Apex court verdict on Reliance gas dispute Friday morning

Posted by on May 6th, 2010 and filed under Business/Economy, Immigration/Law/Rights. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

New Delhi, May 5 (IANS) The Supreme Court is slated to deliver Friday morning the much-awaited verdict on one of India’s most high-profile legal battles between companies led by the two Ambani brothers, Mukesh and Anil, over natural gas supplies from the Krishna-Godavari basin.

A three-member bench of Chief Justice K.G. Balakrishnan, Justice B. Sudershan Reddy and Justice P. Sathasivam will pronounce the judgment here, as reported by IANS Wednesday. The bench had reserved its verdict Dec 18, after hearing the arguments for 27 days, spread over nine weeks.

At the core of the gas dispute is the validity of an agreement reached between the two brothers — and blessed by their mother Kokilaben — at the time of the de-merger of the erstwhile Reliance Group in June 2005. It concerns the price, quantity and tenure of gas supplies by Reliance Industries to Reliance Natural Resources.

The agreement purportedly calls for 28 million units of gas per day to be supplied by Mukesh Ambani-led Reliance Industries to Anil Ambani-led Reliance Natural Resources at $2.34 per unit for a period of 17 years.

The Bombay High Court’s division bench of Justice J.N. Patel and K.K. Tated had already upheld the gas agreement and directed Reliance Industries and Reliance Natural Resources to enter into a gas supply pact within a month.

Prior to that, two single-judge benches of the Bombay High Court had also ruled in favour of Reliance Natural Resources in May and October 2007, respectively.

But Reliance Industries moved the apex court July 4, challenging the verdict on all three counts — the quantity, tenure and pricing of natural gas. Prior to that, Reliance Natural Resources had also filed a caveat with the court seeking binding orders.

The oil ministry had initially kept aloof from the case, arguing both in parliament and outside that the contractor had full marketing freedom in deciding whom to sell their share of gas, for what duration and at what price.

It belatedly sought an intervention in the matter towards the fag end of the hearing in the Bombay High Court.

Even in the Supreme Court, the ministry first filed a petition asking for the agreement between the two brothers to be declared null and void, only to face the embarrassment of having to virtually withdraw the original petition.

In the amended version that was filed later, it sought to argue that hydrocarbons discovered in India were sovereign assets of the state, and as such, the ministry alone had the power and freedom to decide whom the contractor could supply gas to, and for how long and at what price.

The fields, off the Andhra Pradesh coast, were won by Reliance Industries at the time when its founder, the legendary industrialist Dhirubhai Ambani, was still at the helm. These fields have since turned out to be the biggest ever gas discovery made in India and one of the biggest in Asia in recent years.

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