In the row over non-revision of prices of domestically produced natural gas from most touted KG-D6 block in the east coast, the Supreme Court on Monday asked the government and Reliance Industries to give their stand on whether it would be appropriate for it to pass an order appointing an arbitrator when two public interest litigations (PILs) were pending before its another bench.

Justice Ranjan Gogoi said that he needed to hear arguments from both sides over whether the two PILs restricted him from appointing an arbitrator in the gas-pricing dispute between the central government and RIL when similar issue is pending before a three-judge bench of the apex court.“The question that we ask is are we going to start an exercise which may be stillborn at some point,” he asked solicitor general Ranjit Kumar and RIL counsel Sameer Parekh. The court will hear the matter on September 21.

The judge said that the January and October 2014 pricing guidelines, along with the production-sharing contract which contains the arbitration clause, had been challenged in PILs filed by CPI leader Gurudas Dasgupta and Common Cause, an NGO.

Challenging the government’s gas pricing policy, the PILs also allege that the gas pricing formula devised by the government sought to benefit RIL by favouring doubling of the prices of gas extracted from its KG-DG basin fields. Justice Gogoi had last month reserved verdict in relation to the appointment of an arbitrator in the gas-pricing dispute.
While RIL wants appointment of an umpire arbitrator from neutral nationality, the government wants the apex court to reject the Mukesh Ambani company’s plea as the dispute is “not arbitrable.”

Considering that its partners – BP and Niko Resources – “are foreign companies, who are directly affected by any determination in the present case, it would be appropriate that the third arbitrator is appointed from a country other than India, UK, and Canada that is of neutral nationality,” RIL had stated.

However, the government had said that its role as an executive in framing policies for an entire sector of entities and the public at large cannot be challenged and decided under a private contract which the government has entered into with a private party for the purposes of exploration, extraction and exploitation of natural resources.

According to the government, the dispute is not arbitrable as the economic policy matters cannot be delved into by the courts unless there is violation or infringement of any of the constitutional or statutory provisions while implementing such policies.

Reliance  had sought arbitration in May 2012 after the government disallowed about $1 billion in costs, as the gas flow tapered. The company also sought arbitration over deferred gas pricing in May 2014. In this case, GS Singhvi, a former judge of the Supreme Court, is arbitrating for the government and David Steel is representing Reliance Industries.

Face-off
* SC asked govt and Reliance Industries to give their stand on whether it would be appropriate for it to pass an order appointing an arbitrator
* Justice Ranjan Gogoi said that he needed to hear arguments over whether the two PILs restricted him from appointing an arbitrator
* The PIL alleges that the gas pricing formula devised by the govt sought to benefit RIL by favouring doubling of the prices of gas from KG-DG basin