New Delhi, May 07: The Supreme Court will pronounce its verdict on Friday in the case relating to ‘Reliance gas dispute’ between Reliance Industries Ltd (RIL) of the Mukesh Ambani group and Reliance Natural Resources Ltd. (RNRL) of the Anil Ambani group, considered as one of the biggest corporate legal battles in recent years.
The batch of appeals was against a June 15, 2009, Bombay High Court order that asked RIL to supply gas to RNRL at $2.34 per million British thermal unit (mBtu) against the officially prescribed $4.2 per mBtu.
A three-judge Bench of Chief Justice K. G. Balakrishnan, Justice B. Sudershan Reddy and Justice P. Sathasivam had reserved the verdict on December 18, 2009, after marathon arguments. Initially Justice R.V. Raveendran was on the Bench and the case was heard for few days. But he recused saying that his daughter worked for a law firm which advised RIL on global acquisitions.
Thereafter, Justice Reddy was inducted into the Bench.
The case pertained to RNRL’s demand that it be supplied 28 million standard cubic metres a day (mscmd) of gas from RIL’s KG-D6 gas fields at a price of $2.34 per mBtu agreed in a 2005 family MoU.
It was the contention of RIL that Central Government’s gas pricing policy would prevail over any private agreement and this aspect had been overlooked by the High court in its order.
On the other hand, RNRL alleged that the Ministry of Petroleum and Natural Gas was dishonest and collusive with RIL to deny RNRL its due share of gas.
It contended that “any suitable arrangement” for the supply and pricing of the gas could not be subject to the approval of price by the government.
It said that RNRL was entitled for 28 mscmd of gas from the KG Basin at $2.34 mBtu and though RIL was willing to supply, the government was not approving it.
It said the production sharing contract (PSC) between RIL and the government entered in April 2000 was for 40 blocks in about four lakh sq. km. and the contract to supply gas between RIL and RNRL constituted less than one per cent of the gas exploration area available to RIL, “which is 336 sq. km and there are 19 wells in which exploration is taking place.” It said the policy gave full marketing freedom to the contractor to supply gas at the price he wanted.
It was the Centre’s argument that “the gas title is that of Government. The title only passes to the contractor under permission at point of delivery with qualified marketing freedom. RIL is no more than an agent to sell gas. Any agreement of contractor over-riding Government public sharing contract was not called for.”