Ganguly had written to Joshi April 14, 2006, seeking the government's nod for the gas purchase master agreement (GPMA) between Mukesh Ambani's Reliance Industries and Anil Ambani's Reliance Natural Resources.

But the oil ministry declined permission.

'It is found not to have been derived on the basis of competitive arms length sales in the region for similar sales under similar conditions,' argued the oil ministry letter in response to the application made by Reliance Industries.

Bhatia said in the letter to the prime minister that Joshi was not only the official to whom Reliance Industries had written its letter seeking the nod for the GPMA, but also a member of the gas price committee for approving the formula.

He also said the ministry's decision to refuse permission for the contract was designed to help Reliance Industries back out of its binding contractual obligations.

It was calculated not only to scuttle the contract between the two Ambani brothers but also one between the Mukesh Ambani-led company and the state-run power utility NTPC that had floated global tenders for securing the gas, Bhatia said.

It was this decision of the oil minister that triggered a bitter legal battle between the Ambani brothers after Reliance Industries declined to sell gas at the agreed price without prior permission of the government.

In June, the Bombay High Court asked Reliance Industries to supply 28 million units of gas from the fields to Reliance Natural Resources for 17 years at $2.34 per unit after assigning 12 million units to state-run power utility NTPC.

But Reliance Industries challenged the verdict in the Supreme Court, which heard the case July 20 and fixed Sep 1 as the next date of hearing. It also asked all parties to file their replies on the government position on the matter by then.