rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » ADAG may sue 3 RIL executives over gas pact

ADAG may sue 3 RIL executives over gas pact

June 19, 2008 18:39 IST

The Reliance Anil Dhirubhai Ambani Group on Wednesday threatened to sue three top officials of Mukesh Ambani's Reliance Industries for breach of trust and their inability to protect the interest of shareholders of an ADAG company.

In a statement to the media, an ADAG executive said it is contemplating a lawsuit against three RIL executives - L V Merchant, Sandeep Tandon and K Sethuraman - as they had signed a 'one-sided agreement' to supply gas from RIL's Krishna Godavari gas fields to Reliance Natural Resources. Within days of signing this agreement on January 12, 2006, RNRL was transferred to Anil Ambani as a family settlement between the warring Ambani brothers.

ADAG's move came close on the heels of RIL's objection to the proposed sale of Relaince Communications to South African telecom giant MTN. RIL wrote to MTN and ADAG cautioning that the amalgamation deal through reverse swap would tantamount to breach of RIL's first right of refusal to acquire a controlling stake in RCom.

On Wednesday, the Anil Ambani group claimed that the KG basin agreement was "one sided" as at the signing of the agreement RNRL was under the control of RIL. The Anil Ambani group also alleged gross violation of fiduciary obligations by the RIL officials. The Bombay High Court has already termed this agreement as unjust and asked both brothers to re-negotiate the agreement. RIL has appealed to the division bench of the high court against the order.

When contacted, an RCom spokesperson said: "At this stage, all options, including criminal proceedings, against RIL Officials involved in the signing of the January 12, 2006, agreement, are open if RIL seeks to rely on the alleged agreement".

A spokesperson of RIL said, "There is no criminality attached to the signing of the agreement dated January 12, 2006. If any proceedings are adopted, we will not only defend them but will also consider our options for such a malicious action."

Meanwhile, the shareholders of MTN are meeting in Johannesburg tomorrow. The meeting assumes significance as shareholders could ask questions on the falling shares of MTN which has witnessed a downward trend since the latest controversy broke out.

A lengthy court battle, analysts say, could make MTN to look for other suitors who are waiting for the exclusive takeover talks between Anil Ambani and MTN to end on June 8.

On Wednesday, RCom scrip fell 0.42 per cent to close at Rs 527.95 a share on the BSE, compared to its previous close of Rs 530.20. Shares of its suitor MTN Group also fell for the first time in three days, sliding by 3.7 per cent.

BS Reporter in Mumbai
Source: