Wednesday, September 9, 2009

family demerger incomplete as ril plays truant

With RNRL replying to the RIL SLP with a fresh affidavit in the SC, the rules of battle when the court begins its hearing have been spelt out. RNRL has made a very important observation in its fresh affidavit. It says that the supply of gas by RIL to RNRL is an integral part of the demerger of the family business. It also says that that the production sharing contract between RIL and the government gave the former freedom to price and market the gas.

By not giving the gas to RNRL, RNRL is now clearly taking the position that the demerger of the family business remains incomplete and it is well within the purview of the apex court to ensure that this process is completed rapidly. The affidavit filed by RNRL counsel Mahesh Aggarwal has thus raised important questions of the sanctity and legality of the family business demerger.

The affidavit says, "The scheme contemplates that suitable arrangement to be put in place for supply of gas. Until and unless a suitable arrangement is executed, the scheme is not fully implemented and the demerger of the business is not complete." By raising a fundamental question on the validity of the family demerger, RNRL is now asking the SC to enforce its closure. The scheme of demerger has been ratified by the board of RIL of which Mukesh Ambani is chairman, its shareholders and of course the Bombay High Court and yet Mukesh Ambani continues to play truant with the gas supply.

The affidavit also goes on to say that the RIL-RNRL agreement for supply of gas does not affect the government's gas utilisation policy - under the PSC, the supply of gas is not subject to any gas utilisation policy. The petitioners - RIL and the oil ministry - are seeking to misinterpret the terms of the PSC to suggest that any sale of gas has to be in accordance with the gas utilisation policy. Brace yourself for some exciting hearings in the SC.

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