Can't you sort it out via talks or arbitration: SC to Ambanis
On a day when Finance Minister Pranab Mukherjee again expressed the hope that the Ambani brothers would be able to sort out their differences amicably "because they are too big... they have substantial influence over the Indian market", the Supreme Court asked their group firms RIL and RNRL why they couldn't settle their gas supply dispute through arbitration or mediation.
Hearing the dispute over supply of gas from the Krishna Godavari fields, the bench of Chief Justice K G Balakrishnan, Justices P Sathasivam and R V Raveendran today said the two parties could arrive at a "suitable arrangement" through arbitration since the Bombay High Court that approved the Reliance empire's demerger cannot spell what is the ideal arrangement.
To this, Mukesh Ambani-run RIL told the court that it considered the government's gas utilisation and pricing policy as a "suitable arrangement."
The dispute pertains to Anil Ambani-led RNRL's demand that it be supplied 28 mmscmd of gas from RIL's KG-D6 gas fields at a price of $2.34 per mmBtu agreed in a 2005 family MoU overseen by their mother Kokilaben. But RIL contends that it cannot do so in view of the government policy which in 2007 approved $4.20 per mmBtu as the price for KG-D6 gas.
The bench today asked RIL if it would make profits from selling gas at a price committed to NTPC, although it is substantially lower than the government-approved price.
Hearing the arguments of RIL, represented by counsel Harish Salve, the court raised the question: "You had bid $2.34 per mmBtu (for NTPC), you would have still made profits. Now when government is asking you to sell
gas at $4.20 per mmBtu, then you will get huge profits."
In its response, RIL said that the price of the gas would not impact them as they were only recovering the cost and
thereafter, the government would gets the lion's share of profit.
It also said that there was possibly no role for Kokilaben in mediation of the dispute as the issue involved production sharing contract and other technicalities.
Salve said: "If RNRL is asking me to give gas at a lower price, then government will be debiting my account and I am
recovering a lesser amount... I have no control on gas, price and choice of customers."
The bench asked RIL why RNRL should buy gas from the government, as it was only seeking RIL's share of the fuel. To this, Salve replied that the gas belongs to the government.
Pointing out that "demerger was on the assumption that there will be supply of gas" by RIL to RNRL, the bench said: "There are so many grey areas and the parties not agreeing on the issue. Is it (demerger) not fundamental to have a suitable gas supply agreement?... The court which is approving the demerger cannot say what is a suitable arrangement."
The bench also asked RIL "what will happen if there is no suitable agreement? Will the demerger not fail if the agreement is not suitable?... So many ifs and buts are there."
After Salve said that Gas Supply Master Agreement (GSMA) was a suitable arrangement for RIL, RNRL counsel Mukul Rohatgi opposed it, saying both the courts — single-judge and the division bench — of the Bombay High Court had found it "unsuitable."
RIL then said that the government's gas utilisation and pricing policy could be considered as the "suitable arrangement."
Can't you sort it out via talks or arbitration: SC to Ambanis - Yahoo! India News