India's Supreme Court on Friday ruled in favor of billionaire Mukesh Ambani in a gas pricing dispute with brother Anil, closing a chapter on a five-year battle that now gives the government control over setting prices.

The case has rattled investors and raised concerns over the immense influence of powerful businesses on government policy in Asia's third-largest economy.

The Supreme Court ruled in favor of Mukesh Ambani, the world's fourth richest man, and ordered the feuding brothers to renegotiate a gas contract between Reliance Industries and Reliance Natural first drawn up in 2005.

Shares in Reliance Industries, valued at about $74 billion, traded 3.55 percent higher at 1,046.50 rupees, while Reliance Natural plunged 19 percent to 55.50 rupees.

The case involves terms of a deal under which Reliance Industries was to supply Reliance Natural with 28 million standard cubic meters a day (mmscmd) of gas for 17 years at a rate below the government price.

It has brought more clarity as far as policy is concerned that the government is the owner of the gas and has the power to decide prices. This makes government's role more predominant, but votaries of economic liberalization may consider this as a step backward, said S.C. Tripathi, former secretary at the Petroleum Ministry.

Reliance Industries had argued the private deal cannot take precedence over government policy, which determines who can receive gas and at what price.

Anil Ambani, who claimed otherwise, rolled out a series of front-page advertisements in major newspapers accusing the government of taking the side of Reliance Industries.

The highly public feud within the country's richest family has riveted India, and the outcome may set a basis for future regulations on gas pricing in India, Asia's third largest economy.

An unfavorable verdict for Mukesh, Asia's richest man, could have meant Reliance Industries, India's most valuable listed company, would have lost billions of dollars in potential profits on gas sales.

The gas, which Reliance Natural wanted at almost half the government-set rate of $4.2 per million metric British thermal unit (mmBtu), comes from the Krishna Godavari basin off India's east coast, which is operated by Reliance Industries.

The field is India's biggest gas find and should nearly double the nation's gas output when production is at full throttle at 80 mmscmd.

Energy-hungry India, which wants to reduce its dependence on foreign oil and become a new frontier for oil and gas exploration, has showcased the Krishna Godavari discovery to attract foreign investors.

But analysts have raised concerns that the Ambani dispute is putting off foreign investors, with government interference in the pricing and marketing of gas raising investment risk in a politically sensitive resource.

Mukesh Ambani is the world's fourth-richest man with a fortune estimated by Forbes magazine at $29 billion, while his younger brother Anil Ambani, ranked 36th, is worth about $13.7 billion.

(Reporting by Devidutta Tripathy and C.J. Kuncheria; Writing by Pratish Narayanan; Editing by Paul de Bendern)