`RIL not part of Ambani family MoU`
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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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