The Bombay High Court today asked the Union government why it wanted to intervene in the appeal filed by Reliance Industries (RIL) in its case against Reliance Natural Resources (RNRL) over gas supply agreement.
"How is the government affected by grounds on which RIL has filed appeal against the single judge's order?" the division bench of Justices J N Patel and K K Tated asked government's lawyer T S Doabia.
The main issue in the case is terms of Gas Supply Master Agreement (GSMA) whereby Mukesh Ambani-led RIL is to supply natural gas from its Krishna Godavari reserves to Anil Ambani's RNRL. Both parties have filed appeals before division bench, not satisfied with single judge's verdict last year. The government is seeking to intervene in the matter.
But Justice Patel today wondered why the government did not object when the HC approved the scheme of Reliance demerger. The disputed GSMA was framed as a part of the Reliance demerger scheme, the judge noted. The HC has restrained RIL from entering into a contract with third parties for the gas sale. But Justice Patel today pointed out that the stay did not affect production-sharing contract (PSC) between the government and RIL.
The court adjourned the hearing till tomorrow, saying that Doabia will have to satisfy the court as to why government was a necessary party, and how RIL's appeal prejudices its rights.
Earlier, RNRL lawyer Ram Jethmalani said that the government has not intervened in the case between its own company — National Thermal Power Cooperation — and RIL over the gas supply agreement, but it sought to intervene in this case. Jethmalani also stated that according to the PSC between the government and RIL, the latter had the freedom to sell gas in the domestic market "at whatever rate RIL wants to". RIL's stand is that the rate at which it will sell gas to RNRL and other domestic buyers has to be approved by the government. The government-approved rate is $4.20 per million British Units (mbtu).