The Bombay High Court on Friday asked the Central government to file an affidavit clarifying whether its approval was necessary to finalise the price of the gas to be produced by Reliance Industries [Get Quote] in the Krishna Godavari basin.

The High Court is hearing the case between Mukesh Ambani-led RIL and Anil Ambani-led Reliance Natural Resources [Get Quote] over the gas supply agreement. The government is seeking to intervene in the case. The government's lawyer, T S Doabia, told the court on Friday that the government's approval was necessary for the rate at which RIL can sell the gas to other private parties.

The division bench of Justices J N Patel and K K Tated pointed out that, according to RNRL, there was a statement made by the government in the Parliament that it would not be fixing the gas price, except for its own share. Doabia said the reply in the Parliament did not convey anything contrary to what he was saying.

The court asked him to file an affidavit by a secretary-level officer, clarifying the government's position by October 20. Justice Patel added, in case government was worried about its own stake in the KG gas field production, the court would ensure it was not affected by the current litigation. "We will protect the public interest in the project," Justice Patel said.

Doabia also opposed the stay granted by the High Court earlier to RIL's entering into contract for the sale of gas with anybody other than RNRL and National Thermal Power [Get Quote] Corp. "It is sending a wrong signal to the foreign investors," he said.

Earlier, arguing for the RNRL, senior advocate Mukul Rohatgi said a single judge of the Bombay High Court -- against whose order both parties have come in an appeal before the division bench -- had passed an order, which was self-contradictory.

Last year, Justice Anup Mohta had -- with reference to gas supply master agreement -- said the Memorandum of Understanding between Ambani brothers and their mother Kokilaben Ambani was binding on RIL and RNRL. He had also said the High Court cannot write out the GSMA for the parties, and they will have work it out themselves.

Rohatgi said the MoU itself made it clear that RIL was to give RNRL a contract on the same terms as its contract with NTPC. Justic Mohta should have specified these terms, he said.