Giving its verdict on the four-year-old Ambani battle that was intertwined with a bitter public wrangling, a three-judge bench of the court headed by Chief Justice K G Balakrishnan said the Ambani family MoU dividing the gas was not binding, both legally as well as technically. The court held that all the parties are bound by government policy and RIL does not become owner of the gas.
Immediately after the judgement, RNRL Chairman Anil Ambani, who was present at the courtroom, left without taking any questions from the throng of reporters and cameramen.
Stock market responded swiftly to the judgement, with RIL shares shooting up by about five per cent to nearly Rs 1050 and that of RNRL tanked close to 20 per cent to Rs 55.
"RIL does not have absolute right over gas and price is subject to government approval... since MoU (of the Ambani family) has not been made public, it does not fall in the corporate domain... Under the Production Sharing Contract, it is for the government to evaluate the price of fuel," Justice P Sathasivam said, reading out the verdict.
Within minutes, the government welcomed the verdict upholding its sovereign right on pricing and utilisation of gas.
"No matter what campaign one ran against the government, the nation is supreme" Oil Minister Murli Deora said without naming Anil Ambani group which had cast aspersions on his ministry for allegedly siding with Mukesh-led RIL.
It said the terms of production sharing contract will have over-riding effect, and directed RIL to start renegotiation with RNRL in six weeks to safeguard the interests of the Anil Ambani group firm's shareholders.
The bench, headed by CJI Balakrishnan who will be demitting office on May 11, also said that the Ambani family MoU can only be a means of arriving at suitable arrangement but cannot be the sole means for a suitable arrangement.
Contrary to speculation that the judgement could be split, the bench held that since the MoU had not been made public, it doesn't fall in the corporate domain.
Concurring with the judgement, Justice B Sudershan Reddy, who replaced Justice P Raveendran after he recused in November 2009 citing conflict of interest, said that the family MoU cannot be taken into consideration at all.
After a bitter public battle over division of Reliance empire, less than two years of Ambani family patriarch Dhirubhai's death, Mukesh and Anil reached a family settlement spelt out by mother Kokilaben in June 2005.
As per the settlement, the energy and petrochemicals business went to Mukesh and the power, financial services and telecom business to Anil.
Accordingly, the scheme of de-merger approved by the Bombay High Court in December 2005, paving the way for creation of a new entity -- Anil Dhirubhai Ambani group.
However, the bitterness between the two brothers did not cease and the two sides were constantly engaged in public and courtroom battles, with gas dispute reaching the flash point.
ADAG firm RNRL had sought gas from RIL to power its proposed 7,800 MW electricity plant at Dadri in Uttar Pradesh.
The Bombay High Court had last year directed RIL to reach an amicable agreement with RNRL for gas supply as per the family MoU.
Although the apex court said that the petition filed by RNRL was maintainable, as the company court had sanctioned the original demerger scheme, it held that the "gas is government asset till it reaches consumer."
The court, however, also made it clear that RIL did not have absolute marketing right over gas and in the face of the bench's observation, the Anil Ambani group's claim to over 28 mmscmd of gas for 17 years is likely to go back to the negotiating table.
"The court has asked us to renegotiate... that is what we are going to do. The court has given us some time," Reliance Industries Executive Director P M S Prasad told reporters.
The court earlier said that a suitable arrangement must not be suitable only for RIL, but also for shareholders of RNRL and it's RIL's obligation to look after it.
The Supreme Court held the family MoU as technically not binding on the ground that three million shareholders of RIL-RNRL did not know its contents. The MoU was only among the two brothers and their mother Kokilaben.
When the courts were hearing the matter last year, Anil Ambani had launched public tirade against Mukesh, saying his elder brother had traded their father Dhirubhai's vision for "corporate greed."
He had then also said that Mukesh no longer saw a role for their mother Kokilaben in resolving the gas dispute.
The public wrangling also included defamation suit filed by Anil against Mukesh, and Mukesh opposing Anil group firm RCOM's bid to merge with South African telecom giant MTN.
All this happened when the gas supply battle was playing out in courts.
The apex court today said since gas is a national asset, public interest has to be looked into first.
"Terms of production sharing contract (between government and contractor RIL) will have over-riding effect," the court said, adding that the PSC is meant for regulating supply of gas and under PSC it's for the government to evaluate price of fuel.
Although the apex court said that the petition filed by RNRL was maintainable, as the company court had sanctioned the original demerger scheme, it held that the "gas is government asset till it reaches consumer."
The court, however, also made it clear that RIL did not have absolute marketing right over gas and in the face of the bench's observation, the Anil Ambani group's claim to over 28 mmscmd of gas for 17 years is likely to go back to the negotiating table.
"The court has asked us to renegotiate... that is what we are going to do. The court has given us some time," Reliance Industries Executive Director P M S Prasad told reporters.
The court earlier said that a suitable arrangement must not be suitable only for RIL, but also for shareholders of RNRL and it's RIL's obligation to look after it.
The Supreme Court held the family MoU as technically not binding on the ground that three million shareholders of RIL-RNRL did not know its contents. The MoU was only among the two brothers and their mother Kokilaben.
When the courts were hearing the matter last year, Anil Ambani had launched public tirade against Mukesh, saying his elder brother had traded their father Dhirubhai's vision for "corporate greed."
He had then also said that Mukesh no longer saw a role for their mother Kokilaben in resolving the gas dispute.
The public wrangling also included defamation suit filed by Anil against Mukesh, and Mukesh opposing Anil group firm RCOM's bid to merge with South African telecom giant MTN.
All this happened when the gas supply battle was playing out in courts.
The apex court today said since gas is a national asset, public interest has to be looked into first.
"Terms of production sharing contract (between government and contractor RIL) will have over-riding effect," the court said, adding that the PSC is meant for regulating supply of gas and under PSC it's for the government to evaluate price of fuel.
~
ET
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