Govt right on gas supreme; Ambani family has no right on it: SC

I / New Delhi May 7, 2010, 11:34 IST

The Supreme Court today rejected division of gas under the Ambani family MoU and said that it was government's right to decide the price and utilisation of the fuel, which is a national asset.

Delivering the majority verdict of the bench headed by Chief Justice K G Balakrishnan on the four-year gas dispute between RIL and RNRL, Justice P Sathasivam said the Production Sharing Contract over-rides all other agreements.

The family agreement -- signed among brothers Mukesh and Anil Ambani and their mother Kokilaben -- was not legally and technically binding.

The court held that all the parties are bound by government policy and RIL does not become owner of the gas.

This implies that RNRL, which was seeking 28 mmscmd of gas from RIL's KG-D6 fields at a price agreed in the family MoU, would not get the fuel.

The family MoU provided for a price of $2.34 per mmBtu, while the government had set a price of $4.20 per mmBtu.

RIL does not have absolute marketing right over gas and that price was subject to government approval, the Bench said, adding that the family MoU was not legally binding.

It said the terms of production sharing contract will have over-riding effect, and directed RIL to start renegotiation with RNRL in six weeks to safeguard the interests of the Anil Ambani group firm's shareholders.