Ambani Gas row: Family MoU sacrosanct, RNRL tells SC

Anil Ambani led RNRL asserted in the Supreme Court that family MoU of 2005 was a "sacrosanct" document for resolving the gas row with Mukesh Ambani group RIL and accused it of scuttling efforts to arrive at a bankable agreement for the supply of gas from KG Basin.

The arguments in the high-voltage bitter legal battle for the first time saw Anil Ambani sitting during the court proceedings throughout the day on Tuesday.

Besides MoU, the RNRL said it wants to strictly comply with the NTPC document which evisaged the supply of gas to the PSU at USD 2.34 per mmBtu by the RIL.

"We want to strictly comply with the MoU. We want to strictly comply by the NTPC document. MoU is sacrosanct and we have no dispute at all on it and the NTPC draft is a model document," senior advocate for RNRL, Ram Jethmalani submitted before a Bench headed by Chief Justice K G Balakrishnan.

He said under the MoU, mother Kokilaben Ambani has the power to give directions for working out the MoU which was practically to be given the shape of the scheme for demerger.

"The MoU was to be given a shape for technically feasible and commercially viable gas supply production agreement (GSPA) which has to confirm to the NTPC document. Our purpose was that the GSPA consider the NTPC draft which is the best," Jethmalani said while countering RIL's argument that the family MoU was not binding for arriving at suitable arrangement for the supply of gas.

"How can they say MoU is not binding," Jethmalani said before the Bench, also comprising Justices B Sudershan Reddy and P Sathasivam and alleged that till the negotiations were going on for arriving at the bankable contract, RIL never raised the issues of Production Sharing Agreement or the approval of price for the supply of gas by the government.

"The other side (RIL) later came out with bogus arguments of PSA and price approval by the government," he said adding that there was no dispute on the price, duration and quantum of gas to be supplied.

"Throughout the negotiations there was no reference of PSA or Government approval relating to price between the two companies. Time and again they (RIL) said they are trying to evolve bankable arrangement," Jethmalani said.

The Ambani brothers are engaged in a court battle over the supply and price of the gas from KG basin.

While RNRL is seeking gas at a committed price of USD 2.34 per unit, RIL says it cannot honour the commitment made in the family agreement due to government's pricing and gas policy.

Jethmalani blamed the RIL for creating roadblocks for the RNRL's Rs 22,000 crore proposed power plant in Dadri inGhaziabad district of Uttar Pradesh for which the gas was to be supplied from the KG Basin.

"The Directors (of RNRL) required Rs 22,000 crore to raise the proposed project. We needed the bankable agreement or contract which was to be according to the international trading practice," he said.

RNRL asserted that NTPC draft on supply of gas at the rate of USD 2.34 per mmBtu was supposed to be the "template" and both the groups during the negotiations knew what is there in the MoU.

"Throughout this negotiation from June 30 upto the time of filing of the scheme (in the court on September 16, 2005) and thereafter, there was no dispute about the price whether it has to be approved by the government," Jethmalani said adding, "it still remains mystery as to how the price was fixed at USD 4.20".

"Nobody had suggested any price higher than USD 3.18 per mmBtu," he said contending that it was arrived by adding market margin and transportation cost to the USD 2.34 per mmBtu.

Emphassing that the obligation and binding nature of the MoU was never in doubt, he said it was intended to convert the demerger scheme into statutory enforceable contract between the two groups.

However, things started going wrong for Anil Ambani since the July 17, 2004 board meeting of RIL when a resolution was passed giving all powers to Mukesh Ambani, Jethmalani said.

"The Resolution was humiliating for the younger brother. RIL board clipped all powers of Anil Ambani," he said.

The game was to show that Mukesh Ambani was complying with the MoU but at the same time he was preparing a document to demolish his younger brother.

Jethmalani at the end of the day-long hearing said "once the scheme (of demerger) is sanctioned, it is not merely the powers of the court to enforce it but it is the duty of the court to enforce it".