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Govt approval on price mandatory: RIL to SC

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Press Trust of India New Delhi
Last Updated : Jan 21 2013 | 12:54 AM IST

Hearing in the gas row between the Ambani brothers entered the final phase in the Supreme Court today with Mukesh Ambani Group Reliance Industries (RIL) asserting that government approval on gas pricing is mandatory, a contention opposed by the Anil Ambani-led Reliance Natural Resources (RNRL).

RIL said RNRL has maintained that the May 12, 2005 draft agreement between the RIL and NTPC should be the basis for fixing the price of gas from the K G Basin but it has ignored the provision for government approval.

"If you go by the NTPC draft agreement which the RNRL says is the template agreement for the supply of gas then there exists a clause that the price of the gas is subject to the government approval," RIL's counsel Harish Salve submitted before a Bench headed by Chief Justice K G Balakrishnan.

RNRL has been demanding the gas at $2.34 per unit, the rate at which RIL had agreed to supply to the NTPC.

"So RNRL's contention is vague and absurd," Salve said before the Bench, also comprising Justices B Sudershan Reddy and P Sathasivam.

RIL was countering the arguments of RNRL which in its submission today claimed that it has always advocated that the dispute can be resolved by mutual discussion.

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RNRL's counsel Mukul Rohatgi accused the RIL of scuttling the attempt to resolve the dispute out of court. He said the Mukesh Ambani Group has stated that the Supreme Court can decide the gas row.

Rohatgi said when the family MoU was reached in 2005, K V Kamath, a close friend of the Ambanis, was intrumental in the mediation process and, therefore, there are means for reaching an amicable settlement through negotiations.

Disagreeing with this, Salve said the matter can only be resolved now by the court.

Rohatgi said it was because of the attitude of RIL the dispute is not being resolved and "there has been no meeting between the two brothers".

"This case is nothing but that of greed," he said.

However, Salve said the gas dispute arose because Anil Ambani announced the Dadri power plant project in Uttar Pradesh without the approval of the RIL board.

RIL referred to various correspondence between the two groups to buttress the contention that May 12, 2005 Gas Supply Purchace Agreement (GSPA) of NTPC was the template in which government approval was an integral part.

Salve said RNRL's stand now is that it will take what suits it from both the NTPC agreemment and the MoU.

RIL contended that the gas supply agreement and the MoU was planned between RIL and Reliance Power (RPL) and not with RNRL.

He said the quantity of 28 mmscmd was derived from the simple calculation that the Dadri plant required 28 mmscmd of gas to produce 7,600 Mw of power.

Rohatgi, who concluded the arguments for RNRL, said since all other remedy has failed, the Supreme Court should end the matter in the interest of the both parties as the brothers are captains of Indian industry.

Senior advocate Ram Jethmalani, who is appearing for RNRL, said in a lighter vein that the Ambani brothers should not involve politicians to resolve the dispute.

RIL and RNRL are pitched in a high-voltage legal battle for the supply of gas from the KG Basin.

While RNRL is seeking gas at a committed price of $2.34 per unit, RIL says it cannot honour the commitment made in the family agreement reached four years back due to government's pricing and gas policy.

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First Published: Dec 16 2009 | 6:53 PM IST

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