The May 7 judgment of the Supreme Court on the dispute over the pricing and allocation of natural gas from the offshore Krishna-Godavari basin in the Bay of Bengal has come as a huge victory for Reliance Industries Limited (RIL) headed by Mukesh Ambani and a loss of face for Reliance Natural Resources Limited (RNRL) led by younger brother Anil Ambani.

While Union minister for petroleum and natural gas Murli Deora has claimed that the judgment is a vindication of the Indian government’s position in the dispute  — RNRL had claimed that Mr Deora’s ministry had acted in a partisan manner to favour RIL — a close reading of the verdict indicates that the judges were rather critical of the way the government has functioned.
A perusal of the full judgment (the majority judgment delivered by Chief Justice K.G. Balakrishnan and Justice P. Sathasivam is 118 pages long while the minority judgment delivered by Justice B. Sudershan Reddy runs into an additional 146 pages) could convey a distinct impression that the Indian government has been less than efficient in framing energy policies that are in the best interests of the people of the country.
It is all very fine to argue that the Union government has a legal right over the country’s resources (including natural gas) and that no private agreement, including the one signed between the two Ambani brothers and their mother in June 2005, can override such a sovereign right. But that’s really a no-brainer. The critical issue is whether the Government of India, as the custodian of the resources that belong to the people, has acted or is acting in a manner that upholds the genuine interests of the vast majority of the population or whether its policies have helped a few, powerful business groups.
Here’s how paragraph 87 of the majority judgment reads: “It is relevant to note that the Constitution envisages exploration, extraction and supply of gas to be within the domain of government functions. It is the duty of the Union to make sure that these resources are used for the benefit of the citizens of the country. Due to shortage of funds and technical know-how, the government has privatised such activities through the mechanism provided under the PSC (production sharing contract). It would have been ideal for the PSUs (public sector undertakings) to handle such projects exclusively. It is commendable that private entrepreneurial efforts are available, but the nature of the profits gained from such activities can ideally belong to the State which is in a better position to distribute them for the best interests of the people. Nevertheless, even if private parties are employed for such purposes, they must be accountable to the constitutional set-up”.
One sentence in the paragraph can be questioned. There is no evidence to indicate that the government decided to do away with the monopoly exercised by two PSUs, the Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL), and allowed private firms to enter the area of oil and gas exploration because either ONGC or OIL lacked resources or technical know-how. On the contrary, both are highly profitable companies and private players in the hydrocarbons exploration business would never have able to make any headway had it not been for the initial groundwork done by the PSUs. This has been repeatedly emphasised by past heads of ONGC, including the late Subir Raha and Col. S.P. Wahi.

THE MINORITY judgment by Justice Sudershan Reddy devotes considerable space to the issue of the “resource curse”. He writes: “A small portion of our population over the past two decades has been chanting incessantly for increased privatisation of the material resources of the community, and some of them even doubt whether the goals of equality and social justice are capable of being addressed directly. They argue that economic growth will eventually trickle down and lift everyone up. For those at the bottom of the economic and social pyramid, it appears that the nation has forsaken those goals as unattainable at best and unworthy at worst. The neo-liberal agenda has increasingly eviscerated the State of stature and power, bringing vast benefits to the few, modest benefits for some, while leaving everybody else, the majority, behind”.
Justice Sudershan Reddy does not stop there. He unlashes an impassioned tirade: “We have heard a lot about free markets and freedom to market. We must confess that we were perplexed by the extent to which it was pressed that contractual arrangements between private parties with the State and amongst themselves could displace the obligations of the State to the people… History has repeatedly shown that a culture of uncontained greed along with uncontrolled markets leads to disasters… Historically, and all across the globe, predatory forms of capitalism seem to organise themselves, first and foremost, around the extractive industries that seek to exploit the vast, but exhaustible, natural resources. Water, forests, minerals and oil — they are all being privatised; and not being satisfied, the voices that speak for predatory capitalism seek more…”
There’s much more in the judgment that is all about the tussle over India’s natural resources. The warring Ambani siblings have been given six weeks to rework the Gas Sale Master Agreement that safeguards the interest of some three million shareholders of not just RIL but RNRL as well, within the ambit of government policy.
What government policy? In the penultimate paragraph of his judgment, Justice Sudershan Reddy makes an important observation: “Before we part with the case, we consider it appropriate to observe and remind the GoI (Government of India) that it is high time it frames a comprehensive policy/suitable legislation with regard to (the) energy security of India and supply of natural gas under production sharing contracts”.
The short point — that has in the past been pointed out by experts like Surya Sethi (former principal adviser, energy, Planning Commission) — is simply that the government would not have been accused of being a partisan participant in the fight between two of the richest men in India had there not been glaring gaps in the country’s energy policy framework that are yet to be filled up. As for the Ambani brothers, they are unlikely to patch up in a hurry. One chapter in the saga has ended. Another will soon begin.

Paranjoy Guha Thakurta is an educator and commentator