Anil's ADAG trashes Reliance pacts

MUMBAI: The Reliance Anil Dhirubhai Ambani group (ADAG) has termed as “irrelevant” the non-compete agreement between Reliance Industries and four RDAG companies when they were under RIL’s control on January 12, 2006.

In a sudden escalation of the battle between the brothers, Reliance Energy sources maintained on Saturday that airports were reserved exclusively for ADAG and that RIL cannot set up airports.

“The non-compete agreement entered into on January 12, 2006 is irrelevant because it was wrongfully executed by the RIL/MDA group when the companies were still under their control,” Reliance Energy sources said.

ADAG, since January this year, has been pointing out that the non-compete agreements contain “material deviations” from the main agreement between the brothers on June 18, 2005.

This is the first time that they have actually termed the agreement “irrelevant”. ADAG sources claimed that it was the 18 June agreement which was the benchmark to determine which sector was reserved for which brother.

Reliance Industries on Friday maintained that it has fulfilled all its responsibilities in a fair manner. Company sources had also repeatedly pointed out that the non-compete agreement allows them to set up airports or power plants when they are integral or incidental to their business.

They have also said that the ADAG has also been planning to enter oil and gas exploration which are reserved for RIL.

On Saturday, however, RIL officials were unavailable for comment. The non-compete agreement has become a big bone of contention between the brothers.

On Saturday, Reliance Energy sources said that RIL’s explanation is a “devious argument by the RIL group to wrongfully enter a business reserved for ADAG”.

They also added that airports in SEZs cannot be treated as captive use for RIL group as any airport will be used by everybody in an SEZ. The genesis of the dispute over non-compete stems from certain decisions taken by board members of the four ADAG companies when they were still being run by RIL.

According to Reliance Energy sources, two RIL nominees Sandeep Tandon and LV Merchant steamrolled objections by the sole ADAG nominee Gautam Doshi to executive and approve non-compete agreements containing material deviations from the June 2005 deal between the brothers. RIL has consistently denied any wrong-doing.

“RIL and its nominees misused their interim management control over these companies to execute unfair agreements that were ultimately to the detriment of over 20 lakh shareholders,” the sources added.

After the Ambani brothers agreed to split on June 18, 2005, RIL’s stake in four companies in energy, financial services, telecom were spun off into separate entities and listed on the stock exchanges. These four companies, before the listing, were under the control of RIL till early February.