NTPC may challenge high court order

NTPC may challenge high court order
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First Published: Thu, Sep 03 2009. 12 12 AM IST
Updated: Thu, Sep 03 2009. 12 12 AM IST
New Delhi: NTPC Ltd is likely to file an appeal in the Supreme Court challenging an unfavourable Bombay high court order in its ongoing legal dispute with Mukesh Ambani-controlled Reliance Industries Ltd (RIL).
NTPC’s appeal, if one is made, will challenge the high court order allowing RIL to amend its petition so as to include an earlier affidavit filed by the Union government in the same court, but in the case between RIL and Anil Ambani’s Reliance Natural Resources Ltd (RNRL). This is the same case that has now moved to the Supreme Court.
The affidavit had cited the decision of an empowered group of ministers (eGoM) on the pricing and supply of gas from RIL’s D6 block in the Krishna-Godavari (KG) basin. The price fixed by this group was $4.2 (Rs206.22) per million British thermal unit (mmBtu).
Interestingly, NTPC’s appeal in the Supreme Court challenging the Bombay high court’s order, if one is made, will come after the government revised its earlier petition in fight between the Ambani brothers in the Supreme Court on Tuesday. The new petition seeks to protect NTPC’s interests. The earlier petition filed by the government, on 18 July, was seen by analysts as well as the government’s top two law officers as weakening NTPC’s case in the Bombay high court.
“RIL has modified the written statement, which the Bombay high court has upheld. We will challenge it in the Supreme Court. Even the attorney general in his opinion has said that RIL can’t use the government’s decision as a pretext to help its case,” said a senior NTPC executive who did not want to be identified.
The executive declined comment on whether NTPC would intervene in the fight between the Ambanis in the Supreme Court, given that the government’s revised petition in this case protects its interests.
The power ministry on Wednesday in principle endorsed NTPC’s proposed action. “Since petroleum ministry has come in the support of NTPC, there is no need for NTPC to go to Supreme Court (in the case between the Ambanis),” power secretary H.S. Brahma said. He said NTPC was free to appeal in the apex court on any aspect of its case against RIL in the high court. A person who is part of the government’s legal team, but did not want to be named, said he was unaware of NTPC’s move.
NTPC—as reported by Mint on 22 July—had sought the attorney general’s opinion on the government’s 18 July petition in the RIL-RNRL case and said it could, based on the opinion, intervene in the case.
NTPC had previously contested RIL’s amendment in the Bombay high court before a single judge and later before the division bench, but the court allowed RIL to amend its plea. Its appeal in the Supreme Court, if one is made, is based on the legal advice of India’s top two law officers, attorney general Goolam Vahanvati and solicitor general Gopal Subramanium.
Subramanium had said RIL was aware of the ministerial group’s pricing decision taken on 12 September 2007. “Under these circumstances, this is not an event which can be stated to be arising subsequent to the filing of the written statement. The division bench has overlooked this clear aspect in the matter; therefore, the order on merits is amenable to appeal.”
The lawsuit between NTPC and RIL in the Bombay high court dates back to December 2005, with the point of contention being the existence and terms of a valid contract between the two. NTPC claims there is one in which RIL promised to supply 12 million standard cu. m a day (mscmd) of gas for the expansion of the state-owned power generator’s Kawas and Gandhar power plants, both in Gujarat, for 17 years at a price of $2.34 per mmBtu. RIL claims otherwise.
Referring to RIL’s amendment in its plea in the Bombay high court in its dispute with NTPC that the contract between the two firms was scotched by the government’s policy on the pricing and allocation of gas, Subramanium, in his opinion to NTPC, had said: “In fact, the said amendment by RIL seems to portray the Central government as the chief architect of the inability of RIL in being able to perform the contract.”
NTPC claims its contract with RIL dates back to 2004. The government fixed the price of RIL’s KG basin gas on 12 September 2007.
Subramanium also said a private party (RIL) taking advantage of the government’s affidavit and using it as a primary defence could cause the government “great public embarrassment”.
RNRL has sought the apex court’s intervention in a special leave petition for immediate supply of 28 mscmd of gas from KG D6 at $2.34 per mmBtu for 17 years. RIL, in its affidavit, has opposed this, saying the price is 44% lower than that mandated by the government and that it cannot supply gas at a price not approved by the government and to a user not listed in the government’s gas utilization policy.
A spokesperson for the Reliance-Anil Dhirubhai Ambani Group, of which RNRL is part, said in an email response: “We welcome the timely step taken by the government, categorically stating that the eGoM price of $4.20 was never applicable to the RIL-NTPC gas supply contract, as NTPC is entitled to gas supply at the price of $2.34 based on international competitive bidding. This categorical assertion by GOI (Government of India) will protect NTPC from losses of up to Rs30,000 crore. We cannot comment on the impact on our case.”
A spokesperson for RIL in an email communication said: “As a law abiding and responsible corporate citizen, Reliance Industries refrains from commenting on issues which are sub judice.”
In a related development, RIL has written to the power ministry blaming NTPC for delay in signing a deal to buy gas allotted to it from KG D6 under the gas utilization policy and instead buying costlier gas from another supplier, Delhi-based Petronet LNG Ltd. The government had allotted this gas to NTPC units.
Manish Ranjan in New Delhi, Bhuma Shrivastava in Mumbai and PTI contributed to this story.
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First Published: Thu, Sep 03 2009. 12 12 AM IST
More Topics: NTPC | High court | Mukesh Ambani | RIL | H.S. Brahma |