With the Mukesh Ambani-promoted Reliance Industries Ltd (RIL) planning to approach the Supreme Court, challenging a High Court order for selling gas at $2.34 per million British thermal unit (mBtu) to Reliance Natural Resources Ltd (RNRL), the chances of an agreement between the Ambani brothers by July 15 appear remote.
Sources close to RIL said the company would soon respond to an invitation from the Anil Dhirubhai Ambani (ADA) group’s RNRL for discussions on an amicable settlement to the three-year-old dispute. Following last week’s Bombay High Court ruling, RNRL wrote to Mukesh Ambani-promoted RIL for talks to suggest a way forward to firm up an agreement.
“A few rounds of discussions may happen, but RIL is likely to approach the apex court after the conclusion of the one-month period, as directed by the Bombay High Court. Even their mother Kokilaben Ambani’s intervention is unlikely to help in settling the dispute out of court, as it is an issue between two companies on a commercial transaction,” sources in the know of developments said.
An RIL spokesperson declined to comment and said the company was still evaluating the judgment. An RNRL spokesperson also declined to comment on the matter.
Sources said RIL’s legal team was planning to present the issue as a business dispute between two companies and not a family affair. Another issue the company is expected to raise is that the High Court order has national implications and it gave an unfair advantage to the ADA group based on a family agreement in 2005. Besides, company sources have argued that the ruling, in a way, would override the government’s gas allocation and pricing policy.
Another argument would be that a decision in favour of Anil Ambani could create a non-level playing field for gas-based power producers. It was unfair to supply gas to the ADA group at one price and almost double the price for other power producers, RIL is expected to argue.
A few days after the judgment from the High Court, RNRL had filed a caveat in the Supreme Court, asking no relief be granted to Reliance Industries without hearing the ADA group company’s version on the dispute.
On June 15, the Bombay High Court had said RIL should honour a 2005 family agreement to supply 28 million metric standard cubic meters per day (mmscmd) of gas from its Krishna-Godavari basin fields at $2.34 per mBtu for 17 years to RNRL.
The court had also said both “parties should enter into a suitable arrangement on the basis of quantity, tenure and price as specified under the MoU, either by renegotiating the terms or reverting to Kokilaben Dhirubhai Ambani, who has reserved her ability to intervene again if parties fail to act upon the MoU. If a new agreement could not be worked out, the aggrieved party can move the Company Court for modification of the scheme of demerger.