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High Court refuses to stay restraining order on RIL

business Updated: Jul 05, 2007 17:12 IST
Urvi Mahajani
Urvi Mahajani
Hindustan Times
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The Bombay High Court on Thursday refused to stay the order of single judge restraining Mukesh Ambani-led Reliance Industries Limited (RIL) from creating third party rights for the entire natural gas to be produced from its Krishna Godavari basin block in the east India.

While hearing an appeal filed by RIL, the division bench of Chief Justice Swatanter Kumar and Justice Ranjana Desai did not grant the relief to sell gas to companies other than Reliance Natural Resources Limited (RNRL), National Thermal Power Corporation (NTPC) and for its own captive use in the first eight years of production.

Justice AM Khanwilkar of the HC, in an interim order last month, had restrained the RIL from selling gas on a petition filed by Anil Ambani led RNRL. Earlier on May 3, Khanwilkar had in an interim order restrained RIL from entering into any contract for supplying to a third party the 28 million cubic meters committed to RNRL under the 2005 separation agreement between the two brothers.

RIL plans to begin production from the block lying in Andhra offshore from July 2008, with an initial production of close to 40 million standard cubic meters of gas per day. Peak output would touch 80 million cubic meters later.

RIL’s counsel Harish Salve argued that the order was obtained by the RNRL with malafide intentions. “On the one hand they (RNRL) say that the government should buy all the gas and on the other hand they move HC and obtain order saying that the gas should not be sold to third party,” argued Salve.

The project has national importance and is being delayed by such objections, added Salve.

RNRL’s counsel Mukul Rohtgi opposed the appeal stating that it was RIL that was delaying the project. “We are setting up 8000 megawatt plant in Dadri near Delhi at the cost of Rs 10,000 crore. It has got environmental clearance too. This will be sufficient to light up Delhi and Mumbai. We are just waiting for the gas from them (RIL),” said Rohtgi.

Alleging that it was a case of chicken or egg first, Rohtgi said that RIL was saying that you do not have the plant then how do we give gas. “But the fact is we cannot start the plant unless we get the gas,” argued Rohtgi.

As per the agreement between RIL and RNRL signed in January 2006, NTPC gets the first right over the gas produced and it is to be given 12 million cubic meters of gas a day. Then 28 million cubic meters is to be given to RNRL, 25 million cubic meters is to be used by RIL for its commercial purpose. Additional 40 per cent of the balance gas, which is approximately 16.6 million cubic meters, is to be given to RNRL after distributing the first three components.

Besides, NTPC had also filed a suit against Reliance to enforce a gas supply contract on prices agreed to in December 2005. the matter is pending with the HC. The arguments will continue on July 12.