Is a petition under Section 392 maintainable here?

Yes, to modify or clarify a scheme where changes do not fundamentally alter it. The Court allowed limited directions under Section 392.

Does the PSC override private MoUs?

Yes. The PSC, read with constitutional principles and public trust, prevails over private arrangements on natural gas supply and pricing.

Can Government control gas prices under the PSC?

Yes. Pricing and allocation remain subject to Union control in public interest. Private contracts must align with that framework.

Is the family MoU binding on the companies?

Only if reflected in corporate documents and law. As an external aid it shows intent, but cannot defeat the PSC or public law.

What about the doctrine of identification?

It fits small closely-held entities. With millions of shareholders, you cannot equate company personality with individual promoters.

Reliance Natural Resources Ltd. v. Reliance Industries Ltd

Reliance Natural Resources Ltd. v. Reliance Industries Ltd. (2010) 7 SCC 1

Supreme Court of India 2010 (2010) 7 SCC 1 Energy • Company ~7 min read

Author: Gulzar Hashmi | Location: India | Published: 23 Oct 2025 | Slug: reliance-natural-resources-ltd-v-reliance-industries-ltd

Hero image for RNRL v RIL case explainer

Quick Summary

This case is about gas from the KG-D6 block, a family MoU, and who controls price and supply. The Supreme Court held: (1) a Section 392 petition is maintainable for limited clarifications to a court-approved scheme; (2) the Production Sharing Contract (PSC) and public law (Articles 297, 39(b), public trust doctrine) prevail over private MoUs; (3) pricing/allocation of natural gas sits with the Union Government. The family MoU may guide intent but cannot override the PSC or law.

Citation: (2010) 7 SCC 1
Court: Supreme Court of India
Keywords: PSC supremacy, Section 392, MoU effect, Govt pricing, public trust

Issues

Is a petition under Section 392 of the Companies Act maintainable to work out/clarify a Scheme?
Does the PSC override private contracts (MoU/GSMA/GSPA) and give the Government control on price and allocation?
What is the legal nature and binding force of a family MoU not embedded in Articles?
How far does the identification/attribution doctrine apply to widely held companies?

Rules

Section 392: Court may issue directions to work out an approved Scheme, if changes don’t alter its core.
PSC + Constitution: Natural resources vest in the Union (Art. 297); distribution for common good (Art. 39(b)); public trust governs.
MoU: External aid to interpret intent; not binding unless reflected in corporate documents and consistent with law/PSC.
Identification doctrine: Narrow use; not apt for corporations with millions of shareholders.
Board powers: Commercial decisions like pricing lie with the Board (see statutory scheme, e.g., s.293 era context), subject to PSC/public law.

Facts (Timeline)

1999: RIL consortium gets KG-D6 block; PSC executed with Government.

2003: RIL bids to supply gas to NTPC at $2.34/mmBtu; wins.

18 Jun 2005: Family MoU between promoters; envisages RNRL entitlement at $2.34/mmBtu.

21 Dec 2005: Scheme approved; Articles/arrangements to enable gas supply contemplated.

GSMA/GSPA: Drafts approved by RIL & RNRL Boards; later disputed by RNRL as contrary to Scheme.

Govt stance: Ministry declines supply to RNRL at $2.34; pricing/allocation under Government framework.

Litigation: RNRL moves Bombay HC; Single Judge leans toward MoU/Scheme reading; appeals follow; Union is heard.

Supreme Court: Decides on Section 392, PSC supremacy, MoU role, and Govt control.

Arguments

Appellant (RNRL)

Scheme + MoU entitle RNRL to gas at $2.34/mmBtu.
GSMA/GSPA must reflect the Scheme’s “appropriate arrangement”.
Section 392 lets Court enforce/modify to give effect to Scheme.

Respondent (RIL) & Union

PSC and public law govern: private MoU cannot control gas pricing/allocation.
Pricing is under Government approval for public interest.
Identification doctrine cannot equate promoter will with company will.

Judgment (Supreme Court)

Maintainability: Yes. Section 392 petition lies for limited working-out of the Scheme.
PSC supremacy: PSC + constitutional/public trust principles override private MoU terms on gas supply/price.
Govt control: Pricing/allocation of natural gas remain with the Union in public interest.
MoU status: External aid to interpret intent; not per se binding on companies unless lawfully embedded.
Identification doctrine: Inapt for widely held companies; cannot attribute promoter promises to the company automatically.

Ratio

Natural gas is a public resource. The PSC framework and constitutional mandates control price and allocation. Private MoUs yield to this regime. Section 392 enables the Court to give practical effect to a Scheme without rewriting it.

Why It Matters

Clarifies the hierarchy: Constitution/PSC → corporate Scheme → private MoU.
Confirms Government primacy in pricing/allocation of natural resources.
Guides how family/promoter MoUs interact with public law and Articles.

Key Takeaways

PSC trumps MoU on gas supply/price.
Section 392 = limited tool to implement Schemes.
Govt approval is central for price/allocation.
MoU can guide, but is not self-executing against companies.

Mnemonic + 3-Step Hook

Mnemonic: “P-U-B” — PSC prevails, Union controls price, Bring Section 392 only to work out the Scheme.

Check PSC & public law first.
Align any MoU/agreements with Govt approvals.
Use Section 392 for practical directions, not for rewriting.

IRAC Outline

Issue: Can a family MoU fix gas price/supply despite PSC and does Sec. 392 permit enforcing the Scheme to that end?

Rule: PSC + Constitution/public trust govern natural gas; Sec. 392 allows limited scheme-working directions.

Application: MoU is persuasive intent only; pricing/allocation require Govt approval; GSMA/GSPA must fit PSC.

Conclusion: PSC/public law prevail; Sec. 392 maintainable but within narrow bounds.

Glossary

PSC (Production Sharing Contract): Contract between Government and explorer, controlling production, pricing, and allocation within policy.
Public Trust Doctrine: State holds natural resources for the people and must manage them for the common good.
Section 392: Legacy Companies Act power allowing courts to give effect to Schemes without altering their substance.