Ambani family pact not binding on RIL: Counsel

November 11th, 2009 - 4:12 pm ICT by IANS  

New Delhi, Nov 11 (IANS) 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 an earlier ruling of the Bombay High Court and said private pacts between two people cannot bind a corporate entity 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 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 it would only serve as a guiding document to arrive at the suitable arrangement for gas supply 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.

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