The Supreme Court in New Dehli ruled in favor of Mukesh Ambani’s Reliance Industries Ltd. in a dispute that pitted him against his brother Anil’s Reliance Natural Resources Ltd.,
Bloomberg reported.
The Ambanis, the world’s richest brothers, were feuding over gas from a field with $38 billion of reserves, the report noted.
The court ruled that Reliance Industries can sell gas to Reliance Natural Resources “at government-set prices that are higher than those in a 2005 family accord,” the article said. The court asked the parties to renegotiate their agreement within six weeks, Bloomberg reported.
The family agreement was not in the corporate domain and wasn’t approved by the shareholders, Chief Justice K.G. Balakrishnan and Justice P. Sathasivam said. The accord is therefore not legally binding, they said.
The feud began after Mukesh and Anil’s father, Dhirubbhai Ambani, died without leaving a will. According to
a
New York Times
report:
Five years ago, the brothers carved up the sprawling conglomerate their father built. They agreed that Mukesh’s Reliance Industries, which had purchased the rights to tap a natural gas field off India’s coast, would provide that gas to Anil’s Reliance Natural Resources at a set price. Two years after the brothers made their private pricing agreement, the government set another price for natural gas from the same field that was about 79 percent higher…. In a 268-page judgment, the justices defended the Indian government’s right to protect its natural resources, and also highlighted the unusual nature of the agreement between the two brothers.
The Associated Press reported
that Mukesh’s Reliance Industries
has calculated that it could make $11.5 billion from the gas if it’s priced at the current government rate. For Anil, the cost of losing the case could be even higher. The gas supply contract, he told shareholders in July, is “our company’s primary asset and contributes most of its value.”
The AP report quoted Reliance Industries’ attorney, who
told reporters that Mukesh and his wife hoped the ruling would be a “healing touch” to end the bitter family dispute. “The way ahead looks positive to put all the unpleasantness and acrimony behind us,” he said.
The AP article said the dispute “tested the boundaries between government and big business in a country where powerful dynasties like the Ambanis often enjoy close ties with politicians.” (Sources: Bloomberg, May 7, 2010;
New
York Times,
May 7, 2010; Associated Press, May 7, 2010.)
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