SC to hear RIL-RNRL case on Sept 1

The Supreme Court said that the next hearing in the long-standing gas dispute between Reliance Industries (RIL) and Reliance Natural Resources (RNRL) would take place on September 1. The apex court said it would hear all the parties on the same day. The role of the Government and all the other third parties would be decided after the September 1 hearing. The apex court turned down RNRL's plea to reject the Government's petition, seeking to become an independent party in the Krishna Godavari gas dispute. A two-judge bench, headed by Chief Justice K.G. Balakrishnan heard arguments on gas allocation by RIL, RNRL, the Government and some independent power companies. The Supreme Court directed the matter to a three-judge bench, which will now hear the case on Sept. 1.

Earlier, Anil Ambani wrote a letter Prime Minister Dr. Manmohan Singh, alleging that the Petroleum Ministry is interfering in a commercial dispute over buying gas from RIL. The junior of the two estranged Ambani brothers accused the Petroleum Ministry of siding with Mukesh Ambani's RIL against his group company, RNRL. Ambani asked the Prime Minister to direct the Petroleum Ministry and the Directorate General of Hydrocarbons (DGH) to stop intervening in the dispute except to interpret the production-sharing contract, which determines the Government’s rights and entitlements from the gas produced at a field operated by RIL. He also assured the Government that the legal battle between RIL and RNRL over gas from the KG Basin would not hurt national interest.

The Government last week increased its involvement in the gas dispute between the two Ambani brothers by filing a special leave petition (SLP) in the Supreme Court, asking it to quash the MoU signed between the two estranged brothers in 2005. The sovereign right of the Government over gas and the production sharing contract between the Union of India and RIL, the contractor, will gain precedence over the private MoU in larger public interest, the Centre said. The MoU between the two brothers be treated illegal and declared null and void as it treated the gas as a personal and family property of the signatories, it added.

The MoU, as is now well known, requires RIL to supply gas to RNRL at US$2.34 per million British thermal unit (mmBtu). RNRL has laid claim to 28 million standard cubic metres a day (mmscmd) of gas from RIL at a price of US$2.34 per mmBtu for 17 years. RIL, on its part, has said that the agreement is not binding as it is only a contractor for the KG basin gas and has added that this price was rejected by the petroleum ministry which has fixed a higher price of US$4.2 mmBtu. The family agreement was upheld by the Bombay High Court on June 15. However, RIL made an appeal into the Supreme Court against that order. The Supreme Court will hear the matter on July 20.