New Delhi: The Supreme Court Friday ordered re-negotiation of the agreement on the supply and pricing of natural gas from the Krishna-Godavari basin between the two Reliance groups within six weeks, based on the government`s policy on the subject.
A three member bench of Chief Justice K.G. Balakrishnan, Justice B. Sudershan Reddy and Justice P. Sathasivam also asked Mukesh Ambani-led Reliance Industries and Anil Ambani-led Reliance Natural Resources to place the new agreement before the company bench of the Bombay High Court.
The much-awaited judgment said the agreement between the two brothers should serve as the "guiding tool" in reaching the new gas supply and pricing pact within the guidelines of the the government.
The agreement between the two brothers concerned the price, quantity and tenure of gas supplies by Reliance Industries. It called for 28 million units of gas a day to be sold to Reliance Natural Resources at $2.34 per unit for 17 years.
"We respect the judgment of the honourable Supreme Court and note that the Supreme Court has safeguarded the interests of over 25 lakh Reliance Natural Resources shareholders," said Reliance Natural Resources chairman Anil Ambani.
Addressing a teleconference with reporters, he said the apex court had made it clear the arrangement between the two companies should be suitable to both parties, adding he now looked forward to an expeditious and successful re-negotiation within six weeks.
"While giving the guidelines for an expeditious finalisation of the gas supply agrement between Reliance Industries and Reliance Natural Resources, by majority judgment the honourable Supreme Court has upheld Reliance Natural Resources` case," he said.
"The honourable Supreme Court has upheld the memorandum of understanding signed on June 18, 2005, served as the backdrop for the scheme and is the guiding force and the basis of the scheme of arrangements for business reorganisation of Reliance Industries."
Anil Ambani also ruled out any plan for a review petition.
Technically, there were two judgments delivered Friday and both concurring on all major legal points, but differing on the validity of family business reorganization pact or memorandum of understanding.
The chief justice and Justice Sathsivam asked the two companies to use the agreement between the two brothers as "guiding tool" to the reach the fresh gas supply agreement.
According to Additional Solicitor General of India Mohan Parasaran, the gas supply and pricing agreement now needed to be negotiated as per the policy framed by an empowered group of ministers in August 2008, led by Finance Minister Pranab Mukherjee.
"The court has not taken into account the quantum or tenure of the gas. They have to re-negotiate depending on the policies of the government," Parsaran said, even as Petroleum and Natural Gas Minister Murli Deora expressed satisfaction with the verdict.
"The government has the power to decide the price of natural gas and also the power to allocate. Supreme Court has upheld this position," Deora told reporters here.
The Krishna-Godavari gas 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.
A much-relieved, RIL Chairman Mukesh Ambani asked his
lieutenants to put the bitterness behind and focus on value
creation for shareholders of his company.
RIL Executive Director P M S Prasad, one of the
first to speak to Mukesh after the court verdict, told PTI
that "Mukesh felt relieved after the judgement and asked us to
put the bitterness behind and concentrate on value creation
for shareholders... bitterness is not good for either side."
In a statement issued in the night, RIL said that it
will renegotiate the gas supply agreement with RNRL in the
manner and within the timeframe stipulated by the apex court.
"Supreme Court verdict recognises the dominant role of
the provision of PSC and upheld the policy formulated by the
government under which it has the authority to regulate the
production and distribution of natural gas," it said.
"RIL has no ability to deviate from price, quantity and
tenure as determined under the government`s policies, or to
discriminate amongst various consumers," the statement further
RIL hoped "the clarity of findings of the judgement
brings to a permanent closure the incessant distortion of
facts and malicious allegations which were being levelled
against the government`s policies of regulating and developing
the natural gas sector for the greater good of the people of
India and in the interest of nations energy security."