http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 12  

CASE NO.: Appeal (civil)  6569 of 2005

PETITIONER: ADHUNIK STEELS LTD

RESPONDENT: ORISSA MANGANESE AND MINERALS PVT. LTD

DATE OF JUDGMENT: 10/07/2007

BENCH: H.K. SEMA & P.K. BALASUBRAMANYAN

JUDGMENT: J U D G M E N T  

[with C.A. No. 6570 of 2005]

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 2005 which is the  appellant in C.A. No. 6570 of 2005 challenging an order  of the District Court at Sundargarh in a petition under  Section 9 of the Act filed by the appellant in C.A. No.  6569 of 2005 and the respondent in C.A. No. 6570 of  2005.  For convenience, the parties will hereinafter be  referred to as "Adhunik Steels" and "O.M.M. Private  Limited".  Adhunik Steels it was, that filed the  application under Section 9 of the Act.   

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 12  

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.   

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 Adhunik Steels  approaching the District Court at Sundargarh.  We may  also notice that it is contended that Adhunik Steels had  thereafter moved the Chief Justice of the High Court of  Orissa under Section 11(6) of the Act for appointment of  an Arbitrator in terms of the arbitration agreement.  The  application is said to be pending.  

5.              The District Court, Sundargarh held that Rule  37 of the Mineral Concession Rules, 1960 cannot be held  to be applicable to the working arrangement between the  parties which 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 distinction between Section 9  and Section 11 of the Act and that the powers under  Section 9 are wide and what is relevant to be considered  at the stage of a motion under Section 9 of the Act was  the existence of an arbitration clause and the necessity  of taking interim measures and the court could issue  any direction that is deemed appropriate.  Rejecting the  contention of O.M.M. Private Limited that Adhunik Steels  had been dispossessed subsequent to the letter  terminating the contract, the court held 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 of Orissa.  It was argued on behalf

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 12  

of O.M.M. Private Limited that the contract between the  parties was in violation of Rule 37 of the Mineral  Concession Rules, 1960 and hence the agreement itself  was illegal and no right could be founded on such an  illegal agreement by Adhunik Steels.  It was alternatively  contended that in terms of Section 41 of the Specific  Relief Act, no injunction can be granted for continuance  of the contract and the working of the contract involved  intrinsic details in its 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 interim injunction in  terms of Section 14(3) of the Specific Relief Act.  The  learned judge of the High Court came to the prima facie  conclusion that Rule 37 of the Mineral Concession Rules,  1960 had no application to the facts of the case.  The  learned judge also held that in view of clause 8.2 of the  agreement, Section 14(1)(c) of the Specific Relief Act was  not attracted.  But the learned judge upheld the  contention on behalf of O.M.M. Private Limited that the  loss, if any, that may be sustained 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 order of  injunction passed by the District Court, Sundargarh.   Feeling aggrieved thereby, Adhunik Steels has filed its  appeal.  Feeling aggrieved by the finding that Rule 37 of  Mineral Concession Rules, 1960 does not hit the  contract in question and the finding that Section 14(1)(c)  of the Specific Relief Act did not stand in the way of  injunction being granted, O.M.M. Private Limited has  come up with its appeal.   

8.              There was considerable debate before us on the  scope of Section 9 of the Act.  According 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 form or was in a prohibitory form.  The  subject matter of arbitration in the present case was the  continued right of Adhunik Steels to mine and lift the ore  to the surface on behalf of O.M.M. Private Limited and  until the arbitrator decided on whether O.M.M. Private  Limited was entitled to breach the agreement or  terminate the agreement and what would be its  consequences, the court had not only the power but the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 12  

duty to protect the right of Adhunik Steels conferred by  the contract when approached 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 rights of a party in respect  of that property.  Thus, the dispute may  prevent perishable goods from being put to  their intended use, or may impede the  proper exploitation of a profit-earning  article, such as a ship.  If the disposition of  the property has to wait until after the  award has resolved the dispute,  unnecessary hardship may be caused to  the parties.  Again, there may be a risk that  if the property is left in the custody or  control of one of the parties, pending the  hearing, he may abuse his 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, custody or sale of  the property.

(iv)    The securing of the amount in  dispute."

Learned counsel also relied on ’International Commercial  Arbitration in UNCITRAL Model Law Jurisdictions’ by Dr.  Peter Binder, wherein it is stated: "It is not incompatible with an arbitration  agreement for a party to request, before or  during arbitral proceedings, from a court an  interim measure of protection and for a  court to grant such measure."

It is further stated: "In certain circumstances, 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 12  

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 comparison of the adopting  jurisdictions shows that all jurisdictions  include some kind of provision on the issue,  all granting the parties permission to seek  court-ordered interim measures."

9.              Learned counsel for O.M.M. Private Limited  submitted that Section 9 leaves it to a party to approach  the court for certain interim measures and it enables the  court to pass orders by way of interim measures of  protection in respect of the matters enumerated therein.   Neither this Section nor the Act elsewhere 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  necessarily to consider the balance of convenience, the  question whether at least a triable issue arises if not the  establishment of a prima facie case by the applicant  before it and the other well known restrictions on the  grant of interim orders, like the principle that a contract  of personal service would not be specifically enforced or  that no injunction would be granted in certain  circumstances as envisaged by Section 14 and Section  41 of the Specific Relief Act.  Thus, it was contended that  grant 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 interim measure of  protection as may appear to the court to be just and  convenient.  The grant of an interim prohibitory  injunction or an interim mandatory injunction are  governed by well known rules and it is difficult to  imagine that the legislature while enacting Section 9 of  the Act intended to make a provision which was de hors  the accepted principles that governed the grant of an  interim injunction.  Same is the position regarding the  appointment of a receiver since the Section itself brings  in, the 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 country without

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 12  

providing a special procedure or a special set of rules in  that behalf, the ordinary rules followed by that court  would govern the exercise of power conferred by the Act.   On that basis also, it is not possible to keep out the  concept of balance of convenience, prima facie case,  irreparable injury and the concept of just and convenient  while passing interim measures under Section 9 of the  Act.  

11.             The power and jurisdiction of courts in arbitral  matters has been the subject of much discussion.  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 the concept of arbitration as a  consensual process reinforced by the ideas  of transnationalism leans against the  involvement of the mechanisms of state  through the medium of a municipal court.   On the other side there is a plain fact,  palatable or not, that it is only a Court  possessing coercive powers which could  rescue the arbitration if it is in danger of  foundering."

               In Conservatory and Provisional Measures in  International Arbitration, 9th Joint Colloquium, Lord  Mustill in "Comments 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, having no longer a function to  fulfil, the arbitrators hand back the baton  so that the court can in case of need lend  its coercive powers to the enforcement of  the award."

               It is in the above background that one has to  consider the power of the court approached under the  Arbitration Act for interim relief or interim protection.

12.             Professor Lew in his ’Commentary on Interim  and Conservatory Measures in ICC Arbitration Cases’,  has indicated:

"The demonstration of irreparable or  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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 12  

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 the view that he had the power to grant an  interim mandatory injunction directing the continuance  of the working of the contract pending the arbitration.   The Court of Appeal thought that it was an appropriate  case for an injunction but that it had no power to grant  injunction because of the arbitration.  In further appeal,  the House of Lords held that it did have the power to  grant injunction but on facts thought it inappropriate to  grant one.  In formulating its view, the House of Lords  highlighted 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 should  approach the making of such an order with  the utmost caution and should be prepared  to act only when the balance of advantage  plainly favours the grant of relief.  In the  combination of circumstances which we  find in the present case, I would have  hesitated long before proposing that such  an order should be made, even if the action  had been destined to remain in the High  Court."

13.             Injunction is a form of specific relief.  It is an  order of a court requiring a party either to do a specific  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 amend the law  relating to certain kinds of specific reliefs." Specific Relief  is relief in specie.   It is a remedy which aims at the exact  fulfilment of an obligation.  According to Dr. Banerjee in  his Tagor Law Lectures on Specific Relief, the remedy for  the non performance of a duty are (1) compensatory, (2)  specific.  In the former, the court awards damages for  breach of the obligation.  In the latter, it directs the party  in default to do or forbear from doing the very thing,  which he is bound 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 12  

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 the Specific  Relief Act.  Section 36 provides that preventive relief may  be granted at the discretion of the court by injunction  temporary or perpetual.  Section 38 indicates when  perpetual injunctions are granted and Section 39  indicates when mandatory injunctions are granted.   Section 40 provides that damages may be awarded either  in lieu of or in addition to injunctions.  Section 41  provides for contingencies when an injunction cannot be  granted.  Section 42 enables, notwithstanding anything  contained 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  when moved under Section 9 of the Act for interim  protection, the provisions of the Specific Relief Act  cannot be made applicable since in taking interim  measures under Section 9 of the Act, the court does not  decide on the merits of the case or the rights of parties  and considers only the question of existence of an  arbitration clause and the necessity of taking interim  measures for issuing necessary directions or orders.   When the grant of relief by way of injunction is, in  general, governed by the 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 to decide the dispute submitted to it,  in accordance with the substantive law for the time being  in force in India, if it is not an international commercial  arbitration. So, it cannot certainly be inferred that  Section 9 keeps out the substantive law relating to  interim reliefs.  

15.             The approach that at the initial stage, only the  existence of an arbitration clause need be considered is  not justified.  In The Siskina [1979] AC 210, Lord  Diplock explained the position:

"A right to obtain an interlocutory  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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 12  

injunction is merely ancillary and  incidental to the pre-existing cause of  action.  It is granted to preserve the status  quo pending the ascertainment by the court  of the rights of the parties and the grant to  the plaintiff of the relief to which his cause  of action entitles him, which may or may  not include a final injunction."

He concluded:

"To come within the sub-rule the injunction  sought in the action must be part of the  substantive relief to which the plaintiff’s  cause of action entitles him; and the thing  that it is sought to restrain the foreign  defendant from doing in England must  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 concluded: "Whenever an interlocutory injunction is  applied for, the judge, if otherwise minded  to make the order, should, as a matter of  good practice, pay careful attention to the  substantive relief that is, or will be, sought.   The interlocutory injunction in aid of the  substantive relief should not place a greater  burden on the respondent than is  necessary.  The yardstick in section 37(1) of  the 1981 Act, "just and convenient", must  be applied having regard to the interests  not only of 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 the intention behind Section 9 of  the Act is the issuance of an order for preservation of the  subject matter of an arbitration agreement.  According to  learned counsel for Adhunik Steels, the subject matter of  the arbitration agreement in the case on hand, is the  mining and lifting of ore by it from the mines leased to

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 12  

O.M.M. Private Limited for a period of 10 years and its  attempted abrupt termination by O.M.M. Private Limited  and the dispute before the arbitrator would be the effect  of the agreement 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 the mining  operations, an extraordinary measure in itself in the face  of the attempted termination of the contract by O.M.M.  Private Limited or the termination of the contract by  O.M.M. Private Limited, could be granted or not, would  again lead the court to a consideration of the classical  rules for the grant of such an interim measure.  Whether  an interim mandatory injunction could be granted  directing the continuance of the working of the contract,  had to be considered in the light of the well-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 govern the courts in this connection.  So  viewed, we have necessarily to see whether the High  Court was justified in refusing the interim injunction on  the facts and in the circumstances of the case.   

19.             No doubt, there is considerable dispute as to  whether Rule 37 of the Mineral Concession Rules, 1960  has application.  The District Court and the High Court  have prima facie come to the conclusion that the said  Rule has no application.  Whether the said Rule has  application, is one of the aspects to be considered 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 arbitral award in support of its claim that  Rule 37 of the Mineral Concession Rules, 1960 would  apply, is neither here nor there.  We are concerned with  what the arbitrator who may be appointed will hold in  the present case and not what some other arbitrator held  in some other arbitration and some other contract even if  it be between the same parties.  Moreover, in our  adjudication, we cannot 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.

20.             The question here is whether in the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 12  

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 into between itself  and Adhunik Steels.  In terms of Order XXXIX Rule 2 of  the Code of Civil Procedure, an interim injunction could  be granted restraining the breach of a contract and to  that extent Adhunik Steels may claim that it has a prima  facie case for restraining O.M.M. Private Limited from  breaching the contract and from preventing it from  carrying on its work in terms of the contract.  It is in that  context that the High Court has held that this was not a  case where the damages that may be 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 possible  to assess the compensation that might be payable to  Adhunik Steels in case the claim of Adhunik Steels is  upheld by the arbitrator while passing the award.  

21.             But, in that context, we cannot brush aside the  contention of the learned counsel for Adhunik Steels that  if O.M.M. Private Limited is permitted to enter into other  agreements with others for the same purpose, it would  be unjust when the stand of O.M.M. Private Limited is  that it was canceling the agreement mainly because it  was hit 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 the conclusion of the arbitral proceedings.   

22.             At the same time, we see no justification in  preventing O.M.M. Private Limited from carrying on the  mining operations by itself.  It has got a mining lease  and subject to any award that may be passed by the  arbitrator on the effect of the contract it had entered into  with Adhunik Steels, it has the right to mine and lift the  minerals therefrom.  The carrying on of that activity by  O.M.M. Private Limited cannot prejudice Adhunik Steels,  since ultimately 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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 12  

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.