Orissa Manganese & Minerals Ltd vs Synergy Ispat Pvt Ltd

4. The factual background of the case is as follows.

5. The appellant herein secured a mining lease originally from the State of Bihar (now Jharkhand) in the year 1996. However, the appellant could not secure the necessary approval under the Forest Conservation Act, 1980. Therefore, the mining operation had to be kept under suspension.

6. Sometime in the year 2005-2006, at the instance of the respondent herein, the appellant entered into two agreements. According to the appellant (we say so because what exactly is the purport of the agreements is a matter pending consideration in arbitration, therefore, we do not wish to make any definite statement in that regard), one of the agreements is that the mining activity pursuant to the mining lease secured by the appellant (referred to supra), shall be carried on by M/s. Metsil Exports Pvt. Ltd. (Metsil) which is said to be an associate company of the respondent herein on various terms and conditions, the details of which may not be necessary. The agreement is dated 27.2.2005 between the appellant herein and Metsil. The agreement is styled as ‘Raising Contract’. The second agreement is between the appellant and the respondent herein for the sale of iron ore extracted by Metsil for being utilised in a sponge iron plant to be jointly set up by the appellant and the respondent herein. According to the appellant, both the contracts are inter dependent. Failure of the first contract automatically results in failure of the second contract.

7. However, the appellant claims to have realised on 22nd June, 2007 that the ‘Raising Contract’ by which the activity of mining was sought to be entrusted to Metsil is in violation of Rule 37 of the Mineral Concession Rules, 1960, therefore, the appellant sent letters to the respondent as well as to the Metsil purporting to terminate both the contracts. It is stated at the Bar that, admittedly, Metsil never questioned the termination of the contract. However, the respondent company chose to dispute the legality of the decision of the appellant in terminating the agreement for sale of iron ore. The respondent filed an application (A.P. No.922/2011) under Section 9 of the Arbitration and Conciliation Act, 1996 praying, inter alia, for an order of injunction restraining the appellant herein from selling iron ore to the third party. It may be mentioned here that subsequent to the decision of the appellant to terminate both the agreements, the appellant commenced the mining operation from January 2009. The learned single Judge of the Calcutta High Court, by his order dated 14.11.2011, declined to grant any ad interim order as sought by the respondent. By an order dated 14.3.2012, the said A.P. No.922/2011 was disposed of.

8. Thereafter, the respondent preferred another application in A.P. No.245/2012 in which an interim order came to be passed on 29.3.2012 restraining the appellant herein from selling any part of the iron ore extracted from the mines in question without first offering the entire extract to the respondent. Aggrieved by the same, the appellant herein carried the matter in appeal under Section 37(1)(a) of the Arbitration and Conciliation Act, 1996 before a Division Bench of the High Court in A.P.O.T. No.184/2012. By a consent order dated 17.4.2012 in the abovementioned A.P.O.T., the parties agreed for the appointment of one Shri Pradeep Kumar Ghosh, Senior Advocate, as the Arbitrator to adjudicate upon the dispute between the parties. The said A.P.O.T. came to be finally disposed of by an order dated 9.5.2012 with a direction that the appellant would sell iron ore to the respondent, if the respondent so opted, at the prevailing market price during the pendency of the arbitration proceedings.

9. The respondent herein filed an Special Leave Petition(C) No.20425/2012 in this Court challenging the order dated 9.5.2012 passed in A.P.O.T. No.184/2012. The said SLP was disposed of by an order dated 27.7.2012, the relevant portion of the order reads as follows:

14. By the order under appeal, the High Court directed the appellant not to sell the iron ore to any third party without first offering the same to the respondent herein and also to maintain accounts of the iron ore raised by the appellant from the said mines from the date of commencement of the mining operation.

16. While ordering notice on18.7.2014 in the instant appeal, it was directed by the Court that the appellant “will maintain record/account of all the ore consumed” by the appellant “during the pendency” of this matter.

23. For the abovementioned reasons, we dispose of this appeal recording an undertaking of the appellant that during the pendency of the arbitration proceedings the appellant will not sell any part of the iron ore excavated from the mines covered by the agreement in question and such ore would be consumed captively by the appellant in its plant and the appellant would maintain a complete account of the minerals excavated and consumed captively by the appellant.

24. In the facts and circumstances of the case, there will be no order as to costs.

September 12, 2014