Mukesh Ambani-led Reliance Industries (RIL) on Thursday told the Supreme Court (SC) disapproval of the price set by the government for K-G basin gas would impose a massive loss on the company.
Seeking to set aside the Bombay High Court judgement that held family MoU of 2005 executed by the two Ambani brothers and their mother, in its written submission RIL said that even if the government price merely for valuation purpose, the relevant clause in the gas supply master agreement (GSMA) cannot be considered to be ??unreasonable and unconscionable?? to render the whole agreement as not being a ??suitable arrangement?? as argued by RNRL promoted by Anil Ambani.
The company said that once it is demonstrated that RNRL?s challenge to the GSMA was not tenable, the only conclusion would be that the agreement of January 12, 2006 was the appropriate ??suitable arrangement?? for supply of gas.
The submissions filed through advocate firm Parekh & Co said that on one hand RNRL?s contention is that the GSMA/GSPA is not a bankable arrangement, it is also an admitted fact that finance to the extent of $510 million was raised by the Anil Ambani firm for the Dadri power plant in Uttar Pradesh by way of external commercial borrowing and another Rs 11,000 crore was raised from public by Reliance Power for various projects including Dadri.
While stating that RNRL had conceded that ??suitable arrangement?? had to be suitable for both the companies, RIL said that the real consequence of the Anil Ambani company?s insistence on sale price being different (lower) from the government approved price is the under recovery of project cost which amounts to a subsidy to RNRL to the extent of the difference between $4.20 and $2.34.
??This was not envisaged by the scheme and cannot be considered as a ??suitable arrangement,?? it emphasised which seeking dismissal of RNRL?s SLP.