Ambani Gas row: SC favours Mukesh

Ambani Gas row: SC favours Mukesh

Anil Ambani, Chairman of Reliance Communications, comes out of the Supreme Court in New Delhi May 7, 2010. REUTERS/Adnan Abidi

 

A three-judge Supreme Court bench, headed by Chief Justice K G Balakrishnan who demits office on Tuesday, favoured Mukesh Ambani in the high voltage gas pricing and supply dispute between Reliance Industries (RIL) and Reliance Natural Resources (RNRL).

Chief Justice supported Sathasivam's judegement. Justice Sathasivam said that the brothers need to re-noegtiate the MoU in six weeks as the family MoU was not binding. It added that gas was a national asset and the government will finally decide on the pricing. However Justice Reddy disagreed with the judgement.

 

The case is one of India's biggest corporate battles. RIL had appealed to the apex court after the Bombay High Court ruled in favour of RNRL.

Sathasivam in his verdict said RNRL is entitled to get 28 million cubic meters a day from RIL's eastern offshore KG-D6 fields at $2.34 per mmBtu, a price 44% lower than government-approved rates.

The case involves terms of a deal under which Reliance Industries was to supply Anil Ambani's Reliance Natural with 28 million standard cubic metres a day (mmscmd) of gas for 17 years at a rate below the government price.

Stock market participants expected a repeat of the Bombay High Court judgment, which asked Reliance to supply gas to RNRL at $2.34 per unit.

India's Reliance Industries KG-D6's control and raiser platform is seen off the Bay of Bengal in this undated handout photo. REUTERS/Reliance Industries/Handout/Files

 

The gas, which Reliance Natural wants at almost half the government-set rate of $4.2 per million metric British thermal unit (mmBtu), comes from the Krishna Godavari basin off India's east coast, which is operated by Reliance Industries.

The field is India's biggest gas find and should nearly double the nation's gas output when production is at full throttle at 80 mmscmd.

The disputed deal was part of a 2005 family settlement between the Ambani brothers under which the Reliance empire was split following the death of their father. The brothers have been in several disputes since then.

Reliance Industries argues the private deal cannot take precedence over government policy, which determines who can receive gas and at what price.

A watchman of Reliance's closed petrol station walks at Raipur Kalan village in the northern Indian state of Punjab May 7, 2010. REUTERS/Ajay Verma

 

Anil Ambani, who claims otherwise, rolled out a series of front-page advertisements in major newspapers accusing the government of taking the side of Reliance Industries.

The government initially filed a petition in India's highest court asking to be made a party in the dispute, arguing the family deal was not applicable, and Reliance Industries could only sell gas with its consent.

The government later modified its stance, saying it only wanted to assert that it is the rightful owner of the gas.

TIMELINE - Key dates in Ambani brothers' dispute

 

Reuters The Supreme Court on Friday ruled in favour of billionaire Mukesh Ambani in a gas pricing dispute with brother Anil, closing a chapter on a five-year battle that now gives the government control over setting prices.

The case has rattled investors and raised concerns over the immense influence of powerful businesses on government policy in Asia's third-largest economy.

The Supreme Court ruled in favour of Mukesh Ambani, the world's fourth richest man, and ordered the feuding brothers to renegotiate a gas contract between Reliance Industries and Reliance Natural first drawn up in 2005.

 

Following is a timeline of key dates in the Ambani rift.

* July 2002 - Dhirubhai Ambani, a school teacher's son and founder of the Reliance business empire, dies. Mukesh Ambani becomes chairman and managing director of Reliance Industries Ltd, and Anil Ambani is made vice-chairman.

 

* November 2004 - Feud between the brothers becomes public.

* June 2005 - Family reaches a settlement to split the Reliance group in a deal brokered by their homemaker mother, Kokilaben.

 

* 2006 - Formal split takes place, with Mukesh taking control of flagship Reliance Industries, with interests in petrochemicals, oil and gas exploration, refining and textiles. He has since launched a retail venture. The Anil Dhirubhai Ambani Group gets telecoms, power, entertainment and financial services. The Group includes Reliance Communications Ltd, Reliance Infrastructure Ltd, Reliance Capital Ltd, Reliance Natural Resources Ltd (RNRL) and Reliance Power Ltd.

* July 2008 - Reliance Communications calls off merger talks with South Africa's MTN after Mukesh makes a claim on the shares of Anil's telecom firm.

* June 15, 2009 - Mumbai High Court directs Reliance Industries and Reliance Natural to enter a gas supply agreement within a month.

* July 1, 2009 - Reliance Industries says will appeal to the Supreme Court against High Court ruling.

 

* July 19, 2009 - Indian government steps into the legal dispute, filing petition in the Supreme Court saying the gas is its property.

* July 20, 2009 - The Supreme Court does not exclude the government from the proceedings. Court says will hear case on Sept. 1.

* Aug. 28, 2009 - The Supreme Court website lists case hearing on Oct. 20.

* Oct 11, 2009 - Following a visit to holy shrines in the Himalayas, Anil Ambani offers an olive branch to his elder brother and makes an impassioned call to end the impasse. Reliance Industries welcomes the move, but says the dispute under litigation is not merely a family matter and hoped "any overtures for rapprochement are in no way related to the ongoing hearing of the case".

 

* Oct. 20, 2009 - A three-member bench, including Chief Justice K.G. Balakrishnan, of the Supreme Court begins hearing arguments in the case.

* Nov 4, 2009 - The hearing is disrupted when a judge withdraws, citing potential conflict of interest as his daughter worked at a firm that was a consultant to Reliance Industries.

* Nov 5, 2009 - A new three-member bench that also includes the chief justice begins hearing arguments from scratch.

* Nov 5-Dec 18, 2009 - Reliance Industries argues a private deal between the Ambani brothers cannot take precedence over government policy, which determines who can receive gas and at what price. Reliance Natural, which claims otherwise, says the government will not suffer a loss even if Reliance Industries sells it the gas at the disputed price. The government stresses it does not favour either side in the dispute.

* Dec 18, 2009 - Court finishes hearing the case and reserves judgement.

* May 7, 2010 - Supreme Court rules in favour of billionaire Mukesh Ambani, closing a chapter on a five-year battle that now gives the government control over setting prices.

 

 

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