Sunday, October 11, 2009

RIL directors’ claim a breach of trust: ADAG

Anil Ambani Group has alleged that RIL directors' claims of not having approved the Ambani family MoU and actions of their Chairman Mukesh Ambani, who signed the pact, were in breach of criminal trust and fiduciary duties.
Fighting a legal battle on supply of gas, Anil Ambani group firm RNRL even questioned the locus standi of directors of Reliance Industries to file individual affidavit saying they were not parties to the case and had not taken permission of the court to file the same.
"If the MoU was not known, it is not understood as to how the corporate governance committee (to which the directors were members) worked out the basis and details of demerger, which were entirely based on the MoU," Anil Ambani Group firm RNRL said in rejoinder to the affidavits filed on Saturday.
Six directors on the board of RIL had on October 6 filed separate affidavits in the Supreme Court saying the board had not "accepted and approved the contents of the memorandum of understanding (between Mukesh and Anil Ambani) dated June 18, 2005" that provides for division of natural gas from KG-D6 between firms run by the two brothers.
If the statements made by the directors in affidavits to the Supreme Court were true then "the actions of Mukesh Ambani on one hand and the directors and members of the Corporate Governance Committee on the other would clearly amount to breach of fiduciary duties and criminal breach of trust," RNRL said in its rejoinder.
On RIL's contention that RNRL would make an astonishing profit of Rs 350,000 crore by selling the gas to affiliate power firms at market rates, the Anil Ambani Group firm said electricity tariff was either regulated or subject to competitive bidding.
"The cost of inputs for generation of power as well as price for sale of power is fully regulated and, therefore, it would not be possible for RNRL to sell gas at a price which would result in a profit of Rs 350,000 crore," RNRL said.
It, however, did not directly respond to RIL allegation that RNRL, under the family MoU, intends to source gas from RIL at USD 2.34 per mmBtu and sell it at market rates which can be higher than even the government approved price of USD 4.2 per mmBtu.
"The scheme of demerger contemplates that RNRL will undertake the business of supply of gas. It is highly dishonest on the part of the respondent (RIL) to raise this argument and in law it should not be of any concern to the respondent as to what profit the resulting company would make from the demerged business," RNRL said.
RNRL said RIL is bound by its commitment to sell gas to RNRL at USD 2.34 per mmBtu.

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