Ambani brothers battle: SC verdict favours Mukesh
The epic corporate battle fought between the Ambani brothers comes to an end with the Supreme Court ruling in favour of Mukesh Ambani owned Reliance Industries (RIL). The dispute was between RIL and and Anil Ambani’s Reliance Natural Resources (RNRL) over the supply of gas from the Krishna-Godavari basin D6.
After the verdict came out, RIL stock pirce jumped up while the RNRL stock declined considerably. As on 12 noon RIL stock was at Rs 1,043 which was a 3.14 per cent gain. While the rNRL stock declined by 24.5 percent stood at Rs 51.55
The case was fought over 26 days spread over nine weeks begining 20 October last year. A three-judge bench headed by retiring Chief Justice K G Balakrishnan, had reserved its judgement after arguments concluded on 18 December, 2009. After listening to both sides 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.
The highlights of the ruling:�
a) RIL does not have absolute marketing rights over the gas and the price is subject to government approval
b) The Ambani family MoU is not legally binding. Under a 2005 family agreement under RIL was to supply 28 mmscmd at US $2.34 per mmBtu for 17 years to RNRL)
c) RIL directed to reneogatiate within six weeks with RNRL to workout the terms of Gas Sale Master Agreement, safegurading RNRL’s rights.�
d) Gas is a government asset till it reaches end-users.
e) Supreme Court upheld the petition filed by RNRL before Bombay high court court as maintainable, as the court had sanctioned the original Ambani family demerger scheme.
f) Ambani family MoU technically not binding, as it is between two brothers – Anil and Mukesh and mother Kokilaben, and three million shareholders of RIL and RNRL did not know its contents.
g) Ambani family MoU can be a means of arriving at a suitable arrangement but cannot be the sole means for a suitable arrangement
h) Since the MoU was not made public it doesn’t fall within the corporate domain – Business Standard/ moneycontrol.com
Also see Fanning the Flames, Without Prejudice & End Game
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