Mumbai, Oct 15 (UNI) Stating the gas-sharing agreements, executed the by Mukesh Ambani led Reliance Industries Ltd.(RIL), breached the demerger scheme which split the Reliance Empire between the Ambani brothers, the Bombay High Court today directed both of them to reconsider and renegotiate the gas sharing between their respective companies.
A single judge bench of Justice Anoop Mohata has given them four months to renegotiate and come to an amicable settlement, pursuant to a company petition filed by the Anil Ambani- led Reliance Natural Resources Ltd.(RNRL).
At the same time, the court has continued interim orders, that go in favour of the Anil Group. RNRL had moved the high court saying that the Gas Sale Master Agreement (GSMA) and Gas Sale Purchase Agreement (GSPA), purportedly executed between RNRL and RIL on January 12, 2006 and amended on January 27, 2006 was not in accordance with the demerger scheme that separated the Ambani brothers.
It has alleged that the agreements, if given effect to, would frustrate the Scheme sanctioned by the High Court. Whereas, RIL has been contending that agreements were executed between the two Companies in furtherance of Clause 19 of the Demerger Scheme.
The Demerger scheme, which became effective on December 21, 2005, provided for appropriate gas sharing arrangement to be made between companies led by Mukesh and Anil and accordingly the agreements were executed. This arrangement was necessary because after separation, the petroleum business was given to the Mukesh Group and the gas-based power generation business alloted to the Anil Ambani Group.
The RNRL had contended that it was handed over to new board of directors on February 7, 2006 and such agreements executed prior to that date could not be termed to be in accordance with the Demerger Scheme, further saying that those agreements were executed by the RIL board by sitting on both sides of the table. In the eyes of law, no proper agreement was in existance for sharing of gas between the companies, as provided by the Demerger Scheme. The Anil Ambani led company had further contended that, if the agreements were allowed to come in force it would ruin RNRL and leave it with only paper documents, without any business.
A single judge bench had earlier through an interim order directed the RIL to safeguarded 28 MMSCMD gas supply for Patalganga Power Project of RNRL, until further orders and the second order has warned Reliance Industries that all of its deals relating to Krishna Godavari Basin Gas project shall be subject to final outcome of this proceedings.
The RIL on the other hand had contended that it has undertaken the KG Basin gas project with production sharing arrengements with the Union Government and a foreign company and the RNRL was staking claims even before having any gas based power project to utilise the gas and that the whole matter was nothing but an attempt to scuttle the ambitious gas project.