The Supreme Court on Friday reserved its verdict in the `Reliance gas dispute case’ at the conclusion of marathon arguments considered as one of the biggest corporate legal battle for 26 days spread over nine weeks.
A three-judge Bench of Chief Justice K. G. Balakrishnan, Justice B. Sudershan Reddy and Justice P. Sathasivam reserved the verdict after hearing senior counsel Harish Salve for Reliance Industries Ltd (RIL), senior counsel Ram Jethmalani and Mukul Rohatgi for Reliance Natural Resources Ltd (RNRL), Solictor General (SG) Gopal Subramaniam and Additional Solicitor General Mohan Parasaran for the Centre. The SG described the arguments advanced by RIL and RNRL as ‘Trial by Ambush’. He said that the Government had been subjected to trial by ambush.
He pointed out that RNRL said “they are not concerned about production sharing contract, while RIL is defending on grounds and references taken from PSC. Submissions are being made on the basis of interpretation of PSC.” He said “the gas title is that of Government. The title only passes to the contractor under permission at point of delivery with qualified marketing freedom. RIL is no more than an agent to sell gas. It is true that the title passes to them but only for flaring and purposes of re-injecting back in to the ground - for this limited purpose yes they have title of the gas other than the point of delivery.”
The Solicitor General said “the two sides should refrain from interpreting the PSC. The PSC and all other pricing issues are in the domain of the Government and as far as the pricing is considered the Government made sure that the pricing formula was checked by eminent economist C. Rangarajan and such allegations should not be made that the Government is taking sides. The price was done independently making sure that transparency is maintained.” He further said that RBI Governor validated the formula.
He requested the court to preserve the PSC “as we have over 300 PSCs and the Government do not want to be caught in a situation that someone taking a cue from this, look for amendments in his PSC. Any agreement of contractor over-riding Government PSC is not called for. Our position is independent to this case. No space must be left by the court in its final judgment to allow any other party to make any unexpected changes or add to the worries of the Government.” He added that “according to the new rule a comfort letter is needed from GAIL for bankability of power project by any new power project company. RNRL has to follow the same.”
Continuing his arguments, Mr. Salve countered RNRL’s allegations saying they had fundamental inconsistencies throughout. He said RNRL had nowhere mentioned that RIL would supply 28 gas at $2.34 to RNRL. He alleged that “the opposition was taking the references that suit their argument at times from the Scheme and while some other time from the MoU.”
He said that gas supply to Dadri plant was not unilateral decision of Empowered Group of Ministers (EGoM), obviously this was in response to RNRL’s communication to the Government. He said it was right thing on their part to do so. “But now they are objecting to the EGoM’s decision on rejecting gas price of $2.34 per mBtu (million British thermal unit).”
He said “as per my 2009 development plan my gas will be over by 2020 and they are asking a gas agreement beyond that, how can I fulfil that requirement. I can supply as per the development plan. There was no development plan when we bid for NTPC. In hindsight signing the NTPC contract was an impetuous decision as at that time we only had a development plan and P1 of 4 tcf at the time. How can we provide more than what my development plan is?”