Billionaire Ambanis in legal showdown

October 19, 2009 06:39:31 PM

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A long-awaited legal face-off between the billionaire Ambani brothers in India's highest court begins Tuesday in a corporate battle that has transfixed the nation.

The two sides have drafted top lawyers to argue the gas supply case, which pits India's biggest private sector company Reliance Industries Ltd, led by Mukesh Ambani, against Reliance Natural Resources Ltd, headed by Anil.

A Supreme Court bench led by Chief Justice K.G. Balakrishnan will hear the case in which billions of dollars are at stake for the two companies.

In the lead-up to the hearing, younger brother Anil, 50, has fired almost daily volleys at his elder sibling Mukesh, 52, over the gas pricing row which stems from a family pact splitting their corporate empire.

Anil is demanding the honouring of a 2005 settlement brokered by their mother that would allow his company to buy gas from Mukesh at 44 percent below the government-set rate.

Mukesh is insisting the government price must prevail. A lower court upheld Anil's arguments and Mukesh appealed to the Supreme Court.

Anil made a bid earlier this month to patch things up with his brother, with whom he has been at loggerheads since the 2002 death of their rags-to-riches father Dhirubhai, who founded the Reliance empire.

He said he was "reaching out to Mukeshbhai (brother Mukesh)" with a "generous heart" and there could be "no better gift" for their mother.

But Mukesh, India's wealthiest man, rebuffed him, saying the issues needed to be settled by the court and the dispute was "not merely a family matter" but one that involved Reliance Industries' shareholders.

"The dispute involves core business and cannot be decided on sentiment," said Apurva Shah, head of research at Mumbai's Prabhudas Lilladher brokerage.

Mukesh also said it was hard to believe his brother had undergone a "real change of heart" after the vociferous campaign Anil had waged against him through public statements and in newspaper ads.

The government has intervened, asserting its right to set gas prices. It argues the gas from India's richest gas field belongs to the nation and cannot be sold at cut-rate prices.

Anil has accused the petroleum ministry, whose minister was a friend of their father's, of "blatantly and openly supporting" Mukesh in his "unlawful design" to get out of the gas supply deal.

The siblings seemed to work well together while their father, renowned for his ruthless business acumen, was alive but their relations fell apart after his death.

In the asset split, Mukesh kept the oil, gas and petrochemicals businesses of the group's flagship Reliance Industries. Anil got Reliance Energy, one of India's biggest power utility firms, the phone company and finance arm.

They still live in the same high-rise family mansion in Mumbai with their mother, whom both revere, albeit on different floors. But Mukesh is building a towering glass-and-steel 27-storey home for his family.

The warring tycoons, who spent their childhood in a tenement while their father built Reliance into a corporate colossus, suspended hostilities in February to host a party for their mother's birthday. But otherwise their ties have been in the deep freeze.