The oil ministry stand on Krishna-Godavari gas will be opposed as and when Reliance Industries Ltd (RIL) misuses it to scuttle a binding contract, the counsel for Reliance Natural Resources Ltd (RNRL) told the Supreme Court Thursday.
Even some honest officials in the oil ministry raised questions over the oil ministry's power to scuttle the marketing freedom of contractors appointed for the exploration of the country's oil assets, RNRL counsel Ram Jethmalani told the apex court.
His response came when the three-member bench hearing the Krishna-Godavari gas dispute asked if he was challenging the petroleum ministry's gas utilisation policy that has allocated the natural resource among various players and fixed a price.
"It's a democracy. The government has the powers to make policies, good or bad. I am not challenging their power to make a policy and enforce it," Jethmalani told the bench of Chief Justice K.G. Balakrishnan, Justice B. Sudershan Reddy and Justice P. Sathasivam.
"But I am challenging it to the extent that under the guise of a policy, they cannot frustrate the contract," he said referring to the gas supply pact between RNRL and RIL, which is the contractor for the Krishna-Godavari fields.
The three-member bench has been hearing the dispute over the supply of 28 million units of gas for 17 years at $2.34 per unit to Anil Ambani-led RNRL from the gas fields off the Andhra Pradesh coast, awarded to Mukesh Ambani's RIL.
The price, tenure and quantity were based on the 2005 family pact, but RIL subsequently said it could only sell the gas for $4.20 per unit, as this was the price, the company claimed, fixed by the government.
The Bombay High Court had earlier ruled in RNRL's favour.
Jethmalani said even an honest oil ministry official, Joint Secretary A.K. Jain, had raised the issue of government power to curtail marketing freedom of the contractor in an internal ministerial communication.
"Does the government (oil ministry) have the power to put in place a pricing policy and subject the contractor to this policy, especially with regard to the power sector," he said, while quoting from the letter to a ministerial group Aug 24, 2007.
The communiqu