In a severe blow to the Anil Ambani group (Adag) seeking cheap gas from elder brother Mukesh-led RIL, the Supreme Court on Friday (today 7th May, 2010) said that the Government of India has the right to the last word on pricing and utilisation of national assets like gas. The court held that all the parties are bound by government policy and RIL does not become ‘owner’ of the gas.
Giving its verdict on the gas dispute, a three-judge bench of the court headed by Chief Justice K G Balakrishnan said the Ambani family MoU dividing the gas was not binding, both legally as well as technically. This was perhaps visible to most legal experts – after all the Chairmen of 2 companies cannot enter into a personal agreement and say it is applicable to the company. For an agreement to be legally binding it has to be accepted and ratified by the Board – in fact preferably by the shareholders in a general meeting. So RIL wins and RNRL loses….
Be that as it may, the winner is Reliance Industries Limited – however the impact may be muted on the immediate term. The long term impact is likely to be good for the elder brother and bad for the younger brother. Adag is also in some trouble over the number of people in Mumbai walking over to Tata Power – helped by another S C ruling saying Tatas need not sell power to Reliance Energy.
Not sure whether everything is in the price -but things are not going too well for India’s 3rd richest man – or has he already slipped lower?
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