HC Asks RIL-RNRL To Renegotiate Gas Dispute In 4 Months

The Bombay High Court has given Reliance Industries and Reliance Natural Resources four months to renegotiate the gas dispute.

At the end of four months, RIL and RNRL have to submit a progress report after which the HC will take a decision, analysts said.

The earlier interim High Court order was in favour of RNRL, which will continue. This means there is a stay on RIL and it cannot sell the portion of gas, which it had committed to RNRL, to any other party, they added.

The High Court has ruled that the family arrangement between Mukesh and Anil is binding. The court cannot intervene in the commercial aspects of the contract.

The terms of the gas contract should be suitable to both parties, it said.

According to analysts, both parties don’t know what to make of this order at least initially. However, RNRL lawyers claim this ruling as a thumping victory even though the court has not asked RIL to immediately supply gas at the original contracted terms.

The court recognises the legal validity of the MoU between the two brothers, analysts said. While arriving at the gas contract, the MoU terms have to be taken into account.

The gas contracts are subject to government approval. Analysts feel that the court is recognizing the government’s supremacy and role in this matter. Earlier, RNRL had tried to brush this aside saying that this was a private settlement between two parties, hence government approval was not necessary. The court has set that aside, they added.

The court is very uncomfortable in intervening and saying what are the suitable terms, analysts said. Earlier, the HC was unsure whether it could intervene in the commercial aspects of the contracts. The HC has now said it cannot intervene in the commercial aspects of the matter.

Analysts said there is no precedence to this gas dispute in India. Lawyers on both sides are referring to international precedences. The judge would not want to take any risk in this matter, they added.

If RIL or RNRL feels aggrieved by this matter they could approach the Supreme Court. RIL is most likely to appeal this order in the SC as this stalemate will continue for four months, analysts said.

The High Court has observed that Mukesh Ambani was in control of both RIL and RNRL when the contract was being discussed. This the court felt was a breach of the MoU between the two brothers.