Setback to NTPC in RIL gas spat

Setback to NTPC in RIL gas spat
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First Published: Fri, Oct 02 2009. 12 31 AM IST
Updated: Fri, Oct 02 2009. 12 31 AM IST
New Delhi: In a setback to state-run power utility NTPC Ltd, the Supreme Court on Thursday dismissed its appeal challenging an unfavourable Bombay high court order allowing Mukesh Ambani’s Reliance Industries Ltd (RIL) to amend its petition in its ongoing case with the power utility.
By doing so, the Supreme Court has effectively ended the legal challenge to the amended petition. Consequently, NTPC will now have to resume its legal battle in the Bombay high court based on this petition filed by RIL. NTPC had withheld its reply to the amended petition as it had legally challenged its validity.
At the same time, the Supreme Court has permitted NTPC to record its objections to the amendment in its reply. It also signalled to the high court the need to expedite the hearings.
NTPC had filed an appeal in the Supreme Court on 5 September challenging a Bombay 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 case 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 (Rs201 today) per million British thermal unit (mmBtu).
Disallowing NTPC’s plea, the three-member bench headed by Chief Justice K.G. Balakrishnan observed that the courts were now more liberal about allowing amendments to petitions.
It further added that NTPC should not rest its arguments on such technical grounds.
While R.S. Sharma, chairman and managing director of NTPC, did not respond to phone calls seeking comment, a senior NTPC executive, who did not want to be identified since the case is sub judice, denied that the apex court’s dismissal of its appeal was a setback.
“It is no more than a delay. The Supreme Court wants us to exhaust the options in the lower court first. We will challenge and argue RIL’s amended petition in the Bombay high court. If the court rejects it, we will come to the Supreme Court. The apex court has only given directions on technical grounds,” the NTPC official said.
The lawsuit between NTPC and RIL in the Bombay high court dates back to December 2005. The dispute relates to the existence and terms of a contract between the two firms. NTPC claims there is a binding contract in which RIL promised to supply 12 million standard cu. m a day (mscmd) of KG D6 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.
In its petition to the apex court, NTPC had opposed the inclusion of the eGoM’s decision, in the written submission of RIL by way of an amendment.
Arguing in the court for NTPC, solicitor general Gopal Subramanium said that RIL was aware of the eGoM decision before the commencement of the trial and its subsequent inclusion in RIL’s written submission would violate court procedure.
He also stated that the minutes of the eGoM meeting clearly states: “The decisions taken in this eGoM will be without prejudice to the NTPC versus RIL, and RNRL versus RIL case, which are separately sub judice.”
When questioned about the impact of the Supreme Court’s verdict on NTPC’s case in the high court, Subramanium declined comment.
Harish Salve, counsel for RIL, said, “If they (NTPC) had allowed the amendment, the trial would have been completed by now. The ill advised litigation has further delayed the trial by four to six months.”
Interestingly, RNRL had sought the Supreme Court’s permission to intervene in the same case in the apex court, which was not granted.
Both RIL and RNRL have been slugging it out in the courts over the pricing and supply of gas from RIL’s D6 block.
RIL and RNRL had approached the Supreme Court on the verdict of the high court on 15 June that asked the two to sign a “suitable arrangement” for supply of gas.
RIL appealed the judgement while RNRL wanted it expedited. The Supreme Court has refused to stay the high court ruling.
While a Reliance-Anil Dhirubhai Ambani Group spokesperson—of which RNRL is a part—declined comment, an external spokesperson for RIL did not respond to Mint’s queries at the time of filing this story.
manish.r@livemint.com
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First Published: Fri, Oct 02 2009. 12 31 AM IST