Supreme Court to Ambanis: Why can’t you go for arbitration?

In this June 24, 2004 photo, RIL Chairman Mukesh Ambani and the then Vice-Chairman Anil Ambani (currently Chairman, ADAG group) listen to a share holder at the 30th annual general meeting in Mumbai. The brothers are locked in a dispute over supply of gas by RIL to Anil Ambani firm RNRL.

The Supreme Court on Wednesday asked the Ambani brothers’ group firms RIL and RNRL why they cannot settle their gas supply dispute through arbitration or mediation.

During hearing of the dispute over supply of gas by RIL to RNRL at $2.34 per mmBtu, the Bench headed by Chief Justice K.G. Balakrishnan said the two parties could arrive at a “suitable arrangement” through arbitration, as the Bombay High Court that approved the Reliance empire’s demerger cannot spell what is the ideal arrangement.

To this, Mukesh Ambani-run RIL, which continued its arguments for the second day on Wednesday, told the court that it considered the Government’s gas utilisation and pricing policy as the “suitable arrangement.”

Senior counsel Harish Salve also opposed RNRL’s plea for dismissing RIL’s petition, saying only his client’s creditors or members of the Board can challenge maintainability of the petition.

Mr. Salve said RNRL was a third party and hence, cannot seek dismissal of RIL’s plea. RNRL has also separately challenged the government’s petition in the dispute.

The Ambani gas dispute pertains to RNRL’s demand that it be supplied 28 mmscmd of gas from RIL’s KG-D6 gas fields at a price of $2.34 per mmBtu agreed in a 2005 family MoU.

RIL, however, contends that it cannot do so in view of the Government policy, which in 2007 approved $4.20 per mmBtu as price for gas from the KG-D6 fields.

In its arguments on Tuesday, Reliance Industries told the Supreme Court that the 2005 family agreement to divide the Reliance empire was a pact between the Ambani brothers and Mr. Anil Ambani should sue Mr. Mukesh Ambani if he feels aggrieved.