Contact us   Feedback   Annual Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2007 (7) TMI 667 - SUPREME COURT

2007 (7) TMI 667 - SUPREME COURT - 2007 AIR 2563, 2007 (8) SCR 213, 2007 (7) SCC 125, 2007 (9) JT 147, 2007 (9) SCALE 126 - Civil Appeal No. 6569 of 2005 - Dated:- 10-7-2007 - H.K. SEMA AND P.K. BALASUBRAMANYAN JJ. JUDGMENT: P.K. BALASUBRAMANYAN, J. 1. These Cross Appeals by Special Leave challenge the order passed by the High Court of Orissa in an appeal under Section 37(1)(a) of the Arbitration & Conciliation Act, 1996. The said appeal was one filed by the respondent in C.A. No. 6569 of 20 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r 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. 4. We may notice here that prior to approaching the District Court at Sundargarh, Adhunik Steels had moved the Calcutta High Court under Section 9 of the Act seeking identical reliefs. O.M.M. Private Limited had raised an objection to jurisdiction in the Calcutta High Court and the said objection was upheld by the Calcutta High Court and that had led to A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ich has been termed a raising contract. It further held that the balance of convenience was in favour of the grant of an injunction against O.M.M. Private Limited as sought for by Adhunik Steels, and that if an order of injunction was not granted, the very purpose of initiating the arbitration proceeding would be defeated. Following the decision of the Madhya Pradesh High Court in Nepa Limited Vs. Manoj Kumar Agrawal [AIR 1999 MADHYA PRADESH 57], it accepted the principle that there was a distin .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

that in its opinion it would be equitable to grant the orders sought for under Section 9 of the Act. It also stated that an order of injunction would be necessary to preserve the mines in dispute so that the arbitrators at a later point of time can have an effective and proper adjudication of the dispute referred to them. It was thus that the order of injunction was granted. 6. Aggrieved by the order of the District Court, Sundargarh, O.M.M. Private Limited filed an appeal before the High Court .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

performance extended over a period of 10 years and the court would not be in a position to supervise the working of the contract and in such a situation, an interim injunction ought not to be granted. It was also contended that in terms of Section 14 of the Specific Relief Act, the agreement was not specifically enforceable as it was terminable and in any event, since Adhunik Steels could be compensated in terms of money, even if its claim was ultimately upheld, it was not a case for grant of an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d by Adhunik Steels, could be calculated in terms of money and in view of that and in the light of Section 14(3)(c) of the Specific Relief Act, an injunction as prayed for by Adhunik Steels could not be granted. The court did not go into the question of balance of convenience in granting an order of injunction in the light of its conclusion that this is not a fit case for grant of an interim injunction. 7. Thus, the High Court allowed the appeal filed by O.M.M. Private Limited and set aside the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rding to learned counsel for Adhunik Steels, Section 9 of the Act stood independent of Section 94 and Order XXXIX of the Code of Civil Procedure and the exercise of power thereunder was also not trammeled by anything contained in the Specific Relief Act. Learned counsel contended that by way of an interim measure, the court could pass an order for the preservation or custody of the subject matter of the arbitration agreement irrespective of whether the order that may be passed was in a mandatory .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d under Section 9 of the Act. Learned counsel emphasized that what was liable to be protected in an appropriate case was the subject matter of the arbitration agreement. Learned counsel referred to 'The Law and Practice of Commercial Arbitration in England' by Mustill and Boyd and relied on the following passage therefrom: "(b) Safeguarding the subject matter of the dispute: The existence of a dispute may put at risk the property which forms the subject of the reference, or the righ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

position in such a way that even if the other party ultimately succeeds in the arbitration, he will not obtain the full benefit of the award. In cases such as this, the Court (and in some instances the arbitrator) has power to intervene, for the purpose of maintaining the status quo until the award is made. The remedies available under the Act are as follows:- (i) The grant of an interlocutory injunction. (ii) The appointment of a receiver (iii) The making of an order for the preservation, custo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, especially where the arbitral tribunal has not yet been established, the issuance of interim measures by the court is the only way assets can be saved for a future arbitration. Otherwise, the claimant could end up with a worthless arbitral award due to the fact that the losing party has moved his attachable assets to a "safe" jurisdiction where they are out of reach of the claimant's seizure. The importance of such a provision in an arbitration law is therefore evident, and a com .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ewhere has provided the conditions for grant of such interim protection leaving it to the court to exercise the jurisdiction vested in it as a court to adjudge whether any protective measure is called for. In that context, neither the provisions of the Code of Civil Procedure nor the provisions of the Specific Relief Act can be kept out while the court considers the question whether on the facts of a case, any order by way of interim measure of protection should be granted. So, the court had nec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ant of an injunction by way of interim measure to permit Adhunik Steels to carry on the mining operations pending the arbitration proceedings notwithstanding the termination of the contract by O.M.M. Private Limited was not permissible in law. 10. It is true that Section 9 of the Act speaks of the court by way of an interim measure passing an order for protection, for the preservation, interim custody or sale of any goods, which are the subject matter of the arbitration agreement and such interi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he concept of 'just and convenient' while speaking of passing any interim measure of protection. The concluding words of the Section, "and the court shall have the same power for making orders as it has for the purpose and in relation to any proceedings before it" also suggest that the normal rules that govern the court in the grant of interim orders is not sought to be jettisoned by the provision. Moreover, when a party is given a right to approach an ordinary court of the cou .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

iscussion. The relationship between courts and arbitral tribunals have been said to swing between forced co-habitation and true partnership. The process of arbitration is dependant on the underlying support of the courts who alone has the power to rescue the system when one party seeks to sabotage it. The position was stated by Lord Mustil in Coppee Levalin NV vs. Ken-Ren Fertilisers and Chemicalsb (1994 (2) Lloyd's Report 109 at 116): "there is plainly a tension here. On the one hand t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and Conclusions" described the relationship further: "Ideally, the handling of arbitral disputes should resemble a relay race. In the initial stages, before the arbitrators are seized of the dispute, the baton is in the grasp of the court; for at that stage there is no other organization which could take steps to prevent the arbitration agreement from being ineffectual. When the arbitrators take charge they take over the baton and retain it until they have made an award. At this point .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r perhaps substantial harm is also necessary for the grant of a measure. This is because it is not appropriate to grant a measure where no irreparable or substantial harm comes to the movant in the event the measure is not granted. The final award offers the means of remedying any harm, reparable or otherwise, once determined." The question was considered in Channel Tunnel Group Ltd. And another vs. Balfour Beatty Construction Ltd. (1993 Appeal Cases 334). The trial judge in that case took .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed the problem to which an application for interim relief like the one made in that case may give rise. The House of Lords stated at page 367: "It is true that mandatory interlocutory relief may be granted even where it substantially overlaps the final relief claimed in the action; and I also accept that it is possible for the court at the pre-trial stage of the dispute arising under a construction contract to order the defendant to continue with a performance of the works. But the court sh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fic act or acts or to refrain from doing a specific act or acts either for a limited period or without limit of time. In relation to a breach of contract, the proper remedy against a defendant who acts in breach of his obligations under a contract, is either damages or specific relief. The two principal varieties of specific relief are, decree of specific performance and the injunction (See David Bean on Injunctions). The Specific Relief Act, 1963 was intended to be "An Act to define and am .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d to do or forbear from doing. The law of specific relief is said to be, in its essence, a part of the law of procedure, for, specific relief is a form of judicial redress. Thus, the Specific Relief Act, 1963 purports to define and amend the law relating to certain kinds of specific reliefs obtainable in civil courts. It does not deal with the remedies connected with compensatory reliefs except as incidental and to a limited extent. The right to relief of injunctions is contained in part-III of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ined in Section 41, particularly clause (e) providing that no injunction can be granted to prevent the breach of a contract the performance of which would not be specifically enforced, the granting of an injunction to perform a negative covenant. Thus, the power to grant injunctions by way of specific relief is covered by the Specific Relief Act, 1963. 14. In Nepa Limited Vs. Manoj Kumar Agrawal [AIR 1999 MADHYA PRADESH 57], a learned judge of the Madhya Pradesh High Court has suggested that whe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e Specific Relief Act, and Section 9 of the Act provides for an approach to the court for an interim injunction, we wonder how the relevant provisions of the Specific Relief Act can be kept out of consideration. For, the grant of that interim injunction has necessarily to be based on the principles governing its grant emanating out of the relevant provisions of the Specific Relief Act and the law bearing on the subject. Under Section 28 of the Act of 1996, even the arbitral tribunal is enjoined .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nterlocutory injunction is not a cause of action. It cannot stand on its own. It is dependent upon there being a pre-existing cause of action against the defendant arising out of an invasion, actual or threatened by him, of a legal or equitable right of the plaintiff for the enforcement of which the defendant is amenable to the jurisdiction of the court. The right to obtain an interlocutory injunction is merely ancillary and incidental to the pre-existing cause of action. It is granted to preser .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ust amount to an invasion of some legal or equitable right belonging to the plaintiff in this country and enforceable here by a final judgment for an injunction." 16. Recently, in Fourie Vs. Le Roux [2007] 1 W.L.R. 320, the House of Lords speaking through Lord Scott of Foscote stated: "An interlocutory injunction, like any other interim order, is intended to be of temporary duration, dependent on the institution and progress of some proceedings for substantive relief." and conclud .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the claimant but also of the defendant." 17. No special condition is contained in Section 9 of the Act. No special procedure is indicated. In American Jurisprudence, 2nd Edition it is stated: "In judicial proceedings under arbitration statutes ordinary rules of practice and procedure govern where none are specified; and even those prescribed by statute are frequently analogous to others in common use and are subject to similar interpretation by the courts." 18. It is true that th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ent and the right of O.M.M. Private Limited to terminate it prematurely in the circumstances of the case. So viewed, it was open to the court to pass an order by way of an interim measure of protection that the existing arrangement under the contract should be continued pending the resolution of the dispute by the arbitrator. May be, there is some force in this submission made on behalf of the Adhunik Steels. But, at the same time, whether an interim measure permitting Adhunik Steels to carry on .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

-settled principles in that behalf. Similarly, whether the attempted termination could be restrained leaving the consequences thereof vague would also be a question that might have to be considered in the context of well settled principles for the grant of an injunction. Therefore, on the whole, we feel that it would not be correct to say that the power under Section 9 of the Act is totally independent of the well known principles governing the grant of an interim injunction that generally gover .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

onsidered by the arbitrator or the Arbitral Tribunal that may be constituted in terms of the arbitration agreement between the parties. We do not think that it is proper for us at this stage to pronounce on the applicability or otherwise of Rule 37 of the Mineral Concession Rules, 1960 and its impact on the agreement entered into between the parties. We therefore leave open that question for being decided by the arbitrator. The attempt made by O.M.M. Private Limited to rely upon some other arbit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erates as a bar between the parties barring either of them from raising a plea in that behalf. 20. The question here is whether in the circumstances, an order of injunction could be granted restraining O.M.M. Private Limited from interfering with Adhunik Steels' working of the contract which O.M.M. Private Limited has sought to terminate. Whatever might be its reasons for termination, it is clear that a notice had been issued by the O.M.M. Private Limited terminating the arrangement entered .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e suffered by Adhunik Steels by the alleged breach of contract by O.M.M. Private Limited could not be quantified at a future point of time in terms of money. There is only a mention of the minimum quantity of ore that Adhunik Steels is to lift and there is also uncertainty about the other minerals that may be available for being lifted on the mining operations being carried on. These are impoundables to some extent but at the same time it cannot be said that at the end of it, it will not be poss .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

by Rule 37 of the Mineral Concession Rules, 1960. Going by the stand adopted by O.M.M. Private Limited, it is clear that O.M.M. Private Limited cannot enter into a similar transaction with any other entity since that would also entail the apprehended violation of Rule 37 of the Mineral Concession Rules, 1960, as put forward by it. It therefore appears to be just and proper to direct O.M.M. Private Limited not to enter into a contract for mining and lifting of minerals with any other entity until .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ely Adhunik Steels, if it succeeds, would be entitled to get, if not the main relief, compensation for the termination of the contract on the principles well settled in that behalf. Therefore, it is not possible to accede to the contention of learned counsel for Adhunik Steels that in any event O.M.M. Private Limited must be restrained from carrying on any mining operation in the mines concerned pending the arbitral proceedings. 23. We think that we should refrain from discussing the various iss .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version