RIL said it would start negotiations with RNRL

Govt has full right over gas, not Ambanis: SC

Govt has full right over gas, not Ambanis: SC

Govt has full right over gas, not Ambanis: SC

Last updated on: May 7, 2010 21:05 IST

Email
this

Save to
My Page

Ask
Users

Write a
Comment

370)this.width=370">

Next

Ranjit Kumar Sinha & R Balaji in New Delhi

Billionaire Mukesh Ambani on Friday emerged victorious in the battle with younger brother Anil with the Supreme Court rejecting a plea for cheap gas, saying a national asset should be priced only by the government.

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 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 $4.20 per mmBtu, compared to the $2.34 per mmBtu sought by Anil Ambani group firm RNRL.

However, there was a minor difference within the bench with Justice B Sudershan Reddy holding that the MoU was a private pact, which cannot even be considered, while the other two said it could be a basis for negotiations between the two for a new agreement.

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.

Welcoming the judgement, 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."

Click NEXT to read on. . .

Image: Mukesh Ambani (L-standing), Anil Ambani (R-standing) and Dhirubhai Ambani (seated).
Photographs: Jayanta Saha/Reuters

Next

370)this.width=370">

Prev Next

Anil, who sat through the pronouncement of the verdict, later said he RNRL has "currently" no plans to seek review of the verdict 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 11 years. "The price will have to be $4.20 per mmBtu," RIL Executive Director P M S Prasad told PTI.

Shares of Reliance Industries rose 2.3 per cent to Rs 1,033.85, while RNRL was down 23 per cent at Rs 52.75. 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."

Chief Justice 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.