HC to hear RIL, RNRL case today

MUMBAI: The Bombay High Court will hear petitions on the simmering gas supply dispute between the two Reliance companies on Tuesday. The dispute has threatened to delay the development of the Krishna-Godavari basin and has had the entral government worried.Chief Justice Swatanter Kumar last month admitted appeal from both groups against the court order of October 14, 2007.

That order had asked both parties to settle the dispute amicably within four months. The order declined to remove the stay on Reliance Industries’ ability to sign third-party contracts. The four months get over on February 14. Sources from both the camps have confirmed weekly meeting held between RIL and RNRL almost every week since the court asked them to settle dispute amicably.

Expert team comprising of technical and legal members from both the groups headed by PMS Prasad for RIL and J P Chalasani for RNRL had meet close to a dozen times. Interestingly, these meetings are not held at RIL’s corporate head quarters at Markers Chambers IV or R-ADA’s corporate head quarters at Reliance Centre, but at Hilton Towers at Nariman Point.

“It is in interest of both groups to resolve the dispute as early as possible. We are working towards that and believe of an amicable solution soon,” said a member from one of the group, who attends these meetings. Reliance Anil Dhirubhai Ambani (R-ADA) Group chairman Anil Ambani and RIL’s president for petroleum business P M S Prasad have also expressed their confidence that the dispute will be amicably resolved soon. RIL’s counsel on Tuesday will seek to lift the stay on its selling gas to a third party. RNRL’s counsel will seek that the stay not to be removed as it will hurt its interest.

RIL’s gas from Krishna Godavari (KG) basin is slated for commercial production in the next two quarters and it needs to firm up gas sales contracts before that.

In an earlier order on June 20, the court had prevented RIL from creating any third-party interest from the D6 block in the KG basin. This was because the production of 80 mmscmd, expected from the field of gas, is locked up with NTPC, RNRL and for RIL’s captive use.
RNRL & RIL had been locked in a prolonged legal tussle over the gas sales agreement signed in 2005 by which RIL had committed to sell a portion of the KG Basin gas to RNRL at a prefixed price.

However, differences arose over the terms of the contract with the two companies going to court. The central government had refused to accept the contract, forcing RIL to seek a revision in the terms and conditions.

On October 14, 2007, Justice Anoop Mohta directed both the groups to settle the dispute through negotiations, citing the gas sales agreement approved by the RIL board on January 2006 is breach of the scheme (demerger scheme). The court also said that the family arrangement of June 18, 2005 is binding on both parties.