Ambani gas tussle becomes Triangular

Ambani brothers feud over natural gas sharing reaches SC
26 Oct, 2008

PTI reports, a petition has been moved in Supreme Court seeking vacation of stay granted by Bombay High Court, which restrained Mukesh Ambani-owned Reliance Industries from selling gas to any company other than Anil Ambani group and NTPC.

The petition filed in public interest by one B A Aloor, a practising advocate from Pune, alleged that the feud between two brothers is affecting people at large who are being deprived of "the most-efficient and environment-friendly fossil fuel".

The matter is coming up for hearing on November 10. While challenging the High Court order dismissing its intervention application, the petition said vacation of stay would help early gas production from Krishna-Godavari basin.

Contesting the interim stay order, Aloor said the delay in using the gas from the RIL-controlled KG basin gas fields was against public interest, as the gas could be used as a cheaper alternate source of energy.

According to the petition, the national resources entrusted to private companies cannot be allowed to be wasted due to family feud and it casts an obligation on the company entrusted with the exploration of petroleum resources to consider national interests while discharging its duties.

"Natural gas found in the KG basin has not been produced to its optimum level due to family disputes between the Reliance group of companies... Some gas reserves could be lost permanently in the process," the petition filed through advocate Rukhsana Chaudhury stated.

"The finding of natural gas in Krishna Godavari Basin is a watershed in the history of petroleum exploration efforts and the gas starved customers had been waiting for production of gas," it stated, adding the gas supply had not kept pace with the surging demand.

Reliance Natural Resources Limited (RNRL) agrees to Govt becoming a party in
Reliance Industries Limited (RIL) gas case


Earlier Anil Ambani Group company Reliance Natural Resources Ltd has asked Reliance Industries Ltd to pay the difference between the price at which Reliance Industries will sell gas to other buyers ($2.34 per million British thermal unit), and the rate at which RNRL is seeking supply of gas. The suggestion was made by RNRL counsel Mukul Rohatgi as an interim solution to the ongoing dispute between RIL and RNRL over supply of gas. Rohatgi submitted to the Division Bench of the Bombay High Court that it may ask Reliance Industries to pay to RNRL the difference in price for three years.

The division bench of the Bombay High Court on 21 October allowed Government of India to be a party to the ongoing dispute between RIL and RNRL over sharing of natural gas from KG basin fields.

RNRL, which had earlier opposed the move, changed its stand and has not objected to the Government becoming a party at the current stage of the case.

Counsel for RNRL, Mukul Rohatgi, said that if the government is not heard at the High Court stage and if the matter reaches the Supreme Court, the highest court could take a view that the government should have been heard at High Court level. In that case the court might refer the matter back to the High Court. Therefore, to save time, the company (RNRL) has agreed to the government plea for becoming a party to the case, he said.

Counsel for RIL, Harish Salve, said the bench should give the government the opportunity to put forth its case. Otherwise in the Supreme Court the government could say that it was not heard properly in the lower court.

The Government counsel, T.S. Doabia, said that the only issue the government is worried about is the price at which the gas is to be sold and its approval. It is not concerned with the MoU between RIL and RNRL, he said.

The government in its petition field in April 2008 wanted vacation of the interim order of May 3, 2007 that restrained RIL from creating any third party rights and use or supply of gas committed to RNRL.

The Government said that it is a major stakeholder under the Production Sharing Contract (PSC) for RIL’s K-G basin gas. The PSC is between the Government and RIL. A private dispute between the RIL and RNRL cannot threaten the interests of the Government.

Justice J N Patel, who is hearing the case, said the bench has accepted the ‘chamber summons’ (a procedure of approaching the court) of the Government through the Union Ministry of Petroleum and Natural Gas. The government must file an affidavit and the officer concerned must be present in the court.

RIL counsel Harish Salve said that he did not expect the Dadri Power Plant of RNRL to be operational for at least the next six years. However, today both the parties agreed on one significant aspect which is the government�s role in the case. Both the parties made it very clear that they have no objection to the government of India becoming a party to the ongoing litigation.

Mukul Rohatgi, Counsel, RNRL said, "We found that it is better if the government is there because they have been saying that they want to be heard. We have nothing to hide or to keep out from the government. So, we said that let them come otherwise there were apprehensions that if they were not to be heard by this court, then certainly they would have a ground in the Supreme Court to say that they were the owners of the gas and that they have not been heard, etc. In order to obviate all these delays, which would have occurred because of this, we have decided to let the government come. Neither we nor RIL has any objections. Government will be added as a party and they will say whatever they have to say. Thus, when the decision comes it will bind all parties",government, RIL and RNRL.

Harish Salve, Counsel, RIL said, "I have given my consent. I don�t mind if they want to join let them join. They are now bringing replies of ministers and they are saying interpret the documents. The court felt if all that is gone to be going into and the court has realized that the argument of RNRL is not as simple as they are trying to portray and they felt it is better to hear the government"

RIL counsel Harish Salve clearly indicated that RIL never had a problem with the government becoming a party to the case. But it did seem like a sudden change in the stance of RNRL when RNRL counsel Ram Jethmalani told the High Court bench today that RNRL had arrived to a decision and that they consent to the government becoming a party to the ongoing litigation at the Bombay High Court.

After the vacation period ends and when the hearing of this case resumes on November 11, this case will have a fully fledged legal triangle comprising Reliance Industries Limited, Reliance Natural Resources Limited and the Government of India.

RNRL files part of family MoU in HC

October 09, 2008

Anil Ambani-controlled Reliance Natural Resources (RNRL) today submitted a copy of the relevant parts of the memorandum of understanding (MoU) signed between the two brothers.

Reliance Industries’ counsel Harish Salve opposed the court taking the MoU on record and stated that he was reserving his right to cross examine. Ram Jethmalani, counsel for RNRL, read out the contents of the affidavit and said that the portions of the MoU submitted were only to enable the court to effectively deal with the frivolous grievances argued by RIL on non-production of MoU.

Still, the two counsels united in saying that the contents of the documents should not be made public. The MoU records the arrangement between the two brothers as part of the demerger scheme and also notes what needs to be done in future. The court has adjourned the hearing of the case till October 15. According to ADAG, RIL had contracted to supply 12 mmscmd of gas per day to state-run NTPC at $2.34 per unit , and it was agreed that if the gas was not supplied, it would be sold to RNRL.

Jethmalani will continue his submissions in the next hearing on 15 October. Justice JN Patel, who is hearing the case, announced that the court would sit on Saturday (October 18), as it would like to complete the hearing before the Diwali vacation and use the Diwali vacation for drafting the judgement.

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