Apex court asks Reliance Industries to respond to audit report

The Supreme Court on Monday asked Reliance Industries Ltd. (RIL) to respond within three weeks to the official auditor's report that had adversely commented on its operation of gas blocks in the KRishna-Godavari basin.

A bench of Justice T.S. Thakur, Justice J. Chelameswar and Justice Kurian gave time after senior counsel Harish Salve, appearing for the company, said that as against 30 audit objections initially, the government had notified 20 on which his client had to respond.

On January 16, the court sought RIL's response to the report of the Comptroller and Auditor General of India that had recommended disallowing $357.16 million expenditure the company claimed to have incurred on drilling the wells and payments to contractors for the said gas blocks.

The report had also hauled up the oil ministry for the delays in fixing hydrocarbon prices and for following inconsistent parameters for expenditure estimation.

The court allowed three petitioners -- former Communist law maker Gurudas Dasgupta, non-government organisation Common Cause and advocate Manohar Lal Sharma -- and the government to file their replies to the company's reaction to the audit report.

The court also permitted Solicitor General Ranjit Kumar to file the status report in pursuant of the proceedings of the Public Accounts Committee - a parliamentary panel that is examining the report.

As court deliberated on the next date of hearing, it was requested to assign an early date as RIL's plea for an arbitration on the gas pricing was listed for hearing by Justice Ranjan Gogoi.

The court directed the listing of the matter for May 5 for directions on the hearing of the matter.

Besides other issues, Dasgupta, Common Cause and Sharma had moved the court challenging the previous government's decision to double gas prices from then $4.2 per unit to $8.4 per unit.

However, Prime Minister Narendra Modi-led government by an October 25, 2014, notification issued new domestic gas pricing guidelines which came into force from November 1, 2014.

Under the new guidelines, the price of the gas was increased from $4.2 per unit to $5.61 per unit. But this was applicable to normal discoveries and not for deep, ultra-deep and other difficult operations. A decision on that is pending.

The new domestic natural gas pricing guidelines superseded the January 10, 2014, decision taken by the then government that was to be notified to come into force from April 1, 2014.

Besides pricing of the gas, petitioners Dasgupta and Common Cause have sought the relinquishment of the gas fields not developed as provided under the production-sharing contract.

The petitioners have also sought the cancellation of the contract with Reliance Industries and NIKO Resources, concerning the block.