The Hindu Business Line : Reliance-RNRL case: SC issues notices

New Delhi, July 7 The Supreme Court on Tuesday issued notice to Mukesh Ambani-led Reliance Industries and Anil Ambani-run Reliance Natural Resources Ltd on cross appeals filed by both the companies against an interim order of the Bombay High Court on dispute relating to gas supply.

A Bench of the Chief Justice, Mr K. G. Balakrishnan, Mr Justice P. Sathasivam and Mr Justice J.M. Panchal also issued a notice to the Centre cited as an intervener. The Bench, after hearing counsel for the parties during ‘mention’ time, posted the matter for further hearing on July 20.

RIL was aggrieved over the order directing it to supply 28 million standard cubic metres per day of gas at $2.34 per million British thermal units (mmBtu) of gas for 17 years from the date of setting up of the Dadri power plant. It said that the High Court had erred in deciding the three terms — quantity, tenure and price of gas supply — to power plants of RNRL affiliates.

It pointed out that the MoU did not specify any price but only indicated that the gas supply would be on terms not less favourable than the NTPC commercial terms, which contained the price of $2.34 per mmBtu of gas. The court overlooked the fact that admittedly this price as well as any price proposal relating to RNRL was separately and expressly subject to approval by the Government, which by its communicated dated July 26, 2006, had declined to approve the price.

The High Court had overlooked the fact that in the absence of allocation by the Government, RIL could not utilise the gas produced and saved by it as the contractor of the Government to utilise any gas for its captive use. The SLP sought quashing of the impugned order dated June 15 and an interim stay of its operation.

In its SLP against the same interim order, RNRL said it was aggrieved as the High Court had erred in not giving a direction for amendment of the gas supply agreement. It said the entire controversy arose in view of RIL’s consistent and continued conduct of backing out from its firm commitment to supply gas to RNRL.

RNRL alleged, “This is purely out of commercial greed. Higher gas price being sought by RIL will only further enrich this already very profitable company by windfall profits of additional Rs 50,000 crore at the cost of common man in the country apart from making Indian power industry uncompetitive by raising the input cost of power.”

It said “RNRL is not seeking anything over and above what was a solemnly committed binding commercial obligation by RIL, its board and shareholders in the year 2005 under the scheme sanctioned by the court, read with the MoU, acted upon by the parties.”

It sought direction to restrain RIL from supplying or entering into any contract for the supply of natural gas for the amount of 40 mmscmd with any other party other than the petitioner.