Approach 3rd party, warring Ambanis told

The Bombay High Court on Monday suggested that the warring Ambani brothers could approach an independent body to resolve their dispute relating to supply of natural gas from the Krishna-Godavari (KG) basin. "The MoU (memorandum of understanding) is not able to resolve the issue and we would suggest both the parties to approach an independent body for the same," observed justice J N Patel.

The case relates to supply of gas from Reliance's KG basin to a proposed power project by Reliance Natural Resources (RNRL), controlled by younger brother Anil Ambani.

This is not the first time that the court has asked the warring companies to approach a third party for a settlement. The division bench comprising justices J N Patel and K K Tated, had on August 21 suggested that the two brothers should seek the help of their mother Kokilaben to resolve the issue.

Pointing out that direct communication between the two companies have not yielded much result, justice Patel said, "Most of the correspondence between both the parties have been allegations against each other.” RIL and RNRL have submitted copies of e-mail correspondence between both the companies.

Replying to Justice Patel, Harish Salve, senior counsel of RIL, said that it is a legal matter and can only be resolved through the court's intervention and not by any third party.

"The issue of gas pricing has to be resolved as it has not been reached through an arm's length formula. We cannot keep the gas in the ground. We are under tremendous pressure from the government regarding the gas supply," argued Salve. However, Salve said that RIL is ready to supply gas to RNRL at the government-approved price of $4.20 per million British thermal unit (mBtu).

According to the Gas Sale Master Agreement (GSMA) between the companies, RNRL is entitled to 28 million cubic metres of gas per day from the KG basin at $2.34 per mBtu for 17 years. RIL has refused to supply gas at that price for that period. "The tenure can only be as long as I have the gas," Salve argued.

As per the GSMA, RNRL would also be allotted another 12 million cubic metres of gas if an earlier agreement between RIL and power major NTPC falls through. Besides, the ADA Group will have the first right of over 40 per cent of all future gas discoveries made by RIL.

The case will come up for hearing on October 7.