Supreme Court rules in favour of RIL by 2:1

  





 










Source : Moneycontrol.com: Fri, May 07, 2010 at  Fri, May 07, 2010 at 11:40


The verdict on one of the fiercest corporate battle between the Ambani brothers, Mukesh Ambani’s Reliance Industries (RIL) and Anil Ambani’s Reliance Natural Resources (RNRL) over the supply of gas from the Krishna-Godavari basin is out.

After listening to both sides, in what was a split verdict approach, the Supreme Court ruled in favour of RIL by 2:1.

As the verdict process began earlier today, Supreme Court judge Sathasivam declared that the brothers' MoU was not binding and that RIL and RNRL must renegotiate in six weeks.

The judge said that the government owned all the gas assets till it reached the users. It added that Production Sharing Contract (PSC) will overwrite all the prior agreements and the MoU between the Ambani brothers is not binding. The PSC dictates a price of USD 4.2 per mmBtu.

He also said that it was not feasible to restrain the government’s power on gas and it is a natural asset which belongs to the people.


Justice B.Sudarshan Reddy then delivered the dissent to Justice Sathasivam's verdict. At the end of both verdicts, the Supreme Court ruled in favour of RIL by 2:1.

In nutshell, the Supreme Court has fixed the gas sharing price at USD 4.2 per mmBtu. It has not directed the parties to renegotiate the quantum and tenure of the gas contract

The shares of Reliance group companies traded mixed post the verdict.

Mukesh Ambani pack:
At 11:08 am, the Reliance share was quoting at Rs 1,030.30, up Rs 19.40, or 1.92%. A recovery from the day's low of Rs 991.10. The Reliance Industrial Infrastructure stock was up Rs 8.90, or 1.12%, at Rs 807.

Anil Ambani pack:
The share of Reliance Natural Resources was trading a bit soft at Rs 61.70, down Rs 6.65, or 9.73%.

Reliance Capital, Reliance Infrastructure, and Reliance Communications too echoed a similar sentiment, trading down over 3% each. The Reliance Capital share was trading down Rs 28.8, or 4.06%, at Rs 681. While the R-Comm share was down Rs 5.6, or 3.57%, at Rs 151.45. The Reliance Infrastructure share was quoting at Rs 1,007.90, down Rs 45.65, or 4.33%.