Fresh hearing began in the Supreme Court on Thursday in the cross-appeals filed by Ambani group firms, as also a petition by the Centre against a Bombay High Court order directing Reliance Industries Ltd (RIL) to supply gas to Reliance Natural Resources Ltd (RNRL).

With Justice R.V. Raveendran withdrawing from the hearing, a reconstituted Bench of Chief Justice K.G. Balakrishnan, Justice B. Sudershan Reddy and Justice P. Sathasivam took up the matter and senior counsel Harish Salve, appearing for RIL made his submissions afresh by giving a case summary.

Even as Mr. Salve started his arguments in the post-lunch session, senior counsel Ram Jethmalani, appearing for Anil Ambani’s RNRL, alleged that RIL was making arguments contrary to the one made in the Bombay High Court.

He requested the court to permit him to reply for 10 to 30 minutes every day to counter RIL arguments. Mr. Salve took exception to the allegation and said Mr. Jethmalani was wrong in making such an accusation and he should stop interrupting him. When Mr. Jethmalani said “I am interrupting by taking the leave of the court”, Mr. Salve said he would not allow such interruptions. The Bench, however, declined Mr. Jethmalani’s request.

The case pertains to RNRL’s demand that it be supplied 28 million standard cubic metres a day (mscmd) of gas from RIL’s KG-D6 gas fields at a price of $2.34 per million British thermal unit (mBtu) agreed in a 2005 family MoU. RIL, however, contends that it cannot do so in view of the government policy. The Bench is hearing a batch of appeals against a June 15 High Court order that asked RIL to supply gas to RNRL at $2.34 per mBtu against the officially prescribed $4.2 per mBtu.

Mr. Salve reiterated that the Government of India’s gas pricing policy would prevail over any private agreement and this aspect had been overlooked by the High court in its order. He said the Empowered Group of Ministers had decided that subject to the availability of gas, necessary allocations from RIL KG-D6 fields would be made to various projects.

Mr. Salve said the issue to be decided was whether a contractor had a share in the gas produced and whether it could deal with it at will and whether the Government had no right to fix the price of gas that “comes to contractor’s share.” Further the issue needed to be examined was whether the MoU between members of the promoters family was binding upon the corporate entity RIL. He said the High court was wrong in holding that the family MoU being a prior allocation of gas it would override the gas utilisation policy.

Explaining the scope of the Production Sharing Agreement, Mr. Salve said “under the PSC, the investor takes the risk in exploring the gas. He may or may not succeed in his venture. If he is lucky in exploration he can produce and develop it, but he can sell the gas only subject to the GUP (Gas Utilisation Policy).

To a question from the CJI whether RIL could not sell gas even up to the stage of cost recovery, Mr. Salve said “RIL has no authority to sell gas as gas being a national resource its sale is subject to the GUP.” Arguments will continue on Tuesday.


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