Ambanis are fighting like countries at war: SC

The long-awaited hearing on the gas supply and pricing dispute between the Ambani brothers, Mukesh and Anil, in the Supreme Court started on Tuesday with the bench comparing the tussle to a “fight between two countries”.

During the hearing between the Mukesh-led Reliance Industries Ltd (RIL) and the Anil-owned Reliance Natural Resources Ltd (RNRL) that will resume on Wednesday morning, chief justice KG Balakrishnan — who is part of the three-member bench along with justices RV Raveendran and P Sathasivam — said the dispute was “not a fight between shareholders”. Another judge sought to draw a parallel with the rulers of two rival countries.

“It’s like people of two countries don’t have any problems, but there is a fight between two persons who are heading these countries. Thus, there is no fight between the two companies, but just between two individuals which has percolated down to the people,” the court said.

In the course of the hearing, five appeals will arise from the Bombay high court’s judgement of June 15 asking the litigating brothers to get the dispute settled across the table and with the intervention of their mother Kokilaben.

The sensitive nature of the case was evident upfront, with justice Raveendran making a disclosure at the outset about owing an equal number of holdings in the companies owned by the brothers.

None of the senior counsels appearing in this case objected to justice Raveendran being a member of the bench.

The court, however, recorded this in a brief order as a precaution for future accusations against the judge concerned.

During the two-hour-long hearing, the bench also said the battle was personal in nature. It asked the media to exercise restraint, saying the observations made by the justices were only intended to elicit the views of the contending counsels and should not be construed as an expression of their views.

RIL’s lawyer Harish Salve argued that the 2005 Ambani family agreement to divide the Reliance empire was a pact between the two brothers and if Anil is aggrieved by it, he should sue his elder brother Mukesh. The RIL board had not approved the family MoU that provides for the supply of gas by the company to RNRL. Salve said the fight was between the two stewards of the companies that emerged after the demerger of the empire and shareholders weren’t a party to it.

Explaining the genesis of the problem, Salve said it was the Anil Ambani group that asked the government to frame a national gas utilisation policy in 2007. The government framed it but RNRL has gone back on it.

RNRL wants the supply of 28 mmscmd of gas from RIL’s KG-D6 gas fields at a price of $2.34 per mmbtu as agreed in a 2005 family MoU. RIL, however, said it cannot do so in view of the government policy that makes the Union of India the sole arbiter and authority to fix the production quantity and price of gas. Anil is demanding the honouring of the deal that would allow his company, RNRL, to buy gas from RIL at 44% below ($4.2 per/mBtu) the government-set rate for 17 years.

An economic analyst says losing this case could shave as much as $600 million off RIL’s earnings. But the core issue before the apex court is whether a family MoU could be binding on the government and its policies.