Reliance Industries admits gas policy was not notified


New Delhi:The Supreme Court Thursday asked Reliance Industries if the gas utilisation policy had indeed been notified by the government and if the same was in the nature of an industrial policy. And the answer was ‘no’.

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Counsel for Reliance Industries Harish Salve also said that the family pact between the two Ambani brothers, Mukesh and Anil, was “not worth the piece of paper it was written upon” as far as his corporate client was concerned.

Continuing with the hearing on the gas dispute between the companies led by Mukesh and Anil Ambani, the three-member bench of the apex court raised the issue of the gas utilisation policy after noticing that Salve’s arguments were based on it.

Inferring from the so-called policy, the Reliance Industries counsel said both the 17-year tenure for gas supplies from the Krishna-Godavari basin and the price of $2.34 per unit were unacceptable.

He told the bench that the price of $2.34 per unit sought by Anil Ambani-led Reliance Natural was not in conformity with the price of $4.20 per unit fixed by the government on the basis of the recommendations by a ministerial group.

To this, the bench queried if the government had notified this gas utilisation policy like it does in the case of various industrial policies. Salve replied: “It is not a notified policy. It is not like an industrial policy.”

Counsel said it was in the form of an “instruction” given by the government and also formed a part of the minutes of the meeting convened by the empowered group of ministers on Krishna-Godavari gas. He said the government also issued a pressnote in this regard.

Besides questions on the gas utilization and pricing policy, the bench disapproved the argument by Reliance Industries deprecating the family pact brokered by the late Dhirubahi Ambani’s widow Kokilaben between her two sons.

“If there was no MOU (memorandum of understanding), could there have been demerger?” the bench queried, referring to the split of Reliance Industries group in 2005, which was based on the family pact.

Salve replied: “Some parts of the MOU were incorporated in the demerger scheme, some were not.” And he went on to add: “Secret agreement between promoters cannot be binding upon its three million shareholders.”

According to him, “the family MOU is not worth the piece of paper it is written upon, as far as the RIL is concerned.”

The much-watched legal battle between the companies led by the two Ambani brothers is being heard in the Supreme Court since Tuesday by a three-member bench comprising Chief Justice K.G. Balakrishnan, Justice R.V. Raveendran and Justice P. Sathasivam.

The Reliance Industries counsel also maintained that the gas price of $4.20 per unit was not only just but was also the consideration that one of Anil Ambani’s companies had agreed to pay for a power project in Andhra Pradesh.

He said the government had the right to fix the price of gas and that courts cannot intervene in the state’s right to frame a gas distribution policy.

At the crux of the dispute is the supply of natural gas from the Krishna-Godavari basin, awarded for exploration and harnessing to Reliance Industries, before a split in 2005 in the group founded by legendary industrialist Dhirubhai Ambani.

Based on a family reorganisation pact, the Anil Ambani Group wants 28 million units of gas per day for 17 years at $2.34 per unit. But Reliance Industries says it can only sell it for $4.20 per unit, claiming this was the price approved by the government.