Mukesh Ambani-led RIL said on Friday it would not be possible to supply gas to Anil Ambani group firm RNRL without the government's nod and requested the Supreme Court not to restrain it from selling gas to others.
Accusing Reliance Natural Resources Limited of taking contradictory stands in an attempt to mislead Supreme Court, Reliance Industries Limited said in its affidavit that the interim relief sought by the other party on gas sale be rejected as it did not have any plants capable of receiving the fuel.
RIL also submitted that any damages suffered by RNRL, if established, can be recompensated later by money and added that gas supplied at this stage to RNRL could be used only for the purpose of trading with third parties.
"The profits that RNRL may make is not a concern of RIL. In fact, RNRL was created just so that it could earn such a profit," RNRL had said in its affidavit filed in Supreme Court on Tuesday in reply to a separate petition by RIL.
Stating that it can't sell gas to anybody without official nod, the affidavit filed by RIL's law firm Parekh & Company said on Friday the government as such had rejected the price of $2.34 per mmBtu for gas. The current applicable price as per government formula is $4.20 per mmBtu.
Both RIL and RNRL have filed cross-appeals challenging the Bombay high court decision on gas supply, in which the Mukesh Ambani-run firm has named the government as intervener. The government's affidavit is expected anytime now.
RIL said in the affidavit that it would sell and supply the stipulated quantity of gas to users identified and nominated by the government.
Also, as per the MoU (the Ambani settlement), gas supply is only subject to availability and approval by the government.
"The instructions issued by the government... under the gas utilisation policy state that consumers belonging to any of the priority sectors should be in a position to actually consume gas as and when it becomes available and so the marketing priority does not entail any reservation," the RIL affidavit said.
RNRL, however, in its affidavit on Tuesday to RIL's cross-petition had said that it 'could not set up its power plant in the absence of a bankable gas supply agreement. This is on account of RIL. Therefore RIL cannot seek to take advantage of its own wrong.'
RIL said the original relief sought by RNRL in the Company Application before the Bombay High Court was for modification of the arrangement in the form of GSMA/GSPA to make it a 'suitable arrangement' as envisaged by the scheme on the basis of MoU.
However, the high court judgement does not direct the parties to enter into an agreement and the findings in the impugned judgement do not in any manner give rise to a binding contract between the parties, RIL submitted.
Asserting that the gas has to be distributed as per the gas utilisation policy, the government said RIL and RNRL cannot settle between themselves as to how a national asset and natural resource is to be distributed.
"It is not the private property of RIL and RNRL and any understanding arrived at between them is not binding upon the government." it said, adding that the gas has to be distributed in terms of the policy approved by an empowered group of ministers.
Rejecting RNRL's contention that it was entitled to a particular quantity of gas, the affidavit said it was for the government to decide as who was entitled for the gas.
The entire amount of gas would have to be approved valued at the approved price for determining the entitlements of government and the contractor (which in this case is RIL), the affidavit said, adding that the government had rejected a proposal by RIL to supply gas to RNRL as it was not based on arms length transaction.
The Bombay high court decision would lead to fixation of two prices -- one for RNRL and the other for public sector undertakings -- and 'such an interpretation would be volatile of Article 14 of the Constitution of India,' it said. Article 14 provides for equality before law and equal protection.
The sovereign rights of India could not be subjected to private negotiations by mutual understanding and this is whathas precisely happened in the present case, necessitating the filing of the application, the government said.
Stating that it is a major stakeholder under the PSC and its production entitlement could be as high as 80 per cent, the affidavit said: "A private dispute between two parties and their alleged agreement (family MoU) cannot threaten the interests of other stakeholders -- i.e the government in the contract.
'The MoU by its very nature is in contravention of the PSC, which both the signatory parties were aware of before entering into this agreement. It is worth mentioning that government had no knowledge of this private (family) MoU' entered into by the two parties.
It said the Bombay high court judgement had failed to appreciate that the PSC is also modelled on Standard International Practices and the impugned order may result in the ultimate distortion in the growth of gas markets in the country.
Seeking a stay on the operation of June 15 order of the Bombay high court, the government's affidavit said that there was no difference between the valuation and price of gas and added the order had stated that the approved price was relevant only for calculating government share of profit gas and the contractor has the right to sell the gas at a different price.
This is in contravention to the government's stated stance before the high court that all gas produced has to be sold at a price approved by the government and hence there is no difference between the valuation and the price of the gas," it said.
