New Delhi, Nov 11 (Inditop.com) Reliance Industries Ltd (RIL) Wednesday sought to impress upon the Supreme Court that the family pact between the promoter brothers — Mukesh and Anil Ambani — brokered by their mother Kokilaben was not binding on the company.
Proceeding with his arguments in the Krishna-Godavari gas dispute, RIL counsel Harish Salve also questioned the legality of a part of earlier rulings of the Bombay High Court and said private pacts between two people cannot bind a company and its shareholders.
“Admittedly, this document was not placed before the RIL board. Admittedly, it was not mentioned before the court. It was not shown to the RIL shareholders,” argued Salve, questioning the legal validity of the family pact on his client.
He was placing his arguments before a three-judge bench comprising Chief Justice K.G. Balakrishnan, Justice B. Sudershan Reddy and Justice P. Sathasivam, which has been hearing the matter.
“The MOU (memorandum of understanding, or the family pact) was in private domain and not in corporate domain,” Salve said, while admitting the existence of such a document.
“The MOU is binding upon the mother and the two brothers but not on RIL,” he contended, while questioning concurrent findings, both by the single-judge bench and a division bench of the high court, that RIL was also bound by it.
Salve sought to vehemently contest the findings of the Bombay High Court since the Supreme Court has consistently held that higher courts should refrain from hearing a second appeal on such matters.
The apex court has maintained that higher courts should permit a second hearing against concurrent findings of lower courts only if there was a very important question of law and fact is involved in it.
“The judge wrongly came to the conclusion that it’s binding upon RIL,” said Salve.
The dispute is over the supply of 28 million units of natural gas for 17 years at $2.34 per unit to Anil Ambani-led Reliance Natural Resources (RNRL) from the gas fields off the Andhra Pradesh coast, awarded to Mukesh Ambani-led RIL.
The price, tenure and quantity were all based on a family re-organisation pact in 2005, but RIL subsequently said it could only sell the gas for $4.20 per unit, as this was the price, the company claimed, that was fixed by the government.
Salve said the family pact had envisaged that it would only serve as a guiding document to arrive at the suitable arrangement for gas supplies and that the two brothers would arrive at a suitable agreement.
It does not matter even if the RIL chairman had signed the pact, said Salve, adding that the RIL board never approved it.
As the court proceeded to rise for the day, RNRL senior counsel Ram Jethmalani remarked: “At last there is some progress, since RIL has at least admitted there is a family MOU, though as worthless piece of papers.”
At this, Salve remarked: “No hearing is complete without Jethmalani’s quotes.”
Not to be left behind, Jethmalani shot back: “But I’m only quoting you.”
