The government may have chosen to package the withdrawal of its affidavit in the Bombay High Court in the fight between Mukesh Ambani’s Reliance Industries Limited (RIL) and Anil Ambani’s Reliance Natural Resources Limited (RNRL) as an attempt to expedite the case, but it is clear there is egg on the government’s face. RNRL’s counsel had long argued that the affidavit was an attempt to weigh in favour of RIL, and was incorrect — in the event, they made clear their intentions to cross-examine senior petroleum ministry officials who had directed the preparation of the affidavit. Given that the affidavit ran counter to the government’s own statements in Parliament, the government for understandable reasons may not have been keen on senior officials being questioned, or the publicity that would ensue.
One issue in the case between RIL and RNRL is whether there was a completed contract between the two parties (RNRL’s stand) or whether it feels there wasn’t (RIL’s stand). In this context, the government’s affidavit made two broad points. First, while RIL’s disputed contracts with RNRL and the state-owned National Thermal Power Corporation (NTPC) were signed with a gas price of $2.34 per mmbtu, the affidavit talked of a decision by an Empowered Group of Ministers (EGoM) that the gas was to be sold at $4.20 per mmbtu. Second, it said the production sharing contract (PSC) between RIL and the government made it clear that the government had the right to approve the pricing of all gas produced from the RIL field — and that is why the petroleum ministry had the power to reject the RIL-RNRL deal, as it had done last year. This was contrary to the RNRL contention that the government’s powers on pricing applied only to its share of the gas from the RIL field and not to all the gas. In other words, the nub of the affidavit was that since the EGoM decision was binding, the contracts between RIL and RNRL/NTPC were irrelevant.
Some facts are pertinent here. For starters, the minutes of the EGoM point out that the gas price being talked of did not apply to either RIL-NTPC or RIL-RNRL. The EGoM’s minutes show that a member asked the law minister how the price being talked of would impact the RIL-NTPC and RIL-RNRL cases that were before the court, and the minister had said the EGoM decision did not apply to these cases. This was then repeated in the final EGoM decision. Besides, the PSC had it that the government’s right to price gas/oil is limited to the share of gas/oil it is supposed to get from the field, and not to all the gas/oil from that field. While one could argue that the PSC, like any such document, is open to interpretation, the government’s own stance had been that its powers of pricing were not unlimited, that the powers applied only to its share of gas/oil. In replies to questions in Parliament, and in replies to other ministries asking for the government to fix the price of gas for power/fertiliser plants, the petroleum ministry said the same thing: it had no power to fix prices under the PSC. Yet, it chose to state otherwise in the affidavit.
Given the manner in which the petroleum ministry has behaved in this case, specifically the contradictory positions that it seems to have adopted, and submitting an affidavit only to withdraw it later, it may be a good idea for the Prime Minister to call up the petroleum minister and ask him what he thinks he is up to. Many people would be interested in the answers. If there are no satisfactory answers, that would tell its own story.