Bombay High Court
Vyageshwar Minerals Industries ... vs M/S. Resurgere Mines And Minerals ... on 6 May, 2016
Bench: R.D. Dhanuka
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vai
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION (LODGING) NO.618 OF 2016
M/s.Resurgere Mines & Minerals India Ltd. )
a company registered under the )
Companies Act, 1956 having their )
registered office at 15, Morvi House, )
28/30, Goa Street, Ballard Estate )
Mumbai - 400 038. ) ...Appellant
....Versus....
1). Vyagreshwar Mineral Industrial )
Producers Co-operative Society, )
Dattatraya Smruti, Manohar Chowk )
Tal - Pen, District Raigad. )
)
2) Mr.Ashok Gangaram Patil, )
Chairman, Flat No.702, 7th Floor )
Plot No.21, Tulashi Classic, )
Postal Colony, Chembur )
Mumbai - 400 071. ) ...Respondents
WITH
ARBITRATION PETITION (LODGING) NO.629 OF 2016
Vyagreshwar Mineral Industrial )
Producers Co-operative Society, )
Dattatraya Smruti, Manohar Chowk )
Tal - Pen, District Raigad. ) ...Appellant
....Versus....
1). M/s.Resurgere Mines & Minerals )
India Limited Ltd, a company )
registered under the )
Companies Act, 1956 having their )
registered office at 15, Morvi House, )
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905-arbpl618-16c
28/30, Goa Street, Ballard Estate )
Mumbai - 400 038. )
)
2) Mr.Ashok Gangaram Patil, )
Chairman, Flat No.702, 7th Floor )
Plot No.21, Tulashi Classic, )
Postal Colony, Chembur )
Mumbai - 400 071. ) ...Respondents
WITH
NOTICE OF MOTION (LODGING) NO.1581 OF 2016
IN
ARBITRATION PETITION (LODGING) NO.629 OF 2016
Vyagreshwar Mineral Industrial ig )
Producers Co-operative Society, )
Through Ashok Patil Chairman ) ...Applicant
IN THE MATTER BETWEEN :
Vyagreshwar Mineral Industrial )
Producers Co-operative Society, )
Through Ashok Patil Chairman ) ...Appellant
....Versus....
1) Vyagreshwar Mineral Industrial )
Producers Co-operative Society, )
Dattatraya Smruti, Manohar Chowk )
Tal - Pen, District Raigad. )
)
2) Mr.Ashok Gangaram Patil, )
Chairman, Flat No.702, 7th Floor )
Plot No.21, Tulashi Classic, )
Postal Colony, Chembur )
Mumbai - 400 071. ) ...Respondents
Mr.Sharan Jagtiani with Mr.S.B. Pawar and Ms.Nikita Sawant i/b S.K.
Legal Associates for the Appellant in Arbitration Petition (Lodging)
No.618 of 2016 and the Respondent No.1 in Arbitration Petition
(Lodging) No.629 of 2016.
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905-arbpl618-16c
Mr.D.D. Madon, Senior Counsel with Mr.Mayur Khandeparkar and
Mr.Pankaj Kode i/b Mr.Himanshu Kode for the Respondent in
Arbitration Petition (Lodging) No.618 of 2016.
Mr.Mayur Khandeparkar with Mr.Pankaj Kode i/b Mr.H. Kode for the
Appellant in Arbitration Petition (Lodging) No.629 of 2016.
CORAM : R.D. DHANUKA, J.
DATE : 6TH MAY, 2016.
ORAL JUDGMENT :-
1. By these two arbitration petitions filed under section 37 of
the Arbitration & Conciliation Act, 1996 (for short "the said Act") both
the appellants have impugned part of the same order i.e. dated 22nd
April, 2016 passed by the learned arbitrator in an application filed
under section 17 of the said Act refusing to grant part of the relief in
favour of the appellant in Arbitration Petition (Lodging) No.618 of
2016 and granting part of the reliefs against the appellant in
Arbitration Petition (Lodging) No.629 of 2016. Both the appellants
have therefore, impugned part of the order passed by the learned
arbitrator against each other. Since both the petitions are arising out
of the same order, both the petitions were heard together and are
being disposed of by a common order. Some of the relevant facts for
the purpose of deciding these petitions are as under :
2. The appellant in Arbitration Petition (Lodging) No.618 of
2016 was the original claimant, whereas the appellant in Arbitration
Petition (Lodging) No.629 of 2016 was the original respondent in the
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arbitral proceedings.
3. The original claimant carries on the business of mining and
other mining related business and activities. The original respondent
no.1 is a co-operative society and is also a leaseholder in respect of
the land admeasuring 79.981 Hectares situated at Village Mirya
Dongar, Tahsil Pen, District Raigad which is leased by the State
Government to the respondent no.1 for the purpose of Bauxite
mining. The original claimant and the respondent no.1 entered into an
agreement dated 14th December, 2007 for the purpose of extraction
and sale of total bauxite deposit in the said mine for a consideration
of Rs.2,62,50,000/-. It is not in dispute that out of the said
consideration amount of Rs.2,62,50,000/- the claimant has already
paid the said amount except a sum of Rs.75,00,000/- which was
payable by the claimant to the respondent no.1 on the respondent
no.1 receiving MOEF clearance.
4. It is the case of the claimant that though the respondent
no.1 had obtained MOEF clearance, the claimant was not able to
carry out any mining activity under the said agreement entered into
between the parties. There is no dispute that the agreement entered
into between the parties was terminated on 3 rd September, 2012 by
the respondent no.1 by issuing a notice. On 15 th January, 2013, the
respondent no.1 after termination of the agreement issued a public
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notice inviting attention of the public at large that the agreement
entered into between the parties was terminated vide notice dated 3 rd
September, 2012. In the said public notice, the respondent no.1 also
stated that along with the said agreement dated 14th December,
2007,the respondent no.1 had also terminated the power of attorney
dated 14th December, 2007. In response to the said public notice and
also the notice of termination dated 3rd September, 2012, the claimant
issued a counter notice on 23rd January, 2013 and called upon the
respondent no.1 to withdraw the said notice of termination.
5. It is the case of the original claimant that after termination
of the agreement by the respondent no.1, there was meetings held
between the original claimant and the respondent no.1 in which the
respondent no.1 made an assurance to the original claimant that the
notice of termination issued by the respondent no.1 would be
withdraw. It is the case of the original claimant that in view of such
assurance given by the respondent no.1 in the meetings held after
issuing the letter of termination, the original claimant did not invoke
arbitration agreement earlier. It is not in dispute that the original
claimant issued a notice invoking arbitration agreement for the first
time on 26th November, 2015 and thereafter filed a petition under
section 9 of the said Act on 29 th February, 2016. This Court passed
an ad-interim order of status-quo on 23rd March, 2016.
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6. On 16th April, 2016, this Court by consent of the parties,
appointed a counsel of this Court as a sole arbitrator to decide the
dispute between the parties arising out of the arbitration agreement
dated 22nd October, 2007. This Court permitted the parties to treat
the said arbitration petition as the petition under section 17 of the said
Act and continued the said ad-interim order dated 23rd March, 2016
for a period of one week from the date of the said order and granted a
liberty to move before the learned arbitrator for ad-interim relief. This
Court kept all the contentions of the parties including limitation open.
In the said order, this Court clarified that the learned arbitrator shall
dispose of the ad-interim stay / interim application uninfluenced by
the order passed by this Court on 23 rd March, 2016 which order was
not passed on merits.
7. Pursuant to the said order passed by this Court on 16 th
April, 2016, the parties appeared before the learned arbitrator and
advanced submissions. The learned arbitrator passed an order on
22nd April, 2016, rejecting the application filed by the original claimant
under section 17 of the said Act. The learned arbitrator however,
directed the respondent no.1 to maintain the accounts of the bauxite
extracted and sold from the said mine and to furnish the same
regularly to the original claimant in accordance with the said order.
Being aggrieved by the said order dated 22nd April, 2016, the claimant
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filed Arbitration Petition (Lodging ) No.618 of 2016 under section 37
of the said Act. The respondent no.1 filed Arbitration Petition
(Lodging) No.629 of 2016 being aggrieved by the directions issued in
clause (b) of the said order dated 22nd April, 2016.
8. Mr.Jagtiani, learned counsel appearing for the original
claimant invited my attention to various provisions of the agreement
entered into between the parties and also the correspondence
annexed to the Arbitration Petition (Lodging ) No.618 of 2016. It is
submitted that the respondent no.1 could not have terminated the
agreement entered into between the parties without giving 18 years
notice. He submits that since the notice of termination itself was
illegal, the learned arbitrator ought to have directed the parties to
maintain status-quo in respect of the notice of termination. He
submits that the power of attorney executed in favour of the claimant
is not yet revoked by the respondent.
9. The next submission of the learned counsel for the original
claimant is that though the respondent no.1 had obtained clearance
from MOEF in the month of July, 2012, the original claimant could
not carry out any mining activities under the agreement dated 14 th
December, 2007. He submits that the said termination notice
therefore, was ex-facie illegal and thus the learned arbitrator ought to
have granted interim reliefs as prayed by the original claimant.
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10. It is submitted by the learned counsel for the original
claimant that the learned arbitrator in the impugned order has also
rendered a prima-facie finding on the issue of limitation raised by the
respondent no.1. He submits that in view of the fact that after
issuance of the notice of termination, the parties had several
meetings in which the respondent no.1 had given assurances that the
notice of termination would be withdrawn, the notice of termination
was given a go-bye. He submits that the learned arbitrator thus could
not have rendered a finding on the issue of limitation even prima-
facie.
11. Insofar as the the finding of the learned arbitrator on the
issue of delay is concerned, it is submitted by the learned counsel for
the original claimant that the balance of convenience was in favour of
the original claimant. The original claimant had good chances of
succeeding in the arbital proceedings. He submits that since various
meetings were held between the parties, the original claimant did not
invoke the arbitration agreement prior to 26th November, 2015 and
thus the alleged delay could not be a ground for rejection of interim
reliefs as prayed by the original claimant.
12. The last submission of the learned counsel for the original
claimant is that prima-facie finding of the learned arbitrator that the
respondent no.1 had been carrying on mining activities since
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November, 2013 is without rendering any reasons. He submits that
on this ground also, the impugned order passed by the learned
arbitrator deserves to be set aside and interim measures as prayed
by the original claimant deserves to be granted.
13. Mr.Madon, learned senior counsel appearing for the
respondent no.1 in Arbitration Petition (Lodging) No.618 of 2016
invited my attention to various provisions of the agreement entered
into between the parties, the correspondence exchanged between
the parties, statement of claim filed by the original claimant before the
learned arbitrator and various prima-facie findings recorded by the
learned arbitrator.
14. It is submitted that admittedly the clearance from MOEF
was obtained by the respondent no.1 in the month of July, 2012. He
submits that the last installment by the original claimant to the
respondent no.1 was payable upon the respondent no.1 obtaining the
clearance from MOEF. He submits that even after the respondent
no.1 communicated about the clearance obtained from MOEF in the
month of July, 2012, the original claimant did not make balance
payment. He submits that prima-facie finding of the learned arbitrator
on the issue of termination is thus correct and does not require any
interference.
15. The next submission of the learned senior counsel is that
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though the agreement was admittedly terminated on 3 rd September,
2012 and the public notice was issued by the respondent no.1 on 15th
January, 2013 and the public notice issued by the original claimant
itself on 22nd January, 2013, admittedly the notice invoking arbitration
agreement was belatedly issued on 26th November, 2015. He
submits that the original claimant had admittedly filed a petition
under section 9 of the Arbitration Act for interim measures on 29 th
February, 2016. He submits that this Court in the order dated 16 th
April, 2016 has clarified that the order of status-quo passed by this
Court on 23rd March, 2016, was not on merits.
16. Insofar as the submission of the learned counsel for the
original claimant that several meetings were held between the parties
after termination of the agreement is concerned, he submits that the
allegations about such meetings came to be made for the first time
only in the notice invoking arbitration on 26 th November, 2015. He
submits that the original claimant never placed on record that post
termination of the contract any such meetings were alleged to have
been held. He submits that the respondent no.1 has denied by writing
a letter to the original claimant that any such meetings as alleged
were held between the parties.
17. Insofar as the issue of limitation is concerned, the learned
senior counsel submits that the cause of action for invoking
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arbitration agreement commenced when the notice of termination
was issued on 3rd September, 2012. He submits that the notice
invoking arbitration was admittedly issued on 26 th November, 2015
which was after a period of three years from the date of termination of
the agreement. He submits that the learned arbitrator was thus
justified in rendering the finding on the issue of limitation. He submits
that in any event, the findings recorded by the learned arbitrator are
prima-facie as is clarified by the learned arbitrator himself in
paragraph 21 of the impugned order.
18. It is submitted by the learned senior counsel that 18 years
notice period provided in clause 24 of the agreement for termination
is an obvious mistake. He submits that since the contract itself was
for 11 years, the notice period could not be 18 years. He submits that
since the agreement is determinable, the only remedy of the original
claimant would be in damages and not for specific performance.
Learned senior counsel submits that prima-facie finding of the
learned arbitrator that the contract is determinable and thus cannot
be specifically performed and thus no interim measures can be
granted, cannot be faulted. Learned senior counsel placed reliance
on the judgment of the Supreme Court in case of Indian Oil
Corporation Limited vs. Amritsar Gas Service & Ors. (1991) 1
SCC 533 in support of his submission.
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19. Insofar as the submission of Mr.Jagtiani, the learned
counsel for the original claimant in Arbitration Petition (Lodging)
No.618 of 2016, that the respondent no.1 has not terminated the
power of attorney is concerned, Mr.Madon, learned senior counsel for
the respondent no.1 submits that the power of attorney executed in
favour of the original claimant was not de-hors the agreement entered
into between the parties but was co-terminus with the said
agreement. In support of this submission, the learned senior counsel
invited my attention to the provisions of the said power of attorney.
My attention is also invited to the public notice issued by the
respondent no.1 stating that along with the agreement, power of
attorney also was terminated by the respondent no.1.
20. Mr.Khandeparkar, the learned counsel appearing for the
appellant in Arbitration Petition (Lodging) No.629 of 2016 invited my
attention to clause 22 of the agreement entered into between the
parties and would submit that it was provided in the agreement that
the contract was not that of agency, partnership or that of master -
servant relationship. He submits that since the learned arbitrator has
already rendered a finding that the contract was rightly determinable
and the claims made by the original claimant were prima-facie barred
by law of limitation, the learned arbitrator could not have directed the
respondent no.1 to maintain accounts. He submits that there was no
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such prayer in the statement of claim or in the application under
section 17 of the said Act against the respondent no.1 to maintain
accounts and to furnish copies thereof to the original claimant.
Learned counsel invited my attention to the prayers in the statement
of claim and would submit that the original claimant having made a
specific claim for damages i.e. more than Rs.37.57 crores, no such
order of maintaining accounts could be passed by the learned
arbitrator. He submits that the mechanism of arbitration cannot be
used for the purpose of collecting an evidence.
21. Mr.Jagtiani, the learned counsel for the original claimant in
rejoinder submits that it had referred to various meetings held in the
letter dated 22nd January, 2013 also and has not alleged for the first
time in the notice invoking arbitration issued on 26 th November, 2015.
He submits that the issue of limitation is a mixed question of fact and
law and has to be proved by the parties before the learned arbitrator.
He submits that since the original claimant has paid substantial
amount towards consideration of the respondent, the original claimant
was required to be protected by the learned arbitrator.
22. Insofar as the submission of Mr.Madon, the learned senior
counsel that there was a mistake of providing 18 years notice period
in the clause for termination is concerned, he submits that admittedly
the respondent no.1 has not filed any counter claim inter-alia praying
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for rectification in the agreement and thus no such plea can be raised
by the original claimant against the respondent no.1 at this stage.
23. Insofar as the submissions of Mr.Khandeparkar, the
learned counsel appearing for the appellant in Arbitration Petition
(Lodging) No.629 of 2016 are concerned, it is submitted by the
learned counsel that admittedly the original claimant had made a
claim for damages as and by way of alternate relief. He submits that
the original claimant has also sought ad-interim relief in respect of
such reliefs for damages. He submits that the learned arbitrator thus
has ample power to issue the directions to maintain accounts so as to
protect the subject matter of the arbitration. He submits that this Court
shall not interfere with that part of the order. There is no dispute that
the original claimant was already informed that MOEF clearance
obtained by the respondent no.1 in the month of July, 2012 itself. The
agreement is already terminated on 3rd September, 2012. The
respondent no.1 had issued a public notice on 15th January, 2013
recording that the agreement as well as the power of attorney were
already terminated by a notice dated 3rd September, 2012. There is
no dispute that the original claimant also issued a separate notice
dated 23rd January, 2013 in the newspaper protesting against the
letter of termination.
REASONS AND CONCLUSIONS :
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24. There is no dispute that the notice invoking arbitration
agreement was issued on 22nd November, 2013. In its affidavit, the
original claimant has alleged that there were meetings held between
the parties in which the respondent no.1 had alleged to have made
various assurances that the notice of termination would be withdrawn.
The claimant has not given any details of any such meetings held
between the parties. Claimant did not prepare any minutes of such
alleged meetings. There is no dispute that the application under
section 9 of the said Act was filed for the first time on 29 th February,
2016. This Court while passing an order on 16th April, 2016, clarified
that the ad-interim order of status-quo granted on 23rd March, 2016
was not on merits.
25. Insofar as the issue of limitation raised by the respondent
no.1 and the prima-facie finding recorded by the learned arbitrator in
the impugned order is concerned, a perusal of the said order clearly
indicates that the learned arbitrator has recorded such prima-facie
finding on limitation based on the letter of termination dated 3 rd
September, 2012 and the notice invoking arbitration agreement dated
26th November, 2015. In my view the learned arbitrator has rightly
rejected the contention of the original claimant that the limitation for
invoking the arbitration agreement would commence on the date of
notice invoking agreement. In my view, the cause of action for
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invoking arbitration agreement does not commence when the notice
invoking arbitration agreement is issued. The limitation stops when
the notice under section 21 of the said Act is received by the opposite
party. The cause of action for claiming damages arising out of
termination commences when the agreement was terminated. Be that
as it may, the learned arbitrator has made it clear in the impugned
order that the observations made on the issue of limitation by the
learned arbitrator were prima-facie and the same can be conclusively
decided after the parties led oral as well as documentary evidence
before the learned arbitrator. I am thus not inclined to interfere with
such prima-facie finding of the learned arbitrator in this petition.
26. Insofar as the observations of the learned arbitrator that
the contract being determinable and thus no specific performance of
such contract can be granted and consequently no interim measures
can be granted is concerned, the fact remains that the contract is
already terminated by a notice dated 3 rd September, 2012. In my
prima-facie view, the learned arbitrator has rightly held that the
remedy of the original claimant would be in the nature of damages.
Be that as it may, the observations made by the learned arbitrator
being prima-facie observations, the validity of the termination will
have to be decided by the learned arbitrator in the final award.
27. Insofar as the submission of the learned counsel for the
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original claimant that the learned arbitrator did not render any
reasons while holding that the respondent no.1 was carrying out
mining activities since November, 2013 is concerned, the fact
remains that the original claimant was not carrying out any mining
activities and has not paid the balance amount. I am thus not inclined
to interfere with this observation of the learned arbitrator. I am thus
not inclined to interfere with the impugned order passed by the
learned arbitrator which the subject matter of Arbitration Petition
(Lodging) No.618 of 2016.
28. Insofar as the directions issued by the learned arbitrator in
clause (b) of the impugned order dated 22nd April, 2016 is concerned,
a perusal of clause 22 of the agreement entered into between the
parties clearly indicates that the said agreement entered into
between the parties was not that of agency, partnership or that of
master - servant relationship. The respondent no.1 had granted
rights to the claimant for sale of bauxite deposit in the said mine on
the terms and conditions recorded in the said agreement. In my view,
the learned arbitrator having prima-facie held that the agreement was
determinable and the claims made by the original claimant were
prima-facie barred by law of limitation and that there was gross delay
in invoking arbitration by the claimant, the learned arbitrator could not
have directed the respondent no.1 to maintain any accounts and to
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furnish the copies thereof to the original claimant. In my view,
Mr.Khandeparkar, learned counsel for the appellant in Arbitration
Petition (Lodging) No.629 of 2016 is right in his submission that such
direction issued in clause (b) of the operative part of the impugned
order is contrary to the prima-facie finding rendered by the learned
arbitrator in favour of the respondent no.1.
29. A perusal of the statement of claim and also the
application filed under section 17 of the said Act clearly indicates that
there was no prayer for accounts made by the original claimant.
Merely because the original claimant had claimed damages as and
by way of final relief and also as and by way of ad-interim relief, no
such order of maintaining accounts or for furnishing the copies
thereof could have been passed by the learned arbitrator. The
appellant in Arbitration Petition (Lodging) No.629 of 2016 has thus
made out a case for interference with the directions issued by the
learned arbitrator in clause (b) of the impugned order.
30. I therefore, pass the following order :
a). Arbitration Petition (Lodging) No.618 of 2016 is dismissed.
b). Arbitration Petition (Lodging) No.629 of 2016 is allowed in
terms of prayer clause (a).
c). It is made clear that the observations made by the learned
arbitrator in the impugned order are prima-facie. The learned
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arbitrator shall decide the matter on merits and in accordance with
law without being influenced by the observations made by the learned
arbitrator in the impugned order.
d). There shall be no order as to costs.
31. In view of the order passed by this Court in Arbitration
Petition (Lodging) No.629 of 2016, the notice of motion filed by the
appellant does not survive and is accordingly disposed of.
ig (R.D. DHANUKA, J.)
