RIL resorted to breach of trust, RNRL counsel

Reliance Natural Resources (RNRL) counsel Ram Jethmalanai concluded his argument before the division bench of the Bombay High Court on Thursday by pleading for justice. “We are victims of fraud and please do us justice,” said the former law minister as the long pending legal tussle between the warring Ambani brothers over the supply of gas from Reliance Industries (RIL) to RNRL inched towards a conclusion. The final arguments in the case will take place on Friday. The case is being heard by a division bench comprising Justice JN Patel and Justice KK Tated. Whoever loses will almost certainly approach the Supreme Court. “RIL cannot be allowed to take advantage of its own misdeeds and order for restitution is imperative in this case as RIL resorted to criminal breach of trust through signing unilaterally the gas sales agreement while in control of RNRL,” Jethmalani told the court. RIL counsel Harish Salve and government counsel and additional solicitor general (ASG) Mohan Parasaran is expected to conclude their final submissions before the court on Friday. Mokul Rohatgi, another counsel representing RNRL, argued that the gas sale purchase agreement (GSPA) between RIL and RNRL was invalid because when the pact was signed, Mukesh Ambani Group’s directors were on both sides and even though RNRL had objected to the terms, they had not been considered. GSPA was not in line with the scheme of demerger. It has to be corrected on a few broad issues and must be properly negotiated and include the price at which gas will be supplied, and the term for which gas will be supplied and be in conformity with the MoU and the scheme of demerger,” Mr Rohatgi said. When Justice Patel said that the court could not pass directions that were in contravention of government decisions, Mr Rohatgi said, “the government had the right to fix the valuation of the gas to calculate the production cost of petroleum. Whereas RIL can sell it at any price.” “The government fixing the valuation of the gas and the sale price of the gas were part of different clauses of the production sharing contract between the government and RIL. These two clauses were in harmony and operated in different spheres,” Rohatgi argued. Mr Jethmalani also focused on the pricing of gas, which has been at the core of the long drawn-out proceedings. While the controversial gas supply agreement between RNRL and RIL says the price of gas should be $2.34, the government has fixed the price of gas at $4.20, though that decision explicitly excluded the RIL-RNRL case. If the gas from the KG-Basin is sold at $4.20, the government will have to subsidise it for users, Mr Jethmalani said. As such, the government will not be making a profit of Rs 16,000 crore, which was suggested by RIL, he said. Meanwhile, if the price is raised from $2.34 to $4.20, RIL will make a profit of Rs 30,000 crore, Mr Jethmalani said in his submissions before the court.