Supply gas to RNRL at originally agreed rates: High Court tells Reliance

15 June 2009

The Bombay High Court has upheld the plea of Anil Ambani-owned Reliance Natural Resources Limited to be provided gas supply from Reliance Industries (RIL) at the pre-agreed rates. It has also asked both parties to resolve the dispute within a month through a fresh and suitable agreement as per the original memorandum of understanding that existed prior to the splitting of the Ambani group.

The court also ruled that the gas supplied  at those rates can be used only for power generation and not for trading. Till the new agreement is reached, RIL will continue to supply gas as per the interim order of the central government. (See: Bombay high court lifts interim stay on RIL gas sale)

As per the original memorandum, RIL had agreed to supply gas from its KG basin to RNRL for its upcoming 7,400MW power project located at Dadri in Uttar Pradesh. RIL however had denied entering into any pact with RNRL. (See: 'No pact with RNRL' Reliance Industries)

In December 2006, RNRL had petitioned Bombay High Court to force RIL to go by the original memorandum. The court directed the two parties to settle the dispute internally, which proved to be difficult on the two issues of price and quantity of gas to be supplied, following which both parties appealed to the division bench of the High Court in early 2008.

State-run NTPC had also earlier been denied access to KG-D6 gas due to RIL's ongoing court battle with Anil Ambani group firm Reliance Power. (See: NTPC opposes sale of RIL's KG-D6 gas to Dabhol power plant)

Markets analyst S P Tulsian told CNBC-TV18 in an interview that the judgment would lead to Reliance Industries suffering losses to the tune of Rs 3,600 crore.