Supreme Court Imposes ₹10 Lakh Costs On Reliance Industries For Delaying 20-Year-Old NTPC Suit

The Supreme Court on Friday imposed ₹10 lakh costs on Reliance Industries Ltd (RIL) for prolonging litigation in a nearly two-decade-old suit filed by NTPC over a proposed natural gas supply contract.

A Division Bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe noted that the suit remains at the evidence stage despite repeated litigation over discovery, production of internal documents, and redaction of inadmissible statements.

Discovery and inspection took four years, production of internal documents took more than a year, while redaction of inadmissible statements began in 2016 and continued for three years until the Supreme Court's February 2019 judgment.

“In conclusion, it is compelling for us to note that the suit filed by NTPC way back in 2005 has not progressed much. At every stage there has been obstruction. Stage-1, relating to chamber summons for discovery and inspection took 4 years to conclude. Stage-2 relating to chamber summons for production of internal documents took more than a year and Stage-3 relating to redaction of inadmissible statements commencing from 2016 concluded with the judgment of this Court in 2019, took full three years,” the court observed.

The dispute began after NTPC issued an RFQ for natural gas supply to its power plants. RIL submitted its financial proposal, following which NTPC issued a Letter of Intent on June 16, 2004. RIL accepted it subject to a draft Gas Sale and Purchase Agreement to be negotiated and finalised.

NTPC later filed a suit seeking a declaration that a binding contract existed for supply of 132 trillion BTU of natural gas for 17 years. The suit was, in substance, a claim for specific performance, based on NTPC's case that the LOI terms had been unconditionally accepted by RIL.

The first round began when RIL sought discovery and inspection of NTPC's internal documents concerning discussions on finalising the gas sale agreement and internal meetings. The High Court rejected the application in 2014, holding that the documents were irrelevant to deciding whether the LOI resulted in a concluded contract.

RIL appealed, but the Division Bench dismissed the challenge, holding that the contract issue had to be decided from documents already produced.

In 2015, RIL sought leave to produce additional documents, including its own internal documents. The High Court rejected the application in January 2016, finding its explanation for not producing documents already in its possession untenable. RIL challenged the order before the Supreme Court but withdrew the appeal in July 2016.

Within weeks, RIL filed a second evidence affidavit. NTPC sought redaction of portions of both affidavits referring to internal documents already held irrelevant. The High Court initially permitted some oral evidence concerning those matters, prompting NTPC to approach the Supreme Court.

In February 2019, the Supreme Court held that the contents of documents already excluded from evidence could not be brought before the trial court through oral testimony.

The High Court thereafter examined the affidavits paragraph by paragraph and redacted portions falling within the Supreme Court's directions. It retained material reflecting the witness's perception and relevant correspondence between NTPC and RIL.

RIL sought to reopen the issue in the present appeal, relying on Section 60 of the Indian Evidence Act, 1872, and arguing that the High Court had exceeded its jurisdiction. The Supreme Court declined to revisit its 2019 judgment.

The bench noted that the same argument had already been advanced before the court when it considered the issue in 2019.

The bench noted that the Supreme Court had directed in 2019 that the trial be completed within nine months. Seven years have since passed.

The present bench noted that implementation of this direction could have been concluded with the High Court's August 22, 2024 order. RIL, however, filed the present appeal.

The court reiterated its request to the High Court to dispose of the suit as expeditiously as possible. It also observed that allowing a party to prolong litigation is “a sad reflection of the way courts conduct their proceedings.”

The appeal was dismissed with ₹10 lakh costs. RIL must pay the amount to the Supreme Court Advocates on Record Association within five weeks.

“For the reasons stated above, the appeal is dismissed with costs quantified at Rs. 10 lakhs payable by the appellant-RIL to Supreme Court Advocates on Record Association. The amount shall be paid within a period of five weeks from today,” the court ordered.

For Petitioner: Dr. Abhishek Manu Singhvi, Shyam Divan, Sr. Advocates, Advocates Sameer Parekh, Sonali Basu Parekh, Rubin Vakil, Ishan Nagar, Avishkar Singhvi, Rishit Badiani, Ashwin Dave, Ketan Dave, Gaurav Gangal, Abhishek Thakral, Ruchi Krishna Chauhan, Aditi, Nidhiram Sharma, Adith Deshmukh, Suvasita Chopra, Parekh & Co., AOR

For Respondent: Tushar Mehta, Solicitor General, Advocates Rishir Daulat, Bindu Saxena, Digvijay Dam, Aparajita Swarup, Shailendra Swarup, AOR