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High Court Of Orissa
L. MOHAPATRA
ORISSA MANGANESE AND MINERALS PVT.LTD. - Appellant
Versus
ADHUNIK STEEL LTD. - Respondent
ARBA 26 Of 2004
Decided On : 03/18/2005
Arbitration and conciliation Act - Termination of Contract - Mineral Concession Rules, 1960 - [MINING CONTRACT] - [Arbitration and conciliation Act, 1996] - [Section 37(1)(a)] - [Rule 37] - The court discussed the applicability of Rule 37 of the Mineral Concession Rules, 1960 to the termination of a mining contract. It found that the rule did not apply to the facts of the case and held that the agreement was not determinable unless the conditions for termination were fulfilled. The court also considered the Specific Relief Act and held that the loss, if any, suffered by the respondent could be compensated in terms of money, and therefore, no order of injunction could be granted.
Fact of the Case:
The respondent was appointed as a raising contractor by the appellant to operate mines, but the appellant terminated the agreement, leading to a dispute. The respondent filed an application under Section 9 of the Arbitration and Conciliation Act, seeking relief from the termination of the agreement.
Finding of the Court:
The court found that the termination of the agreement was not justified and that the revocation of the power of attorney was also not justified. It held that the respondent would suffer irreparable loss if not granted an injunction, but ultimately concluded that the loss could be compensated in terms of money, and therefore, the order of injunction was not justified.
Issues: The issues included the applicability of Rule 37 of the Mineral Concession Rules, 1960 to the termination of the mining contract, the enforceability of the agreement under the Specific Relief Act, and the justification for granting an order of injunction.
Ratio Decidendi: The court's decision was based on the finding that the agreement was not determinable unless the conditions for termination were fulfilled, and that the loss suffered by the respondent could be compensated in terms of money, leading to the conclusion that the order of injunction was not justified.
Final Decision: The appeal was allowed, and the impugned order was set aside. No costs were awarded.
( 1 ) THIS appeal under Section 37 (1) (a) of the Arbitration and conciliation Act, 1996 (hereinafter called as the 'act') is directed against the order dated 18-8-2004 passed by the learned District Judge, sundargarh in Civil Misc. Application No. 8 of 2004 restraining the present appellant, it's servants, agents and any other person acting under the appellant from relying, acting upon, giving effect to letter dated 24-11 -2003 and the purported termination of the contract on 14-5-2003. The Court further restrained the appellant from dispossessing the respondent from the mines in question and directed that the temporary injunction shall remain in force till final award is passed by the Arbitration Tribunal.
( 2 ) THE respondent filed an application under Section 9 of the Act to restrain the appellant from acting upon or giving effect to letter dated 24-11-2003 and the purported termination thereby and also for restraining the appellant from dispossessing the respondent from the schedule mines and raising ore therefrom. Case of the respondent before the learned District Judge is that the Government of Onssa granted lease of mining land at Patmunda, Orahari. Tentuldi, kusumdihi, Sonpathoh and Bhanajikusum covering area of 1994 92 acres, 127 20 acres, 88 00 acres, 77 96 acres, 56 55 acres and 20 10 acres respectively in favour of the appellant on 1st January 1980 Further case of the respondent is that the appellant had no expertise, equipment and resources to operate the said mines and in its attempt to work the said mines it incurred huge liability to various authorities towards Provident fund, sales tax income tax, payment to financial institutions, payment to workmen etc running to about Rs 2 30 crores On ac count of its inability to work in the said mines and keeping in mind huge outstand ing liabilities the appellant appointed respondent as it s raising contractor and ex ecuted an agreement dated 14-5-2003 Un der the said agreement the respondent was required to carry out mining operation in the aforesaid mines on exclusive basis and excavate, remove manganese ore tor and on behalf of the appellant and deliver the same to the customers of the appellant for a period often years with effect from 18-5 2003 with an option to renew the agreement on the same terms and conditions Pursuant to the aforesaid agreement possession of the mines was handed ovu to the respondent on 29-6-2003 In July 2003 in a meeting held between both parties it was agreed that the respondent shall allow the workmen employed by the appellant to continue in employment Though the parties agreed to the above, the respondent alleges that the appellant neither furnished detail of the said workmen nor amount payable to them, as a result whereof the said workmen were not paid their dues Due to non payment of dues the workmen continued to obstruct mining operation undertaken by the respondent It is also case of the respondent that in terms of the agreement the respondent employed present workmen for working at the mines, but the mining operation could not be taken up because of the reasons stated above and because of the reason that the appellant did not remove it's equipments lying in the mines on or before 14-5 2003 as agreed to and in the process the respondent suffered loss to the tune of Rs 40 00 crores While the matter stood thus, on 24-11-2003 the appellant intimated the respondent that the agreement entered between the parties was in violation of the Mineral Concession Rules, 1960 (hereinafter called as the 'rules') and therefore the same is illegal, void and terminated the agreement with immediate effect In the said letter the respondent was asked to vacate the mines immediately and remove its workmen and equipments The appellant again by notice dated 24-11-2003 published in daily The Sambad' Intimated that the power of attorney executed by the respondent dated 14 5-2003 stood cancelled/revoked According to the respondent, the letter dated 24-11-2003 te
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