a) Need time to read the judgement
b) We don’t want to react until we have studied the judgement
c) Course of action will be decided after reading the judgement
d) Would not like to comment till the renegotiation is over
e) Extra two weeks given to reapproach SC

Minister for petroleum and natural gas, Murli said the Supreme Court verdict saying the government stand that gas belongs to the nation has been vindicated.

Immediately after the Supreme Court upheld the government’s right to fix price of gas and decide its utilisation, Deora  said “SC verdict upholds the fact that gas belongs to the government and the people of the country and that is what we have been saying.”

“I welcome the verdict. No matter what campaign one ran against the government, the nation is supreme,” he said without naming Anil Ambani group which had cast aspersions on his ministry for allegedly siding with Mukesh-led RIL.
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In the midst of the court battle, the government had also moved the Supreme Court asserting its sovereign right on pricing and utilisation, even as RIL said that it had fixed the gas price at $4.20 per mmBtu as per the government policy.
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PTI

Some aspects of the judgement are welcome –

1. Government is the owner of the gas.

2. The PSC overrides every other document

3. MoU is a private matter between the brothers 

What we are worried about is the court’s interpretation of the PSC – we feel the government has the right to approve the price and not determine the price as said in the judgement. The government must clarify on this before the next round of NELP is launched

RNRL did not do its   homework properly – an MoU is only a document of intent and not a binding contract. The other side took advantage of this fact and won the battle.

• a) All negotiatios at US $ 4.20 mmBtu

b) May have to tweak some provision in gas supply pact

c) Agreement with RNRL to be with SC purview

d) Hope to reach agrement within six weeks

 e) Market price of gas is subject to government policy

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