, NEW DELHI, May 7 – India\’s Supreme Court ruled in favour of the country\’s richest man Mukesh Ambani on Friday in his long-running feud with his brother Anil over a family deal to share the nation\’s largest gas find.
In a landmark decision, the court threw out a deal between the estranged siblings involving access to the Krishna Godavari Basin off India\’s east coast in a move hailed by Mukesh\’s lawyers and the government.
Anil had demanded the honouring of a 2005 pact brokered by their mother that would allow his company to buy gas for 17 years from the field owned by Mukesh at a price far lower than one set by the government.
Mukesh, 53, who heads India\’s largest company Reliance Industries Ltd (RIL), sought to have the deal annulled in a legal battle that has riveted India with its heady mix of incredible wealth and vitriolic family in-fighting.
"It is a complete victory for Mukesh Ambani," his lawyer Sameer Parekh told AFP after the decision overturning a lower court ruling in favour of Anil.
Reliance Industries and Anil\’s Reliance Natural Resources Ltd (RNRL) must now renegotiate the deal in the next six weeks in line with the government\’s pricing policy.
Affirming that only the government has the right to set gas prices, Chief Justice of India K.G. Balakrishnan ruled that the brothers\’ deal was "not legally binding."
Shares of Anil\’s RNRL, which was counting on the cheap gas to supply planned power plants, crashed 23 percent to 52.75 rupees on the Mumbai stock exchange. Reliance Industries\’ shares rose 2.27 percent to 1,033.85.
"This was a make-or-break case for RNRL. If things do not pan out well for RNRL during re-negotiations, we see more downside for the stock," said Deepak Pareek, oil analyst at Mumbai-based Angel broking.
Anil Ambani, 50, said in a statement his company "currently has no plans" to ask for a review of the Supreme Court order and that it looked forward to "expeditious and successful renegotiations" with Reliance Industries to secure gas supplies.
The seeds of the battle lie in the carve-up of the Reliance empire built by their rags-to-riches father Dhirubhai Ambani, who died in 2002 without a will.
In the asset split, Mukesh kept the oil, gas and petrochemicals businesses of the group\’s flagship Reliance Industries. Anil got its power utility division, the phone company and finance arm.
Under the pact, Anil was to get gas from Mukesh at $2.34 per million British thermal units (BTUs). However, the government two years later said the gas should be sold at nearly double the rate.
The government, which stood to lose out on royalties on the sale of the cheaper gas, argued the resource belonged to the nation and could not be subject to a family pact and sold at cut-rate prices.
"The gas belongs to the people of India," Indian oil secretary S.S. Sundaresan told reporters after the ruling. "The viewpoint of the government has been upheld."
Analysts say the very public row had highlighted to investors the vagaries surrounding energy marketing and pricing policy in fuel-hungry India and could make them more cautious.
The Ambani feud has also been seen as a lesson to other family-run businesses in India, which dominate the corporate landscape, on how not to handle a handover from one generation to the next.
Anil had accused his brother of "corporate greed" and trying "every trick in the book" to wriggle out of the agreement.
Despite their rancorous battle, Mukesh and Anil still live in the same high-rise family mansion in Mumbai with their mother, albeit on different floors.
Last October, Anil made a vain bid to patch things up with his brother, declaring it would be a present for their mother.
Mukesh rebuffed him, saying the row needed to be settled by the court and was "not merely a family matter" but involved Reliance Industries\’ shareholders.