Anil Ambani group firm RNRL today told the Supreme Court that the government's approval was not required for sale of gas by RIL to it and alleged that the Mukesh Ambani-led company had "wrongfully and mischievously" sought to pass this off as a condition.
"The allegation that government approval is a condition precedent to sale of gas by RIL to either (power PSU) NTPC or to RNRL is completely wrong and incorrect," RNRL said in its affidavit, replying to RIL's petition in the Supreme Court.
It questioned RIL's argument that government's approval was required for price fixation, saying that even the empowered Group of Ministers had decided that any policy on the subject would be without prejudice to the RIL-RNRL case.
RNRL has never questioned the ownership of the government on gas, but RIL has complete market freedom to deal with gas that belongs to it, the affidavit said.
"The Anil Ambani group is of course entitled to claim damages for the loss and damage caused to RNRL on account of continuing breach and violations committed by RIL, in addition to directions to RIL for supply of gas," it said.
The two sides approached Supreme Court against the Bombay High Court's June 15 ruling that asked RIL to provide 28 mmscmd of gas to RNRL at $2.34 per mmBtu.
RIL's plea is that as a contractor, it does not have power to fix price. The government has moved a petition in the case asserting its right on pricing and distribution of gas and the apex court has decided to commence hearing all these matters on October 20.
RNRL told the Supreme Court that RIL had itself conceded and stated before the courts that it would make profits even at a price of $2.34 per mmBtu and the Director General of Hydrocarbons has also said so.
"The Director General of Hydrocarbons has made a public announcement on August 5 that the cost of production of natural gas from KG D6 is $1.28 per mmBtu and RIL will earn a profit of $1.06 per mmBtu plus the marketing and risk management charges of $0.12 per mmBtu," RNRL said.
Stating that Reliance Industries Ltd has been changing its stance with regard to the MoU (family agreement that provides for sale of gas by RIL to RNRL), Reliance Natural Resources detailed RIL's response on different occasions and said "this fully exposes RIL's blatant lie and falsehood."
"RIL has complete marketing freedom for sale of gas within India. The marketing freedom would include within its scope the freedom to sell the gas on such terms and at such price that RIL deems fit and proper," RNRL said.
Stating that the supply of gas was not subject to gas utilisation policy of the government under the PSC with RIL, RNRL said in its affidavit that "the petitioners (RIL) are seeking to mis-interpret the terms... To suggest that any sale of gas has to be in accordance with the (government) policy."
RNRL further said that RIL had made a "valid, binding and enforceable commitment in the year 2005 to supply gas on the agreed terms to RNRL" and the said commitment and obligation was not affected in any manner by the gas utilisation policy announced by the government in 2008.
The Anil Ambani group company accused that RIL's endeavour was to "subvert and frustrate" the demerger scheme sanctioned by 99.998 per cent shareholders and creditors of the company.
"Until and unless a suitable arrangement (to execute the demerger scheme and a gas supply agreement was put in place) is executed, the scheme is not fully executed and the demerger of business is not complete," it said.
In this context, RNRL said that it was the duty of the court to give suitable directions to make the scheme workable. "Breach and violation of the scheme by RIL gives jurisdiction to the court to give direction to have a suitable agreement."
In terms of PSC, RIL has complete market freedom to deal with the gas that belongs to it and the "Company Court and the Division bench had given directions only with regard to the gas that belongs to RIL and has not given any direction in relation to the gas that belongs to the Union of India," RNRL said.
RNRL further submitted that the Bombay High Court order had not disregarded the PSC between RIL and the government of India.
"...It is submitted that no government approval is required in respect of selling price of $2.34 per mmBtu and RIL is bound and liable to supply gas to RNRL at the price of $2.34 per mmBtu.
"The contract appended to the international tender did not have the clause relating to the government approval. Hense there is no question of adopting such a clause in the contract with RNRL," the Anil Ambani group firm said.
