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New Delhi, Nov. 24 On a day when Mr Anil Ambani made a surprise appearance in the Supreme Court in the Ambani brothers’ gas row, his company Reliance Natural Resources Ltd (RNRL) said it was unable to raise the Rs 25,000 crore (around $5 billion) needed for the Dadri power plant as Reliance Industries Ltd (RIL) failed to give it a bankable agreement.

RNRL also described the 2005 family MoU as a “sacrosanct” document as against RIL’s claim that for the company the MoU was not worth the piece of paper on which it was written.

Mr Anil Ambani, who was in the court throughout the day’s proceedings, said in a statement, “My presence in the honourable Supreme Court today reflects my deepest regard and respect for our judiciary. I have come here today not just on my own behalf but on behalf of the nearly 11 million shareholders of the Reliance Anil Dhirubhai Ambani Group – the largest shareholding family in the world – whose interests will be directly affected by the outcome of this case.”

RNRL is suing RIL for not honouring its commitment made in the family MoU for supplying 28 mscmd of natural gas from the Krishna-Godavari Basin D6 block at $2.34/mBtu. RIL has maintained that it neither has the marketing freedom nor the authority to supply gas to RNRL at subsidised rate, as the Government has determined a price of $4.2/mBtu and also allocated the gas according to the utilisation policy.

Mr Ram Jethmalani, senior counsel for RNRL, continued his arguments before a Bench headed by the Chief Justice, Mr K.G. Balakrishnan, saying none of the issues including the price of the gas ($2.34 per unit plus transportation costs taking it to $3.18 per unit), its quantum (28 mmscmd) and duration of supply (17 years) was in dispute from the date of MoU (which was June 18, 2005) till the approval of the demerger scheme (December 2005). The only dispute between RIL and RNRL was the bankability of the agreement, he said.

Mr Jethmalani said RIL officials and Board members knew about the contents of the family MoU as RIL’s board resolution of June 2005 had taken note of the MoU. He said, therefore, that there was nothing private about the MoU, adding that it was a corporate document.

“The family MoU is sacrosanct. The NTPC document should be the basis for the price of gas that will be supplied from RIL to RNRL and the final agreement has to be bankable,” he said. Mr Jethmalani pointed out that the NTPC document evisaged the supply of gas from RIL to the public sector power company at $2.34 per mmBtu.

He said the family MoU gives the power to mother Ms Kokilaben Ambani to give directions to work out the MoU and the demerger scheme.

He alleged that till the negotiations were going on for arriving at the bankable contract, RIL did not bring in the issues of Production Sharing Agreement or the approval of price for the supply of gas by the Government.

“The PSC and price approval by the Government were bogus afterthoughts. The obligation and binding nature of the MoU was never in doubt and it was intended to convert the demerger scheme into statutory enforceable contract between the two groups,” he said.

However, things started going wrong for Mr Anil Ambani since the July 17, 2004 board meeting of RIL when a resolution was passed giving all powers to Mr Mukesh Ambani, Mr Jethmalani said.

“The Resolution was humiliating for the younger brother. RIL board clipped all powers of Mr Anil Ambani,” he said. However, according to June 2005 board resolution of RIL, Mr Anil Ambani was to be reinstated on the RIL Board in case the scheme of arrangement does not go through and one seat on the RIL board was kept vacant for this purpose, he said.

Mr Jethmalani said, “Once the scheme (of demerger) is sanctioned, it is not merely the powers of the court to enforce it but it is the duty of the court to enforce it. What we are trying to enforce is not the MoU but the scheme of demerger which is the statutory contract by removing all obstacles,” he said.

More Stories on : Petroleum | Corporate Disputes | Courts/Legal Issues | Reliance Industries Ltd

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