`RIL not part of Ambani family MoU`

Last Updated: Tuesday, October 20, 2009 - 22:30

New Delhi: Reliance Industries today told the Supreme Court that the 2005 family agreement to divide the Reliance empire was a pact between the Ambani brothers and Anil should sue Mukesh if he feels aggrieved.

RIL Board had not approved the family MoU that provides for supply of gas by the company to Anil-led RNRL, Mukesh Ambani-run RIL`s senior counsel Harish Salve said on the first day of hearing on the gas dispute in the apex court.

Hearing petitions by the group firms of both the Ambani
brothers, challenging the Bombay High Court order of June 15
that asked RIL to reach an agreement with RNRL for gas supply,
a bench headed by Chief Justice K G Balakrishnan observed that
it is not a fight between shareholders.

The bench said it`s like people of two countries don`t
have any problems, but there is a fight between two persons
who are heading these countries. "Thus, there is no fight
between the two companies, but just between two individuals
which has percolated down to the people."

The court later adjourned the matter for further hearing
tomorrow, when RIL will continue arguments.

RIL today argued that it was Anil Ambani group, which had
in June 2007 asked the government to frame a national gas
utilisation policy and now it has gone back.

The case pertains to RNRL`s demand that it be supplied 28
mmscmd of gas from RIL`s KG-D6 gas fields at a price of USD
2.34 per mmBtu agreed in a 2005 family MoU. RIL, however,
contends that it cannot do so in view of the government
policy.

The court said: "Neither of the kings are party, but they
are shadow boxing (through their companies)."

Agreeing with the observation made by the bench, Salve
said: "We do say it`s a shadow boxing. Two corporates are
involved... It`s my case that it`s a fight between two heads
of companies."

He went back to arguing that the MoU signed by the family
members of the promoter group, segregating the businesses was
conditional on fulfilment of conditions including necessary
approvals from the companies, relevant regulatory authorities
and courts, and signing of a definitive agreement.

The RIL counsel further said that the RNRL petition
referred to an agreement reached between promoters, but it did
not refer to any document (MoU) nor any such document was
produced before the single judge.

"It is RIL`s case that the MOU was not placed before the
board and that the members of the board had no knowledge of
the terms of the MoU," the counsel said, adding that the
division bench had relied upon the media reports and the board
resolution to come to a positive finding that the MoU was
placed before the Board.

On RNRL`s contention that the government had no role in
price fixing for the gas committed to it by RIL, Salve claimed
that ADAG, in a presentation to Ministry of Chemicals and
Fertilisers in June 2007, had "virtually appealed to the
government to fully regulate the gas sector in the country by
fixing the prices, monitoring the E&P contractors etc."

During the hearing, RIL said that while the Gas Sale
Master Agreement (GSMA) was approved by the boards of RIL and
RNRL, the latter then challenged the same agreement in January
2006 on the grounds of fraud and it should have awaited
reconstitution of the RNRL board.

Besides, RNRL had alleged that the GSMA was thrust on it
but another letter by an affiliate company of ADAG had
asserted that the agreement was valid and legally binding.
"This letter has not been produced by RNRL, and has come into
the possession of RIL recently," Salve added.

At the beginning of the hearing, Justice R V Raveendran,
who is the part of the three-judge Bench, disclosed that he
holds equal number of shares in both RIL and RNRL and enquired
whether anybody had any objections.

Senior counsel Ram Jethmalani, appearing for RNRL, said
that Justice Raveendran was most suited to hear the matter
while Salve wanted the disclosure to be recorded.

The judge said that the comments made during the hearing
should not be construed as observations by the court.

Salve said that the board of RIL was not aware of the
contents of the MoU arrived at with the help of Kokilaben,
mother of Mukesh and Anil, and was not bound by the MoU.

"The company and its shareholders are only bound by the
scheme of arrangement which has the approval of the creditors,
shareholders and the court," he added.

GSMA signed between RIL and RNRL for supply of gas for
Anil Ambani group`s power plant in Dadri, Uttar Pradesh, had a
clause for relevant government approvals including price,
the RIL counsel said.

Though RNRL contended that the GSMA was a fraud, it had
attached a copy of a scheme along with its application to the
Petroleum Ministry in June 2006, seeking permission for laying
a pipeline from Kakinada to Dadri.

Mukul Rohtagi, who also appeared for RNRL, separately
objected to the special leave petition filed by the
government. The court will later take up the issue of
admissibility of the SLP.

Bureau Report



First Published: Tuesday, October 20, 2009 - 22:30

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