-1- IN THE HIGH COURT OF BOMBAY AT GOA APPEAL FROM ORDER NO. 60 OF 2009 M/s. Timblo Private Limited, A Company incorporated under the Indian Companies Act, 1956, having its Office at Kadar Manzil, Margao, Salcete, Goa, through its Managing Director Mrs. Radha Satish Timblo, wife of late Satish Timblo, aged about 54 years, resident of Porvorim, Goa. …... Appellants V e r s u s 1. Smt. Kamalini R. Painguinkar, wife of late Ramakant Painguinkar, aged about 67 years, r/o. Houose no. (not known), Flat no. 1, Ground Floor, Damodar Co-op Housing Society, Aquem Alto, Margao, Salcete, Goa. 2. Shri Raju R. Painguinkar, son of Ramakant Painguinkar, aged about 46 years; 3. Smt. Jyoti Raju Painguinkar, wife of Raju R. Painguinkar, major in age, both residents of B-2, House No. (not known) Virginkar Classic, Nr. Maruti Temple, Davorlim, Margao, Salcete, Goa. 4. Shri Rasik R. Paniguinkar, son of Ramakant Painguinkar, aged about 45 years; 5. Smt. Tanuja Rasik Painguinkar, wife of Rasik Painguinkar, major of age, both residents of -2- Flat no. 1, House no. (not known), Ground Floor, Damodar Co-op Housing Society, Aquem Alto, Margao, Salcete, Goa. 6. Shri Navinchandra Ramakant Katkar, son of Ramakant Katkar, aged about 58 years; 7. Smt. Sandhya Navinchandra Katkar, daughter of Ramakant Painguinkar, aged about 49 years, both residents of House No. (not known), Laxmi Bhuvan, Bandora, Ponda, Goa. …... Respondents A N D APPEAL FROM ORDER NO. 61 OF 2009 M/s. Timblo Minerals Private Limited, A company incorporated under the Indian Companies Act, 1956, having its Office at Kadar Manzil, Margao, Salcete, Goa, through its Director Mr. Arvind Manguesh Hodarkar, son of late Manguesh Hodarkar, aged about 75 years, resident of Margao, Goa. …... Appellants V e r s u s 1. Smt. Kamalini R. Painguinkar, wife of late Ramakant Painguinkar, aged about 67 years, r/o. Houose no. (not known), Flat no. 1, Ground Floor, Damodar Co-op Housing Society, Aquem Alto, Margao, Salcete, Goa. 2. Shri Raju R. Painguinkar, son of Ramakant Painguinkar, aged about 46 years; 3. Smt. Jyoti Raju Painguinkar, wife of Raju R. Painguinkar, major in age, both residents of -3- B-2, House No. (not known) Virginkar Classic, Nr. Maruti Temple, Davorlim, Margao, Salcete, Goa. 4. Shri Rasik R. Paniguinkar, son of Ramakant Painguinkar, aged about 45 years; 5. Smt. Tanuja Rasik Painguinkar, wife of Rasik Painguinkar, major of age, both residents of Flat no. 1, House no. (not known), Ground Floor, Damodar Co-op Housing Society, Aquem Alto, Margao, Salcete, Goa. 6. Shri Navinchandra Ramakant Katkar, son of Ramakant Katkar, aged about 58 years; 7. Smt. Sandhya Navinchandra Katkar, daughter of Ramakant Painguinkar, aged about 49 years, both residents of House No. (not known), Laxmi Bhuvan, Bandora, Ponda, Goa. …... Respondents Mr. V. B. Nadkarni, Senior Advocate with Mr. Y. V. Nadkarni, Advocate for the Appellants. Mr. S. G. Dessai, Senior Advocate with Mr. C. Mascarenhas, Advocate for the Respondents. CORAM: A. H. JOSHI, J. DATE OF RESERVING : 15th September, 2009. DATE OF PRONOUNCEMENT: 7 th October, 2009. JUDGMENT Learned Advocates appearing for the respective parties have -4- agreed for disposal of both these appeals, finally, at the stage of admission itself. Background in brief :- 2. Respondents, who are common in both appeals are Mine Owners who are, for the sake of brevity, referred to as Mine Owners. The appellants are Limited Companies. Both the appellant-Companies are seen to be belonging to one and the same group of Management/Promoters. Two different contracts are entered by mine owner with these different appellants. These two transactions are in fact a package. Respective appellants in Appeal no. 61/09 and 60/09 are referred to for the sake of brevity as “Buyer” and “Extractor”. 3. It appears that there are legal impediments in subleasing of the mining licence. Most of the Mine Owners and buyers / extractors have devised modality of entering into two contracts, one with buyer and another with extractor to undertake mining activity and processing. Same modality has been used/adopted in the present case as well. 4. The Mine Owners have been giving the work of extraction and processing to a firm or undertaking, which is a different business organization or to different commercial entity from the Buyer. The ore so extracted and -5- treated is sold to the Buyer already contracted for. A long term arrangement is ordinarily worked out with the extractors and Buyer in the shape of a written contract / agreement. 5. In the suits at hand, the background and the modalities which reveal from record and respective submissions are summarized as follows : (a) Deployment of Large amount of men machinery, monetary resource and expertise is required to be done for extraction and treatment of the Ore. (b) Mine Owners normally do not have the arrangement of men Machinery and resource for extraction of the Ore and the treatment thereon. (c) The Buyer and the extractor therefore, enter into contracts with Mine owners for a long tenure. (d) The Buyer, therefore, make arrangement of a concern of its business associate to extract the Ore and to do the processing of ore for converting the raw Ore into marketable varieties of Ore. (e) Such marketable Ore is sold by the Mine Owner to the Buyer. (f) The Buyer pays to the Mine Owner the agreed price towards the marketable varieties of iron ore. (g) Mine Owner pays to the extractor the charges towards extraction job work / labour / processing. -6- (h) Such contracts provide for an exclusive right of extraction and at purchase, in favour of extractor and Buyer. (i) These contracts also contain a negative covenant operat- ing against the Mine Owner stipulating that during currency of the of the agreed duration for extraction and sale, the Mine Owner is not entitled either to allot the work of extraction or sell the varieties at marketable ore, produced from the Mine to any other person other than the party with whom the agreement had been entered. (j) It is common knowledge that these Agreements that those are replication of practice in vogue. 6. In present case, two separate Agreements were entered on 16.06.2003 by the Mine Owner namely :- (i) One with appellant in Appeal From Order no. 60/2009 – the Agreement for extraction; and another (ii) Another with the appellant in Appeal From Order no. 61/2009 – the Agreement for extraction sale. 7. Perusal of the Agreement entered with Buyer reveals that crucial clauses contained therein which govern the subject matter are Clause nos. 4(a), 9 and 22 of the Agreement for Sale. These clauses would be referred to whereever required by quoting those. -7- 8. It appears that parties were under a belief that the first spell of agreed period of five years had to end on 15.06.2008. The appellant-buyer states that it has sent letter dated 19.11.2007 to the Mine Owner, offering / opting to renew and proposing a meeting for that purpose and for signing of agreement. 9. The letter dated 19.11.2007 contains expression of decision to continue to buy under earlier arrangement. It is alleged that this letter was accompanied by a draft Agreement in which the clause pertaining to the price of varieties of iron ore to be sold by Mine Owner to the Purchaser was left blank. 10. The Buyer claims that :- (a) This letter was delivered to each of the respondents-Mine Owners by Registered Post, with Acknowledgment and were delivered to the concerned. (b) The postal acknowledgments thereof are received and photocopies whereof are kept on record. (c) The buyer has then sent another letter dated 05.05.2008 requesting for a meeting and reiterates that they have already exercised the -8- option for renewal. 11. The allegations as regards letter of offer dated 19.11.2007 and reminder dated 05.05.2008 are disputed by the mine owners. Mine Owners, by letter dated 13.06.2008, communicated their stance in which they have not referred to buyer's letter dated 05.06.2008. Mine-owners have stated in their letter dated 13.06.2008, that, as earlier spell of five years had come to an end on 15.06.2008 and no arrangement or Agreement had emerged as regards relationships between the parties for the period thereafter, their relations under earlier contract have come to an end. 12. Present appellants have gathered from Mine Owners' letter dated 13.06.2008 that the Mine Owners were thereby disputing their obligation to continue with the contract of extraction and for sale under the Agreements dated 16.06.2003, any further, and they were about to enter into an arrangement for the extraction and sale with some other party. 13. According to the appellants, a dispute had arisen between parties to contract, and an Arbitration, was the recourse available under the Agreement, and it was to be resorted. Applications under Section 9 of the Arbitration Act and respective case 14. The appellants have then appointed Arbitrator. In order to -9- secure and protect own interest for seeking interim relief, the appellants have moved an application under Section 9 of the Arbitration Act before the District Court, South Goa, at Margao. In the body of Petition under Section 9 of the Act, after giving in details the background of transactions, the nature of Agreement and all other details, the appellants prayed for interim relief to last until conclusion of Arbitration. 15. The relevant averments which form the crux of the matter are seen in paragraph 24 and 25 of the application under Section 9. It would be useful to quote those paragraphs instead of narration, which read as below : “24. The aforesaid clause makes it abundantly clear that during the subsistence of this Agreement or any subsequent renewal thereof, the Respondents are restrained from entering into any contracts with a third party for the Sale of Ore from the 'SUIT MINE'. In the present scenario therefore, once the applicant has exercised option vide letter dated 19.11.2007, the 'Sale Agreement' stands renewed for a further period of five years commencing from 16th of June 2008 till 15th of June 2013. 25. The applicant states that since 26.06.2003 till date, the applicant has been exclusively purchasing the said ore in terms of the agreement. The applicant states that the applicant has not committed a single default under the 'Sale Agreement'. The applicant states that even though the Agreement dated 16.06.2003 has been validly renewed for a further period of five years, vide letter dated 13.06.2008 addressed by the Respondents no.2 and 4 to the applicant, -10- the said respondents have falsely contended that there will be no Agreement in existence after 15.06.2008 unless a fresh Agreement is executed. The applicant therefore apprehends that the respondents may sell or agree to sell ore from SUIT MINE to any third party and therefore seeks urgent relief from this Hon'ble Court in order to protect the Applicant's interest under the 'Sale Agreement' which has subsequently been renewed vide letter dated 19.11.2007.” 16. The application under Section 9 has been opposed by Mine Owners by filing reply on affidavit. The objections raised therein are summarized as follows : (a) What is admitted is as below : (i) The execution of Agreement and transactions based thereon; (ii) The contract is renewable at sole option of buyer; (iii) There exists a negative covenant. (b) What is denied is as below : (i) Continuation of contract beyond first spell of five years is possible barely because it is provided by the contract. (ii) That there were meetings and negotiations pursuant to alleged offer for renewal. (iii) Price of the marketable Ore of different grades was not required to be agreed upon afresh. (iv) The obligation to sell the Ore any more -11- subsists. (c) It is urged that : (i) The purchasers too have understood the Agreement to mean the same thing what the Mine Owners mean. (ii) The blank spaces for the price to be negotiated and agreed, left in the draft agreement forwarded with letter dated 19.11.2007, proves that similar understanding of the agreement prevailed in the mind of both parties to the contract. (iii) No special efforts are required to ascertain the intention of parties underlying the Agreement, as it is plain and obvious. (iv) It is duty spelt out from the agreement that unless prices are agreed six months before expiry of first spell of 5 years, the right of purchase extract etc. comes to an end at the close of first spell of 5 years. (d) The loss the purchaser would suffer would be compensable in terms of money. (e) There is no case for interim relief made out by Buyer/Extractor. 17. The learned Trial Court heard and decided the application and rejected the same by impugned Orders. The purchaser/extractors, who are -12- aggrieved by those Orders are before this Court in these two appeals from Orders. Of hearing in this Court 18. An application was filed by the appellant in each appeal styling it as an application for stay. As there was no order to be executed, and hence application misplaced, said application was disposed with liberty to file fresh and proper application. 19. Both learned Advocates had conceded for finaldisposal of appeal at the stage of motion hearing. 20. Heard both the learned Senior Advocates at length. 21. While the learned Advocate for the appellant was in the process of rejoinder, in answer to queries by the Court it had transpired that exhaustive details referring to irreparable loss, etc., were not brought by the buyer before the District Court, nor those were placed on record of this Court. Advocate for the appellant, therefore, orally sought leave to amend and substitute the application which was granted. The appellant has then converted the application for leave for additional evidence under Rule 27 of Order 41 of Civil Procedure Code. In this application for leave to produce additional evidence, -13- various documents of common knowledge which were not filed in the District Court were filed. 22. This application for leave to produce additional evidence has been strongly opposed, as well contents of the documents too are replied by filing reply and rejoinder. Respective Submissions 23. Submissions of respective Advocates do mainly surround the:- (1) Facts. (2) As to what is the exact interpretation of the recitals in agreements through which the tenure of absolute right of exploration and buying was agreed. (3) Conditions precedent to renewal. (4) Law governing interpretation of deeds. (5) Scope of powers under Section 9 of Arbitration Act. (6) Scope of scrutiny and interference in appeal. 24. Both learned Advocates have cited various Judgments in support of respective submissions as follows : A-1. Appellant's citation on merits. (1) AIR 2002 S.C. 2308 (M/s. I.T.I. Ltd., vs. M/s. Siemens Public Communications Network Ltd.,) (2) AIR 1996 CAL. 67 (Vijaya Minerals Pvt. Ltd. vs. Bikash Chandra Deb,) -14- (3) AIR (38) 1951 S.C. 193 (Arjan Singh vs. Kartar Singh & Ors. ) (4) AIR 1963 S.C. 1526 (K. Venkataramiah vs. A. Seetharama Reddy & Ors.) (5) JT 2000 (Suppl.3) SC 90 (State of Rajasthan vs. T. N. Sahani & Ors. A-2-Appellant's citations on the point of additional evidence. (6) AIR 1993 S.C. 276 (Dalpat Kumar & anr. vs. Prahlad Singh & Ors.) (7) AIR 1960 S.C. 953 (Sahebzada Mohammad Kamgard Shah vs. Jagdish Chandra Deo Dhabal Deb & Ors.) (8) AIR 1972 S.C. 1279 (M.N. Aryamurthi & anr. vs. M. L. Subbaraya Setty) (9) 1996 AIHC 3412 (Atchut V. S. Velingcar vs. Timblo Limited). (10) (2007) 5 S.C.C. 614 (Hardesh Ores (P) Ltd. vs. Hede & Company. (11) (1991) 5 S.C.C. 167 (Hind Plastics & anr. vs. Collector of Customs, Bombay & anr.) (12) 2008 (5) ALL MR 815 (Friends Co-operative Housing Society Ltd. vs. The Nagpur Improvement Trust & Ors.) R- 1 - Respondent 's citations on merits. -15- (1) 1989 Supp (1) SCC 487 (Provash Chandra Dalui vs. Biswanath Banerjee) (2) (2004) 1 SCC 1 (Sate of U.P. vs. Lalji Tandon) (3) (2007) 5 S.C.C. 614 (Hardesh Ores (P) Ltd. vs. Hede & Co.) (4) 1990 (Supp) S.C.C. 727 (Wander Ltd. vs. Antox India Ltd.) (5) (2006) 8 SCC 726 (Ramdev Food Products Ltd vs. Arvindbhai Rambhai Patel) (6) (2006) 4 S.C.C. 227 (Percept D' Mark (India) (P) Ltd. vs. Zaheer Khan & anr.) (7) (2007) 7 S.C.C. 125 (Adhunik Steels Ltd. vs. Orissa Manganese and Minerals (P) Ltd.) (8) (2007) 6 S.C.C. 798 (Arvind Constructions Co. (P) Ltd. vs. Kalinga Mining Corporation & Others) R-2 - Respondent's Citations on permissibility of additional evidence are: (a) 2008 (4) AIR Bom K 595 (Suman Balkrishna Zodge vs. Alaka Suresh Zodge & Ors.) (b) (2001) 7 S.C.C. 503 (N. Kamalam (Dead) & anr. vs. Ayyasamy & anr. 25. Though various disputed questions are raised and submissions are made at length, the matter revolves around limited questions which are as follows : -16- (1) What is the duration of initial-first spell i.e. tenure of agreement wherein appellants can operate without renewal ? (2) Whether by virtue of Agreements dated 16.06.2003, is it necessary for the parties to arrive at fresh consensus or Agreement as regards prices for the sale of marketable mineral Ore of various grades and as regards job work charges for extraction of processing, after expiry of first spell of five years to enable the appellants to continue their exclusive right under agreements/contracts dated 16.06.2003? (3) Whether the Buyer / Extractor have exercised the option to continue beyond 1st spell of 5 years ? (4) Whether additional evidence should be allowed as necessary or otherwise ? (5) In whose favour the aspects of balance of convenience and irreparable loss weigh ? (6) Do appellants have case for order of interim relief prayed for ? (7) What shall be the interim order and on what terms? 25. Scrutiny of submissions and perusal of records reveals that the case is governed mainly by facts, and which alone, are decisive of the issue involved and are limited to the interpretation of various clauses of the -17- agreement. 26. Clauses 4(a), 9 and 22 of the Agreement for sale are quoted for ready reference, herein below : ... “Clause 4. (a) This agreement shall come into force on the day of execution of this agreement and shall initially remain in force for a period of 5(five) years from the date of execution of this agreement and the same shall be renewed by the SELLER for further like periods of five years at the sole option of the BUYER on the same terms and conditions herein contained. In the event the BUYER desires to renew the agreement for further period of 5(five) years, the BUYER shall exercise the option of renewal at least six months before the expiry of the period so also the revision in the rates shall also be finalized six months earlier. (b) Only the BUYER shall be entitled to terminate this Agreement and its renewals and not the SELLER. However the BUYER shall be entitled to terminate this agreement and its renewals for the following reasons by giving 2 calendar months' prior notice in writing to the SELLER:- (i) If the purchase of the ore hereby agreed is not economically viable due to recession in the domestic and/or international market or for any other reason/s. (ii) In the event the economic condition of the BUYER weakens or the BUYER decides to close down its mining business. (iii) for misrepresentation of the clause 1(a to j), breach of any of the terms of this agreement and for dis-satisfactory performance of the SELLER. (iv) In the event of occurrence and continuance of the conditions / situations stated in para 20 and 21 of this agreement. (Quoted from page 133 to 134 of Appeal from Order No. 60/2009) Clause 9 - Price : the price payable by the BUYER to the SELLER for all the marketable wet metric ton (WMT) iron ore to be sold from the area of the said Mine/Lease shall be as under :- For the first 2(two) years : Rs. 246/- (Rupees two marketable Iron ore from : hundred forty six -18- oxidized ore : only) per W.M.T. For the next 3(three) years: Rs.265.75(Rupees two Marketable Iron ore from : hundred sixty five and oxidized ore : paise seventy-five : only) per W.M.T. For the subsequent 5(five): Rs.291.70 (Rupees two years Marketable Iron ore : hundred ninety one and from oxidized ore : paise seventy only) Due to the perculiar chemical and physical specifications of Silicious ore the price payable for silicious ore with 50% Fe content and above will be as under :- i) for first 2(two) years … Rs.382.50(Rupees three hundred eight two and paise fifty only) ii) for next 3 (three) years … Rs.403/-(Rupees four hundred three only) iii) for subsequent 5 Rs.424.50(Rupees four (five) years … hundred twenty four and paise fifty only) That the above rate Clauses shall be revises after every 5 (five) years as per Clause 4 supra. i. That these rates will be also subject to increase by mutual discussions, whenever there is substantial increase in rate of H.S.D. Explosives, machinery and other inputs. ii. Sales tax if applicable shall be on account of BUYER and shall be charges extra on the above rates. The BUYER shall deposit a sum of Rs.10,00,000/- (Rupees Ten Lakhs only) with the SELLER at the time of execution of this agreement which shall be refunded at the time of termination of this agreement, without interest. (Quoted from page 134 to 135 of paper book of Appeal from Order no. 60/2009) 22. The SELLER hereby solemnly declares that he has exclusive right and authority to enter into and execute this agreement with the BUYER which the SELLER has done out of his own freewill and consent in the manner hereinafter appearing; that the said Mine/Lease is absolutely free and clear from any charges, liens or any encumbrances of whatsoever nature. Further that the BUYER by observing and complying with the terms and condition of this agreement is entitled to the undisturbed purchase of the entire quantities of marketable iron ore from the said Mine/Lease without interference, interruption, claim or demand whatsoever from or by the SELLER or his heirs, administrators, assignees or from any person lawfully or suitably claiming from through -19- or under the SELLER and even if such claim is made it will be unlawful and the entire responsibility of its cost and consequences shall rest upon the SELLER and the SELLER further agrees and undertakes that so long as the BUYER is ready and willing to purchase the marketable iron ore from the SELLER at any time hereinafter, the SELLER shall not enter into any agreement for sale of marketable SELLER shall not enter into any agreement for sale of marketable iron ore from the said Mine/Lease to any other person/s and shall further sell the entire marketable iron ore, only to the BUYER's herein.” (Quoted from page no. 138 of Paper book from Appeal From Order no. 60/2009)” 27. Rules of interpretation of deeds as can be drawn from various treaties as based on law laid down by Courts is the only guiding path thereto. 28. Ratio of various precedents relied upon by parties in this behalf can be summarized as follows : (a) Draw plain meaning; (b) Find out real intention between the parties at the time of entering into agreement, and ascertain what is actually agreed; (c) What parties have behaved later on is not decisive of the intention; 29. Keeping in mind these settled rules of interpretation of deeds, this Court has seen through the clauses of the agreements. 30. Gist or summary of stipulations of paras quoted above the conclusions which have to be reached are as follows : (a) Duration 1. First Spell of duration for contract for sale is for five years from the date of agreement. -20- 2. Second spell is for five years. 3. Renewal for second spell is at sole option of the Buyer. 4. Renewal has to be on the general terms and conditions contained in the agreement which are