ADHUNIK STEELS LTD. versus ORISSA MANGANESE AND MINERALS PVT. LTD.

Citation: [2007] 8 S.C.R. 213 · Decided: 10-07-2007 · Supreme Court of India · Bench: H.K. SEMA · Disposal: Disposed off

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

ADHUNIK STEELS LTD. 
A 
v. 
ORISSA MANGANESE AND MINERALS PVT. LTD. 
JULY 10, 2007 
[H.K. SEMA AND P.K. BALASUBRAMANY AN, JJ.] 
B 
Arbitration and Conciliation Act, 1996-Section 9: 
Interim prohibitory/mandatory injunction-:Grant of-Held-It is 
governed by Specific Relief Act, 1963 and well known concepts ofbalance· C 
of convenience, prima facie _case, irreparable injury and interim ·measure 
appearing tO court to be just and convenient-Section 9 was not de hors 
them-'-// was more so since a right to approach ordinary court was given 
without providing a special procedure in that behalf-,-Approach that at · 
· initial stage only existence of arbitration clause need be considered is not Q 
justified. 
One party obtaining mining lease from Government and contracting · 
with another for raising ore on its behalf-Notice by former to latter_ 
purporting to terminate contract on ground that contract ll;'as violative of 
Rule 37 of Mineral Concession Rules, 1960 and there was danger of their g, 
losing rights as a lessee, and.also asking latter to remove their workmen and 
equipment from site-The latter alleging that pursuant to contract it had 
mqbilized huge resources for extraction of mineral arid incurred losses, 
moved District_ Court under Section 9 for injunction restraining termination 
of contract and dispossession from site of mines-District Court refusing ii F 
but High- Court granting it-Correctness of~Held-Whatever might be 
· reasons for termination of contract, a notice had been issued regarding same 
and in terms of Order XXXIX Rule 2 of Code of Civil Procedure, I 908, ·art _ 
interim injunction could be granted restraining breach of contract-To that 
. extent, there was a prima facie case-However, it was pos:Jib/e to. assess 
compensation payable to fatter if their claim was upheld by arbitrator-: G 
Though the former could not enter into a similar tranfaction with any oiher 
entity since that would also entail violation of Rule 37 there was no . · • , 
justification in preventing them from carrying on minil~g operations by 
themselves as that would not prejudice the latter who in case of success of._· . 
213 
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214 
SUPREME COURT REPORTS 
(2007) 8 S.C.R. 
A their claim were entitled to get compensation for termination of contract-
Question of application of Rule 37 left to be decided by arbitrator. 
--t 
Arbitration-Precedent-Other arbitral award-Held-Court is not 
concerned with what arbitrator who may be appointed will hold in impugned 
case and not what some other arbitrator held in some other arbitration and 
B some other contract even· if it be between same parties-Moreover, Court 
could not be bound by what an arbitrator might have held in an arbitration 
proceeding unless it be that the said award operates as a bar between the 
parties barring either of them from raising a plea in that behalf. 
O.M.M. obtained a mining lease from the Governrnent and entered info 
C a contract wit!t AS for raising the ore on its behalf. However, a few months 
thereafter, O.M.M. issued a notice to AS purporting to terminate the contract 
and asking them to remove their workmen and equipment from the site. 
According to O.M.M., it had realized that its contract with AS was violative of 
Rule 37 of the Mineral Concession Rules, 1960 and since there was danger 
D of itself los!ng its rights as a lessee, the contract had to be terminated. AS 
alleged that pursuant to contract it had mobilized huge. resources for the 
extraction of the mineral and incurred losses, and moved the local District 
Court under Section 9 of the of the Arbitration and Conciliation Act, 1996 
for an injunction restraining O.M.M. from terminating the contract and 
dispossessing it from the site of the mines. O.M.M. contested the application 
E butthe Distriet Court allowed it However, the High Court allowed the appeal 
ofO.M.M holding that (i) in view of Section 14(3)(c) of the Specific Relief 
Act, 1963 the loss, if any, that may be sustained by AS, could be calculated in 
terms of money; (ii) the question of balance of convenience for grant of 
injunction was not required to be gone into as it was otherwise not a fit case 
p 
for grant thereof. However, the High Court also held that prima facie neither 
Rule 37 ibid nor Section 14(l)(c) of the Act of 1963 were applicable to the 
facts of the case. Feeling aggrieved thereby, both AS and O.M.M. filed the 
present cross appeals. 
AS contended that (i) Section 9 of the Act of 1996 

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