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1962 Supreme(Ori) 18
HIGH COURT OF ORISSA
R. L. Narasimham, C. J. And G. K. Misra, J.
SERAJUDDIN AND CO. - Appellant
Versus
STATE OF ORISSA - Respondent
O. J. C. 121 Of 1961
Decided On : MARCH 16, 1962
B.M.PATNAIK, D.NARASARAJU, G.K.DAPHTARY, R.Choudhury, S.S.BASU
The Court should not exercise its writ jurisdiction when an alternative remedy of arbitration is available.
Headnote:
MINES AND MINERALS - Mining lease - Royalty - Computation - Sale price at pit's mouth - Arbitration clause - Jurisdiction of Civil Court - Writ jurisdiction - Alternative remedy.
Fact of the Case:
The petitioner, a lessee of a mining lease for manganese ore, challenged the notifications issued by the State Government determining the sale price of manganese ore at the pit's mouth for the purpose of computing royalty. The petitioner contended that the State Government had no authority to arbitrarily fix the price and that the notifications were issued in violation of the arbitration clause in the lease agreement.
Finding of the Court:
The Court held that the petitioner had an alternative remedy of arbitration under the arbitration clause in the lease agreement and that the writ jurisdiction of the Court should not be exercised in the circumstances. The Court also held that the Central Government had revisional jurisdiction under Section 30 of the Mines and Minerals (Regulation and Development) Act, 1957, and that the petitioner could seek relief before the Central Government.
Issues: 1. Whether the Court should exercise its writ jurisdiction when an alternative remedy of arbitration is available. 2. Whether the State Government had the authority to fix the sale price of manganese ore at the pit's mouth for the purpose of computing royalty. 3. Whether the impugned notifications were issued in violation of the arbitration clause in the lease agreement.
Ratio Decidendi: 1. The Court held that the writ jurisdiction should not be exercised when an alternative remedy of arbitration is available, as the arbitration clause in the lease agreement provided for the settlement of disputes between the parties. 2. The Court did not decide the issue of whether the State Government had the authority to fix the sale price of manganese ore at the pit's mouth, as it held that this issue could be decided by the arbitrator or the Central Government in revision. 3. The Court held that the impugned notifications were not issued in violation of the arbitration clause in the lease agreement, as the arbitration clause provided for the settlement of disputes arising out of the agreement, and the notifications were issued in exercise of the State Government's statutory powers.
Final Decision: The Court dismissed the petition, holding that the petitioner had an alternative remedy of arbitration and that the Central Government had revisional jurisdiction to decide the dispute.
NARASIMHAM, C. J.
( 1 ) THE applicant holds a lease under the Government of Orissa for extraction of manganese ore from a certain area in Keonjhar district. The lease was first taken, by him on 29-12-1947 from the then Ruler of Keonjhar, prior to its merger with Orissa. The lease contained a stipulation for payment of royalty at a certain rate. It also contained an arbitration clause (Clause 12) providing for the settlement of any dispute between the lessor and the lessee as regards payment of royalty or any other money under the terms of the tease. After the merger of the Keonjhar State with Orissa with effect 1-1-48 that lease was annulled by the Government of Orissa. Subsequently after some vicissitudes, (which need not be mentioned in detail here) there was a compromise between the Government of Orissa on the one hand and the petitioner on the other and another agreement dated 22-12-52 (Annexure B to the Writ petition) was entered into by which the original lease of 1947 was revived subject to certain modifications embodied in the latter agreement. This agreement also contained an arbitration clause (Clause 15) in the following terms :
"15 (a ). That in the event of any question, dispute or controversy arising between the parties touching this Agreement or in any clause contained therein or any matter connected with this Agreement the same shall be referred to the Chief Secretary to the Govt. of Orissa, whose decision, if not accepted by the lessee shall be referred for arbitration of two Arbitrators one to be nominated by the State and the other by the Company not later than 30 days, from the date of communication of the decision of the Chief Secretary or in case of disagreement between the Arbitrators, to the award of an Umpire to be appointed by the Arbitrators in writing before proceeding on the reference, and the decision of the Chief Secretary, or if his decision is not accepted by the lessee the decision of the Arbitrators or in the event of their not agreeing with the decision of the Umpire appointed by them shall be final and conclusive and binding on the parties. The provisions of the Indian Arbitration Act, 1940 and of the Rules made thereunder and any statutory modification thereof shall be deemed to apply to and be incorporated in the Agreement.
(b) That upon every and any such reference the assessment of the costs incidental to the reference and award respectively shall be left to the discretion of the Chief Secretary or the Arbitrators, or, in the event of their not agreeing? of the Umpire appointed by them.
(c) That this agreement shall continue in operation if reasonably possible, during the arbitration proceedings. " The aforesaid agreement was further modified by the Controller of Mining peases, Government of India by his order 3-8-1. 959, in exercise of the power conferred on him by the Mining Leases (Modification of Terms) Rules 1956 (Vide annexure C to the Writ petition ). The material modification made by him, for our purpose, was as regards payment of royalties, and that is in the following terms:
"3. It is further clarified that royalty shall be payable in accordance with Section 9 of the Mines, and Minerals (Regulation and Development) Act 1957, instead of according to the stipulations of the lease deed. "
( 2 ) THE statutory provisions dealing with mining leases may now be noticed. In 1948, tha then Central Legislature passed an Act known as the Mines and Minerals (Regulation and Development) Act (hereinafter referred to as the old Act) for the regulation and development of mines. Section 5 of that Act conferred rule making power on the Central Government to make Rules for regulating the grant of mining leases. In exercise of this, power the Central Government made the Mineral, Concession Rules 1949 (hereinafter referred to as the old Rules) wherein in Schedule I, the royalty payable for manganese ores was regulated as follows:
"manganese, (a) Manganese 15 per cent of the sale dioxide value at the
