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Reliance moves SC against HC judgment

business Updated: Jul 05, 2009 00:16 IST
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The Mukesh Ambani-controlled Reliance Industries Ltd (RIL) on Saturday moved the Supreme Court challenging the June 15 judgment of the Bombay High Court directing it to supply gas to the Anil Ambani-controlled Reliance Natural Resources Ltd (RNRL) at $2.34 (Rs 112.32) per unit.

It has named the Government of India as one of the respondents (defendants) in the case.

Therefore, the government, which has so far refrained from intervening in the bitter battle between the Ambani brothers, will now have to take a stand on the issue of deciding the quantity and price of gas sales by RIL to RNRL.

The government has fixed a price of $4.2 (Rs 201.60) per unit of gas. So, RIL will incur huge losses — estimated at close to Rs 4,000 crore per annum — by selling gas to RNRL at the court-mandated price. The international price of gas is even higher than the one fixed by the government — more than $6 (Rs 288) per unit.

The High Court had asked RIL to honour the 2005 family agreement between Mukesh and Anil when they partitioned the undivided Reliance empire between themselves.

According to that agreement, RIL will have to supply 28 million cubic metres per day of gas from its Krishna-Godavari Basin fields to RNRL at the agreed price. The agreement will be valid for 17 years from the date of RNRL setting up its 7,000 MW power plant in Dadri in UP. The plant is still three-to-four years from completion.