New Delhi, July 04: A day after Anil Ambani-led RNRL petitioned the Supreme Court seeking modification in the Bombay High Court order, elder brother Mukesh-run RIL moved the apex court challenging the same judgement that asked it to supply 28 MMSCMD gas to RNRL at USD 2.34 per mmbtu.
Reliance Industries Ltd in its appeal today alleged that the High Court had erred in deciding the three terms -- quantity, tenure and price of gas supply -- to power plants of RNRL affiliates as the court had no jurisdiction.
The High Court on June 15 had asked RIL to honour a 2005 family agreement to supply 28 million cubic meters per day of gas from its Krishna-Godavari basin fields to RNRL at USD 2.34 per mmBtu for 17 years from the date of setting up of the Dadri power plant.
"The High Court as a company court exercising jurisdiction under Section 392 of the Company Act, 1956, had no power to modify the scheme of reconstruction of a company by demerger as approved almost unanimously by 99.9998 per cent shareholders and creditors and sanctioned by the court..." RIL said in appeal.
According to the petition, the supply of gas as per the MoU was subject to all necessary approvals as required under the Production Sharing Contract and the government policy.
The High Court, while concluding that the MoU of June 18, 2005 was binding on the companies, overlooked the fact that obligations contained in the MoU contemplated approval of the government and the same were not absolute.
RIL said that the Government of India continued to have the title of the natural gas till the delivery point and had a "paramount and dominant role" in approval of the gas price formula.
The company sought the apex court's direction to allow it to produce and sell natural gas under PSC of April 2000 subject to further orders of the court.
It further stated that the high court as a company court cannot sanction, implement or modify a scheme of arrangement that in effect nullifies a declared government policy.
According to the petition, the government, which is the owner of all hydrocarbon resources of the country, continued to control all aspects of petroleum operations being carried on by the contractor, who under the PSC was obliged to abide by and follow the stipulation of PSC.
Stating that gas allocation, as directed by the high court, was in contravention of the government's Gas Utilisation Policy, RIL said that the high court failed to appreciate that such direction would lead to termination of PSC which would result in loss of Rs 34,000 crore invested by it in the project.
The petition filed through K J John & Co said that the ruling nullified the duty bound obligation to sell gas at competitive arms length sales price and would put the entire project of development of KG-D6 block for exploration and production of natural gas in "peril and jeopardy."
Bureau Report
First Published: Saturday, July 04, 2009, 12:59