the supply of natural gas from RIL’s Krishna Godavari (KG) basin to RNRL is expected to come up for hearing in the next few days.

   Legal circles believe that the tussle promises to become a test case because of the importance of the issues before the apex court. The Supreme Court will have to decide whether the Ambani family agreement on which Bombay HC’s ruling was based has created a contractual obligation which RIL must meet.

   A single judge and later the division judge bench comprising of justice J N Patel and K K Tated had upheld the June 18, 2005 ‘family agreement’ in their respective judgements delivered in October 2007 and June 2009. The agreement, according to both rulings, had created a binding contractual obligation for RIL to supply a specified amount of gas at a fixed price of $2.34 per unit. RIL argues, that, regardless of the family agreement, it could not sell gas to RNRL without government approval. Further, it says that the part of the agreement relating to gas supply is subject to public policy and government decisions and the agreement itself says as much. The SC will have to decide between these interpretations.

   The Bombay High Court on June 15 had asked both the Ambani group firms, RIL and RNRL, to reach a ‘suitable arrangement’ in a month’s time in line with the Ambani family agreement. The family pact envisages RIL supplying 28 million metric standard cubic meters per day (mmscmd) of gas for 17 years at a price of $2.34 per mmBtu to fuel the proposed 7,400 megawatts Dadri power project in Uttar Pradesh.

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