Adhunik Steels Ltd vs Orissa Manganese And Minerals Pvt. Ltd

2. O.M.M. Private Limited obtained a mining lease from the Government of Orissa for mining manganese ore from certain extents of land situate in Sundargarh district in the State of Orissa. For reasons of its own, O.M.M. Private Limited entered into an agreement dated 14.5.2003 with Adhunik Steels for raising the manganese ore on its behalf. The term of the agreement was 10 years with effect from 18.5.2003, it conferred on Adhunik Steels an option to seek a renewal for a further term.

3. According to Adhunik Steels, pursuant to this agreement, it had mobilized huge resources for carrying on the excavation and extraction of the mineral by arranging for the necessary labour, staff, equipments, and so on. It had also incurred expenditure for removing the overburden. On 24.11.2003, O.M.M. Private Limited issued a notice to Adhunik Steels purporting to terminate the agreement. The notice also called upon Adhunik Steels to remove their workmen and equipment from the site. According to O.M.M. Private Limited, it had realized that the contract it had entered into with Adhunik Steels was one in violation of Rule 37 of the Mineral Concession Rules, 1960 and since there was danger of O.M.M. Private Limited itself losing its rights as a lessee, the contract had to be terminated. Adhunik Steels, alleging that it had incurred considerable expenditure and had already incurred losses, moved the District Court at Sundargarh under Section 9 of the Act for an injunction restraining O.M.M. Private Limited from terminating the contract and from dispossessing Adhunik Steels from the site of the mines and for other consequential reliefs. The said application was opposed by O.M.M. Private Limited on various grounds. Ultimately, by order dated 18.8.2004, the District Court allowed the application and restrained O.M.M. Private Limited from relying on, acting upon or giving effect to the letter of termination dated 24.11.2003 and further restraining O.M.M. Private Limited from dispossessing Adhunik Steels from the mines in question. The order was to remain in force till the final award that was to be passed by an Arbitral Tribunal constituted in terms of the arbitration agreement.

He concluded:

and concluded:

23. We think that we should refrain from discussing the various issues at great length since we feel that any discussion by us in that behalf could prejudice either of the parties before the arbitrator or the arbitral tribunal. We have therefore confined ourselves to making such general observations as are necessary in the context of the elaborate arguments raised before us by learned counsel.

24. We therefore dismiss the appeal filed by O.M.M. Private Limited leaving open the questions raised by it for being decided by the arbitrator or Arbitral Tribunal in accordance with law. We also substantially dismiss the appeal filed by Adhunik Steels except to the extent of granting it an order of injunction restraining O.M.M. Private Limited from entering into a transaction for mining and lifting of the ore with any other individual or concern making it clear that it can, on its own, carry on the mining operations in terms of the mining lease.

25. We think that the arbitration proceedings must be expedited. We are told that the application for appointment of an arbitrator made before the Chief Justice of the Orissa High Court under Section 11(6) of the Act is pending for over two years without orders. Normally, we would have requested the Chief Justice of the Orissa High Court or his nominee to take up and dispose of the application under Section 11(6) of the Act expeditiously. But we put it to the parties that it would be more expedient if we appoint an arbitrator in this proceeding itself, so that further delay can be avoided. The parties have agreed to that course. We therefore think that it would be in the interests of justice if we appoint here and now a sole arbitrator to adjudicate on the dispute between the parties. Hence we appoint Mr. Justice R.C. Lahoti, former Chief Justice of India as the sole arbitrator to decide the dispute between the parties. The arbitrator will be free to fix his terms in consultation with the parties. We confidently expect the sole arbitrator to enter upon the reference and pronounce his award expeditiously.

26. The appeals are disposed of as above. We make no order as to costs.