The Supreme Court on Monday asked Mukesh Ambani-owned Reliance Industries [Get Quote] to pay Rs 50 crore (Rs 500 million) within two weeks to BPCL [Get Quote] for the price difference in naptha supplied by the state-run company to RIL plant in Raigad.

A bench headed by Justice A K Mathur in an interim order asked RIL to pay Rs 50 crore against BPCL's demand of Rs 110 crore (Rs 1.1 billion) within two weeks subject to the final order. The court, however, directed BPCL not to execute the decree allowed earlier by the Bombay High Court in the case.

BPCL and Reliance had entered into an agreement in August 1986 for supply of naptha in bulk as a feed stock for manufacture of purified terephthalic acid.

Under the agreement, BPCL had agreed to supply special cut naphtha of 110/140 cut grade for Reliance's petrochemical plant at Patalganga in Raigad district at Rs 944.87 per MT, the price fixed by the Ministry of Petroleum.

While the naphtha was supplied by BPCL, it was processed by RIL in its plant and after extracting PTA the balance naphtha was returned to BPCL.

BPCL increased the price of SCN from Rs 944.87 per MT to Rs 1,054.40 MT (add-on to the Ministry fixed price) in October 1991.

RIL had contended that even the rate of Rs 944.87 per MT was excess but continued to pay at this rate.

Reliance, however, referred the matter to arbitration seeking refund to the tune of more than Rs 40 crore (Rs 400 million) saying BPCL did not incur any excess cost and even the rate of Rs 944.87 per MT was higher.

The arbitrator in September 2000 rejected RIL's claim and asked it to pay Rs 44.12 crores (Rs 441 million) plus interest payable at the rate of 11 percent per annum from November 1994.