Chronology of Events - RIL RNRL Case - KG Gas Dispute

Dates

25.Feb.1999

12.April.2000 to
2002

06.June.2002
November 2004 -
June 2005

18.June.2005

5.August. 2005

12.September.
2005
16.September.200
5
21.September.200
5

24.0ctober. 2005

09.December.2005

12.January.2006

February - July
2006
12.April.2006

9.May.2006

31.June.2006

26.July.2006

8.November.2006

10.November.2006

April - June 2007

18.May.2007

18.June.2007

19.June.2007

10.October.2007

15.October.2007

28.May.2008
 28.May.2008

30.January.2009

1. January. 2009 to
Jun - 09

15.June.2009

04.July.2009

15.July.2009

18.July.2009

28.July.2009

03.August.2009

04.August.2009

07.August.2009

11.Aug.2009

17.08.09 -
21.08.09

18.August.2009

18.August.2009

20.August.2009

01.September.200
9

13.September.200
9 - JP Chalasani
Statements in
Marketing Margins

24.September.200
9

25.September.200
9

06.October.2009

07.October.2009
12.October.2009

19.October.2009

19.october.2009

20.October.2009

24.October.2009

27.October.2009

28.October.2009

30.October.2009

04.November.2009

05.November.2009

12.November.2009

25.November.2009

01.December.2009

10.December.2009

15.December.2009

19.December.2009

7.May.2010
 Chronology of Events - RIL RNRL Case - KG Gas Dispute
Events
New Exploration and Licensing Policy (NELP) announced by Government of India. Global bids for exploration of
certain oil and gas fields were invited. A consortium of Reliance Industries Limited (RIL) and Niko Resources
Limited (Niko) was successful in its bid for KG-DWN-98/3 (KGD-6).
Production Sharing Contract (PSC) between Government of India, RIL and Niko executed and subsequently
tabled in Parliament
The Consortium of RIL and Niko made a major find and announced discovery of significant reserves of Natural
Gas.
Shri Dhirbubhai Ambani, the founder Chairman of RIL, passed away.
There were certain disputes and differences between the two members of Promoters Ambani Family i.e. Mr.
Mukesh D. Ambani and Mr. Anil D. Ambani.
Memorandum of Understanding (MOU) signed between the members of family of promoters of RIL. Mr. Anil
Ambani resigned from the VC & JMD of RIL.
The Board of RIL approved the Scheme of Demerger of demerging of the four businesses and transferring them
to four Resulting Companies and decided to make applications in the Court under the Companies Act.
RIL accordingly filed Company Application No.563 of 2005 with Bombay High Court seeking directions for
convening meetings of shareholders, secured and unsecured creditors to consider and approve the Scheme of
Demerger.
The Bombay High Court directed that the meetings of the equity shareholders of RIL to be held on 21st October
2005.
A meeting of equity shareholders of RIL was held and the Scheme was approved by a majority of 99.81% of the
equity shareholders present and voting and 99.9998% of shareholding in value voted in favour of the Scheme.
RIL thereafter filed Company Petition No.731 of 2005 seeking sanction of the Bombay High Court under Sections
391 and 394 of the Companies Act for the Scheme of Demerger which was approved by the equity
shareholders, secured and unsecured creditors.
RNRL (Then Global Fuel Management Services Ltd. ) also filed Company Petition No. 733 of 2005 seeking
sanction to the scheme of demerger.
The scheme of demerger was sanctioned by the Bombay High Court. The financial services, telecom and power
businesses are transferred to the leadership of Mr. Anil Ambani and Mr. Mukesh Ambani will continue to lead the
other businesses.
The board of directors of RIL and board of directors of RNRL as it existed before the demerger approved the
GSMA and the GSMA was executed. The draft of the Gas Supply Master Agreement was appended to the GSMA.
The GSMA provided for supply of quantity of gas not exceeding 28 MMSCMD.
RIL made an application to the MoPNG for approval of the gas price at which the sale of 28 MMSCMD gas was
agreed under the GSMA. This approval was sought in accordance with the terms of the PSC.
Letter from RIL to MOPNG seeking approval to the price for sale of Gas mentioned in the GSMA dated 12th
January
RNRL addressed a letter to MoPNG requesting it to 2006.
approve the application made by RIL for price approval. This
was with reference to RIL’s Application dated 14th April 2006 seeking price and formula approval for sale of
natural gas.
RIL forwarded to RNRL a communication dated 26th June, 2006 received from the GOI rejecting the gas pricing
formula stipulated in the GSMA.
Letter from the Director MOPNG to RIL declining to grant approval to the price formula for sale of Natural Gas to
RNRL. This was in response to Application dated 14th April 2006.
RNRL filed Company Application No.1122 of 2006 claiming reliefs on the basis that such reliefs were required
for implementation of the scheme sanctioned by this Hon’ble Court. RNRL files company application no.1122 of
2006. It takes the dispute to Court.
Company Application no. 1123 and 1122 seeks that RIL be restrained from creating any third party interests in
respect of 28 MMSCMD of gas to be supplied to RNRL.
The learned Company Judge (Mohite, J.) however directed that the matter be removed from his Lordship’s
Board. which have existing facilities for consumption of gas
RIL invited quotations from power and fertilizer companies
from the expected gas from the expected date of commencement of production of gas so as to facilitate the
fixing the price of gas as per market conditions under the policy of the GOI. Term Sheets were signed for the
sale of gas. These were also subject to the approval of GOI.
On the basis of the price discovered by RIL for sale of Gas, RIL submitted a proposal for approval of gas price
formula/basis for valuation of Natural Gas.
Both RIL and RNRL filed appeals against the order dated 3rd May and 20th June. On these appeals the Appeals
Court passed the following order stating: "we do not find anything in the impugned orders which prevents the
Central Government from going ahead with the manner of the price fixation under the PSC between the GOI and
the appellant".
Company Application No.695 of 2007 filed and moved urgently by RNRL seeking further restraint against RIL
and in respect of the balance of the 40 MMSCMD of gas. The Application (Lodging) No.721 of 2007 was filed. It
was alleged: “…….any attempt by the Respondents for sale/auction of any quantity of Gas would necessarily
affect the Applicants’ right of 40 MMSCMD and, would be in breach of the order dated 3rd May, 2007 passed by
this Hon’ble Court……..” On that basis restraint order was sought against Appellants from selling any quantity
of gas.
The market price determined by RIL by limited tender process of $4.33 was reduced to $4.20 mmbtu and was
approved by the GOI. The Government of India-MoPNG in response to RIL’s application dated 18th May 2006
approved Gas Price Formula/basis under the PSC.
The Bombay HC disposes of application no.1122 of 2006. (7)
A meeting of EGoM was held to discuss issues related to commercial utilization of gas under NELP. The EGoM
issued guidelines for sale of natural gas by NELP contractors. The EGoM detailed the list of priority for supply of
gas which is broadly –
(i) Existing Urea plants
 (ii) LPG Plants
(iii) For existing gas based power plants
(iv) City gas distribution, etc.
The Division Bench of the Bombay High Court concluded the hearing of a batch of Appeals (Appeal No.844 of
2007 filed by RIL and Appeal No.l of 2008 filed by RNRL against Order dated 15th October, 2007 and Appeal
No.440 of 2007 against Order dated 3rd May 2007 and Appeal No.441 of 2007 against Order dated 20th June,
2007).
The Appeal Court vacated all earlier orders and directed that RIL may proceed to sell Gas produced from KGD-6
field to the parties as nominated in various EGOM decisions at a price mentioned in EGOM decisions as
Pursuant to the Order of theelucidated in theof
GoI Affidavit dated
High 13 January
dated 2009.
th
Division Bench the Bombay Court 30th January 2009 and as per the
allocation of gas under the Gas Utilization Policy enunciated in EGOM Minutes dated 28th May 2008 and 23rd
October, 2008, RIL enters into various contracts for sale and supply of Natural Gas to various power and
fertilizer companies.
The Division Bench of the Bombay High Court disposed of Appeal No.844 of 2007 and Appeal No.1 of 2008. The
High Court answered the first question by holding that the Company Application was maintainable. The High
Court has answered the second question by holding that the suitable arrangement envisaged under Clause 19 is
the one which is based on the MOU and that the price, quantity and tenure of supply of Gas should be according
to the MOU.
RIL files SLP in the Supreme Court challenging Bombay HC decision asking for relief.
Reliance ADA Group Chairman Anil Ambani asks the Prime Minister Manmohan Singh to direct the Petroleum
Ministry and the sector regulator to stop from "overtly and covertly" intervening in a commercial dispute his
The government, in its special leave group firm has
petition withthe
before Mukesh Ambani-run
SC, sought RIL. to declare as "null and void" the
a direction
Ambani family settlement, as also to stay a June 15 Bombay High Court order asking RIL to supply gas to
RNRL - AGM - Anil Ambani and share holdersReliance ADA Group
together raise firm RNRL.
slogans against Petroleum Minister Murli Deora in
tandem with Anil Ambani's attack against the ministry, but these interruptions the high profile industrialist
would not have minded during the Annual General Meeting of his group firm. Anil Ambani accuses Murli Deora
and the Petroleum Ministry at the AGM of RNRL and steps up attacks on RIL.
Anil Ambani and RNRL demanded "an independent and objective re-examination by public accountability bodies
like the CAG and the CVC of the apparently exorbitant capital expenditure of Rs 45,000 crore.
Oil and gas field regulator DGH rejects industrialist Anil Ambani's charges that it had approved Reliance
Industries Rs 45,000-crore "exorbitant capital expenditure" plan for gas fields, saying the actual expenditure is
subject to three audits including one by CAG.
RIL issues official statement against RNRL and Anil Ambani's attacks
Anil Ambani Group accuses the Petroleum Ministry of "misleading" the Prime Minister's Office by claiming that
Reliance Industries is required to sell natural gas as per the Gas Utilisation Policy of the government.
The Petroleum Ministry informs the Power Ministry that no marketing margin was approved for sale of gas by
companies like Reliance Industries, saying these are commercial arrangements between sellers and buyers.

Anil Ambani Ad Campaign Against RIL and MOPNG

The Supreme Court decides to commence final hearing on the high-profile gas dispute between the group firms
of Mukesh Ambani and his younger brother Anil from October 20.
RIL Senior Vice President (Commercial) B Ganguly writes to the GoI saying that the company had no objection
to any special audit of KG-D6 PSC (Production Sharing Contract) by CAG as desired by the government for
auditing its gas field costs and said it is operating the field in compliance with rules.
PMS Prasad writes to Oil Secretary R S Pandey, saying "certain parties are bent upon holding the country's price
and national interest hostage to their own narrow commercial interests and are stopping at nothing to destroy
the reputation of the country.It is necessary to nip these malafide endeavors in the bud for the sake of the
energy security of the country."
The government informs the Supreme Court that it was not for declaring the Ambani family settlement "null and
void" as prayed earlier and said that its policies on gas pricing were without prejudice to power utility NTPC's
case against RIL."It (government) is in no way concerned with the private dispute between (Mukesh-led) RIL and
(Anil group firm) RNRL or between the Ambani brothers, but is only concerned with its rights as owner and
regulator of natural gas," the Centre said in an application.
*Without Prejudice* *RIL charging illegal & unauthorized marketing margin on sale of gas* *Marketing Margin
being charged without the approval of EGOM**Power & Fertilizer Sectors to bear an additional burden of over Rs
10,000 crore**Government does not benefit by even a single Rupee; entire gain to RIL alone* *Government is
denied its lawful share; on the other hand made to
pay for this in form of enhanced subsidies* *Government undertaking GAIL not permitted to charge similar
marketing margin on sale of gas under APM*
RIL serves notice to stop gas supply to Anil-led Reliance Infra, which in turn warned against the "malafide"
action. RIL took this step due to payment "default" on the part of Reliance Infrastructure for gas supplied during
the first fortnight of September.Pursuant to this, RIL invoked the letter of credit (bank guarantee) to recover an
amount Rs 12 lakh towards marketing margin for supplies in first half of this month.
Anil Ambani Group firm Reliance Infrastructure informs RIL that it will shut its Samalkot power plant for
maintenance later this month, coinciding with Mukesh Ambani-run firm's notice of suspension of natural gas
supplies over payment defaults.".
RIL files 7 separate (Seven full-time members of RIL Board) affidavits telling the Supreme Court that the Board
had not approved the family MoU, which divides gas between companies run by the two brothers and the RIL
Board members said they had "never seen nor read the said MoU"
DGH Sibal writes to the home and oil ministries fearing for his life
RIL annexes RNRL's offer document for a GDR listing that said it will supply gas to its affiliate power companies
at prevailing market prices. "Such market prices may exceed the Government-approved cap price of USD 4.20
per mmBtu (for KG-D6 gas)."
Anil Ambani Group firm Reliance Infrastructure makes a u turn and agrees to pay the levy, although under
protest, and has asked the Mukesh Ambani firm to resume natural gas supplies to its power plant.
 Upstream oil and gas regulator DGH attributes the poor interest in auction of exploration blocks to the Ambani
brothers' gas dispute.
The Centre today files its reply to an affidavit filed by Reliance Natural Resources in the Ambani brothers' gas
dispute and said that its legal rights have been affected by the Bombay High Court ruling on the matter.
The apex body of oil firms has petitioned Prime Minister Manmohan Singh against Anil Ambani Group's media
campaign, saying it conveyed a distorted and negative view of doing business in India and sullying the industry
and its achievements. Association of Oil and Gas Operators
Reliance Industries warns of irreversible damage to the Krishna Godavari basin reservoir saying the failure of
the government to name additional customers has led to natural gas flow from KG-D6 fields being artificially
restricted.
RIL RNRL Case Hearing Begins in SC

Justice R V Raveendran discloses that he holds shares of both Mukesh Ambani-led Reliance Industries and Anil Ambani-run
RNRL before he started hearing their gas dispute as part of a three-judge bench. Raveendran said he holds equal number of
shares in RIL and RNRL and said if anyone had objections to his hearing the matter, he would like to recuse himself. Senior
counsel Ram Jethmalani, appearing for RNRL, said that Justice Raveendran was most suited to hear the matter while Salve
wanted the disclosure to be recorded.

R-Infra writes to RIL saying it had agreed to making further payments towards marketing margin for Samalkot under protest till
the issue is finally resolved. "We have taken up the matter with Petroleum Ministry and are awaiting their response."

Oil sector regulator resigns following allegations that he favoured Reliance Industries, V K Sibal seeks voluntary retirement
from his parent company Oil India Ltd.
The Power Ministry has told the Committee on Public Undertakings that State power utility NTPC Ltd will not lose any money
even if it was to get natural gas at prices higher than those committed by Reliance Industries five years ago.
Oil regulator V K Sibal, who is being probed by CVC and CBI for allegedly favoring Reliance Industries, leaves the DGH to
rejoin parent Oil India as it has rejected his application for voluntary retirement.
Justice R V Raveendran, a senior Supreme Court judge today withdraws from the Bench hearing it saying his daughter is
associated with a solicitors firm advising Mukesh Ambani group on other global projects AZB and Partners. A new Bench is to
be constituted tomorrow to hear the high-voltage case between Mukesh Ambani's RIL and Anil Ambani's RNRL relating to
pricing of gas from K G Basin.
The hearing in the gas dispute between the Ambani brothers restarts afresh in the Supreme Court after a change of judge and
the two sides indulged in a verbal battle with the one side accusing the other of deviating from its earlier stand.
Salve informs the Bench that it was the Anil Ambani group which had in June 2007 asked the government to frame a national
gas utilisation policy to regulate the prices and now it has gone back and is taking a contrary view.Citing the presentation made
by RNRL to the government, he said the "government had done exactly what RNRL has recommended."
UBS fined 8mn pounds over staff misusing client accounts. The penalty of close to Rs 50 crore by UK's Financial Services
Authority (FSA) comes at a time when Indian authorities are also probing alleged violation of norms in use of funds held in the
UBS accounts of Reliance Energy and Reliance Natural Resources Ltd (RNRL).
EGOM - Reliance Industries is allocated 2.34 mmscmd of gas from its KG D-6 fields to meet just about one-fifth of the gas
requirement at its twin refineries at Jamnagar in Gujarat.
The government in the Rajya Sabha says three firms of Anil Ambani group - Reliance Infrastructure, Reliance Natural
Resources and Reliance Communication -- have violated overseas debt norms. The matter pertaining to Reliance
Infrastructure has been referred to Enforcement Directorate over non-payment of penalty and that of RNRL for further probe,
also by ED.
Parliamentary panel asks the government to take necessary steps for early settlement of the ongoing dispute between the
Ambani brothers over gas from KG-D6 fields. Without going into the merits of the dispute, as the matter is sub-judice, the
Parliamentary Standing Committee on Petroleum and Natural Gas said resolution of the dispute would help in achieving the
targeted gas production.
The government says Mukesh Ambani-run Reliance Industries has provided most of the papers relating to its eastern offshore
KG-D6 gas fields and the nation's top auditor CAG is ready to begin audit of expenses incurred in developing the fields.
The Supreme Court today reserved its judgement in the high-voltage legal battle on gas supply and pricing between the
Ambani brothers with Government asserting that the title to the natural gas vests with it.
The Supreme Court delivered the judgement infavour of RIL by 2:1