Within two days, the Indian judiciary has given its verdict on perhaps the most high profile political and corporate cases of this decade. The death penalty for Kasab by a sessions court, one suspects, was the easier of the two.

The Supreme Court verdict on the gas dispute between RIL and RNRL has far more sub-texts woven into it. The primary issue, on which the three-judge bench pronounced its verdict, is asserting the supremacy of the government on the pricing and utilisation of a national asset. The subsidiary one is an acknowledgement that gas prices in India are now irrevocably going up.

Tackling the first line of thought, the verdict is set to become the basic precedent for years to come, for subsequent court cases and government decisions on a large number of disputes involving the corporate sector. Of course, there is always the possibility of a review of this judgement by a larger bench. But it will not be unfair to compare Friday?s judgement with some of the legendary political cases that defined the course of Indian political history like the Kesavananda Bharati case.

Already battle lines are being drawn in the telecom sector, with the mining sector not far behind. This is not surprising. The stakes have multiplied for the economic actors in the new India and so it is only fair that the Supreme Court has been asked to adjudicate on some of the first principles.

The sovereign obviously has the primacy of the right over national assets. It is for this very reason that modern laws of contract seek to establish the limits to which that right can be exercised by the sovereign. But in this case the Supreme Court has not decided on those limits.

It will, however, become necessary to define them soon. This will be necessary as India has a clearly defined rule of law that leaves no scope for expropriation of assets of a private enterprise, for instance. Yet as a large number of private enterprises do trade in national assets, the limits of government intervention, following the court order will have to be factored into new contracts. That can only happen either through fresh court judgements or government pronouncements.

We never faced this dilemma before but it was bound to come up in an economy expanding as rapidly as India. The related issue that will also need to be defined, one suspects, is what constitutes a national asset. There are some that are easy to define, like minerals. But there are also companies that do business on common properties like operating a toll road, or even running a hotel. Can these be construed as national assets? If so, what are the rules that will govern their usage?

This is not just a case of pricing the asset or property in question. The issue is one of ownership and if that can and should be invoked by the sovereign. On the pricing issue, all governments in the post-liberalisation era have rightly laid stress on setting up regulatory commissions to determine the price, among other things. One of the reasons the gas dispute got dragged to the courts was because the regulator for the sector was not in place when the Ambanis signed the MoU.

These issues are not chicken feed. Exploration companies, especially those from overseas, and even the domestic ones, have often wanted answers to these questions. Indian case laws in the corporate sector have largely tipped towards taxation issues. Over the years, some of the basic principles of taxation have been crystallised. For instance, it is recognised that the government is not bound by the concept of promissory estoppel from changing its tax rates or making other changes. With the Supreme Court verdict in the gas dispute, one suspects another lacuna will soon be addressed.

For corporate lawyers the immediate impact of the verdict will, therefore, be to open the grounds for re-examination of their briefs, wherever there is a dispute with the state. To what extent RIL and RNRL will do business with each other after Friday?s verdict is something that only the next few weeks will tell.

Beyond this issue, the most significant benefit that will flow from the Supreme Court verdict is the lifting of uncertainty about gas pricing. A host of issues had become subservient to the final outcome of the case. Since natural gas already accounts for about 10% of the energy needs of the economy and is projected to reach 20% in the next five years, we are talking big numbers here.

The first is, of course, energy prices. The government was finding it difficult to raise the price of natural gas under the administered price mechanism, as RNRL and even public sector NTPC had questioned the right of RIL to sell at over $2.34 per mmBtu. That has been sorted out and all downstream companies can now price their products, including fertiliser, electricity and piped gas, for domestic connections at the new benchmark. So, companies like ONGC, Oil India?both of which had gone on record saying the current gas prices were too low to justify fresh investments in the sector?will now find enough reasons to reconsider. That can only mean good news for the economy.

The verdict has supported the RIL position that it is only a contractor for the natural gas extracted from the D-6 field in Krishna-Godavari basin. The price for the gas, as of now, will be $4.20 for each mmBtu and RIL will sell the gas to the competing end-users that include a clutch of fertiliser and power companies, besides some city gas projects, as per the government?s policy. RNRL, too, is one of them. So there is little option left for RNRL but to take the price as given and negotiate accordingly.

They will have to move fast. Incidentally, the economic shelf life of the D-6 field is only about 20 years, of which three years have already been spent in Group of Ministers and in the courts. Someone should perhaps set a price for the opportunity cost the economy has incurred in these years.

subhomoy.bhattacharjee@expressindia.com