Govt word final; SC says no to cheap gas for ADAG from RIL

Ranjit Kumar Sinha & R Balaji
New Delhi, May 7 (PTI) The Indian Supreme Court Friday
rejected Anil Ambani group's plea for cheaper gas from Mukesh
Ambani- led RIL on the basis of a family pact, saying the
government had the sovereign right on price and utilisation of
fuel.
A three-judge bench headed by Chief Justice K G
Balakrishnan, who demits office on May 11, said that the
Ambani family MoU that seeks to divide gas between group firms
of the two brothers was not binding, both legally as well as
technically.
The MoU is part of the Ambani family settlement reached
in June 2005 for dividing the Reliance empire between Mukesh
and his younger brother Anil.
At the same time, the apex court asked the group firms of
the warring siblings to sit together within six weeks and
rework within the next eight, a gas supply agreement in
conformity with the government policy.
The government has already fixed the price of gas from
RIL's KG-D6 fields at USD 4.20 per mmBtu, compared to the USD
2.34 per mmBtu sought by Anil Ambani group firm Reliance
Natural Resources Limited (RNRL).
Welcoming the judgement, India's Petroleum Minister Murli
Deora, whom Anil had accused of siding with Mukesh, said: "The
Supreme Court verdict upholds the fact that gas belongs to the
government and the people. No matter what campaign one ran
against the government, the nation is supreme."
Anil, who sat through the pronouncement of the verdict,
later said he would not seek review of the verdict as of now
and was looking forward to renegotiation of the gas deal with
RIL as per the court's directive.
RIL said it would start negotiations with RNRL, but would
not be able to give gas for 17 years as demanded, because the
life of the field was just 11 years. "The price will have to
be USD 4.20 per mmBtu," RIL Executive Director P M S Prasad
told PTI.
Reading out the verdict, Justice P Sathasivam said: "The
MoU was signed as a private family arrangement between two
brothers, Mukesh and Anil, and their mother (Kokilaben)... MoU
does not fall under the corporate domain.
"It was neither approved by the shareholders nor it was
attached to the scheme (of demerger of Reliance). Therefore,
technically, the MoU is not legally binding."
CJI Balakrishnan and Justice Sathasivam said: "MoU was
definitely the instrument which was the basis of the scheme.
Therefore, it can be used as an external aid for the
interpretation of suitable agreement."
Justice B Sudershan Reddy, who replaced Justice P
Raveendran after he recused himself citing conflict of
interest, however, differed saying that the MoU should not be
taken into consideration at all. He also suggested that
negotiations should commence within eight weeks and should be
concluded in the next six.
Besides the price, the government has fixed users for
over 90 mmscmd of output from KG-D6 fields. 64 mmscmd of this
is on long-term basis and the rest is temporary. RIL's current
output from the fields is 62-63 mmscmd. MORE PTI RKS
MRD


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