'The MoU was binding on all. We have concurrent findings of two courts below,' RNRL's counsel Ram Jethmalani told the Bench headed by chief justice KG Balakrishnan.
Stumbling blocks for resolving the gas row between the Ambani brothers can be removed by putting together the family Memorandum of Understanding (MoU) and the demerger scheme, Anil Ambani-led RNRL told the Supreme Court today.
Even the two Benches of the Bombay High Court have held that the Mukesh Ambani group RIL's Board and its Directors were aware of the binding nature of the MoU which provided the road map for the demerger scheme.
"The MoU was binding on all. We have concurrent findings of two courts below," RNRL's counsel Ram Jethmalani told the Bench headed by chief justice KG Balakrishnan.
Jethmalani was referring to the decision of the Single Judge and Division Bench of the High Court which had held that MoU was known to the RIL on which it was acting till the dispute was brought before the Court.
The 2005 family MoU involving their mother Kokilaben led to the division of RIL between the Ambani brothers.
The senior advocate said if RIL was not aware of the binding character of the MoU then how did they come to know about the arrangement for the supply of 28 mmBtu of gas to RNRL.
"The MoU was in the knowledge of the RIL Board and its directors who were acting upon it. If RIL was not aware of the MoU how could they know about the supply of 28mmBtu of gas. All this show that RIL accepted that MoU was binding on them. Only when the dispute came to the court, they came out for the first time to say MoU was not binding," he said.
The high court had on July 15 asked RIL to supply gas at $2.34 per unit to the RNRL for 17 years from the KG Basin. The Ambani brothers are engaged in a high-voltage legal battle over the supply and price of the gas from KG basin.
While RNRL is seeking gas at a committed price of $2.34 per unit, RIL says it cannot honour the commitment made in the family agreement due to government's pricing and gas policy.
Countering the arguments of RIL that MoU was not binding, Jethmalani said the company and Mukesh Ambani cannot be treated as a separate identity. He said the fact that Mukesh Ambani was acting for the RIL was clear from the July 27, 2004 Resolution by which all powers of RIL Board was delegated to him.
"There was no difference between RIL and Mukesh Ambani," Jethmalani said. He was responding to RIL's contention that only those actions were binding on the company which were authorised by the Board of Directors.
Jethmalani said that while the July resolution clipped Anil's powers as RIL board's Vice Chairman and managing director and caused humiliation to him, the same resolution gave full powers and controlling stake in RIL to Mukesh Ambani.
Under Section 392 of the Companies Act, if the demerger scheme is not implemented as envisaged, Anil Ambani is entitled to be reinstated in RIL Board with full powers as existed before the "obnoxious" board resolution of July 2004, Jethmalani argued.
Jethmalani said government policy cannot change from time to time and has to be consistent. RNRL has also questioned the Government role in the dispute alleging that it was siding with the RIL.
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