Holding

Section 9 of the Arbitration Act does not supersede the established Specific Relief principles; courts must apply the usual criteria for interim injunctions and may restrain O.M.M. from contracting with third parties while permitting it to continue mining itself.

Summary

O.M.M. Private Limited, holder of a mining lease, terminated its contract with Adhunik Steels Ltd., alleging violation of Rule 37 of the Mineral Concession Rules, 1960. Adhunik filed a Section 9 application under the Arbitration and Conciliation Act, 1996 seeking an interim injunction to restrain termination and dispossession. The District Court granted the injunction, but the Orissa High Court set it aside, holding that the loss was quantifiable in money and that the balance of convenience did not favour an injunction. The Supreme Court held that Section 9 does not override the well‑settled principles of the Specific Relief Act governing interim injunctions, namely the need for a prima facie case, balance of convenience and irreparable injury. It dismissed O.M.M.'s appeal, partially dismissed Adhunik's appeal, granting an injunction restraining O.M.M. from entering into any other mining contracts while allowing it to continue mining itself, and appointed a sole arbitrator to expedite the arbitration.

Issues considered

The extent to which Section 9 of the Arbitration and Conciliation Act, 1996 is independent of the Specific Relief Act, 1963 in granting interim injunctions.
Whether the principles of balance of convenience, prima facie case and irreparable injury apply to Section 9 applications.
The applicability of Rule 37 of the Mineral Concession Rules, 1960 to the mining contract.
Whether O.M.M. can be restrained from carrying on mining operations pending arbitration.
Whether O.M.M. can be restrained from entering into other mining agreements pending arbitration.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(6), s. 28, s. 9
Code of Civil Procedure, 1908s. Order XXXIX Rule 2
Mineral Concession Rules, 1960s. Rule 37
Specific Relief Act, 1963s. 14(1)(c), s. 14(3)(c), s. 41, s. 42

Subjects

ArbitrationSection 9Interim injunctionSpecific Relief ActBalance of conveniencePrima facie caseIrreparable injuryMineral Concession RulesRule 37Mining leaseArbitration appointment

Judgment

ADHUNIK STEELS LTD. A
v.
ORISSA MANGANESE AND MINERALS PVT. LTD.

JULY 10, 2007

[H.K. SEMA AND P.K. BALASUBRAMANYAN, 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 H
.. ~

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 was independent of
G Order XXXI.X of the Code of Civil Procedure and Act of 1963; (ii) by way of
an interim measure, the court could pass mandatory or prohibitory order for
the preservation of the subject matter of the arbitration agreement; (iii) until
the arbitrator decided whether O.M.M. was entitled to terminate the contract
and its consequences, the court had not only the power but the duty under ;
H Section 9 Act of 1996 to protect their contractual right to mine and lift the

I
ADHUNIK STEELS LTD v. ORISSA MANGANESE AND MINERALS PVT. LTD 215

ore to the surface on behalf of O.M.M; (iv) if O.M.M. is permitted to enter A
into agreements with others for the same purpose, it would be unjust as it
cancelled the agreement mainly because it was hit by Rule 37 ibid; (v) O.M.M.
must be restrained from carrying on any mining operation in the mi"es
concerned pending the arbitral proceedings.

O.M.M. contended that (i) since neither Section 9 of the Act of 1996 B
nor any other of its provisions provided the conditions for grant of interipi
protection; the provisions of the Code of Civil Procedure and the Act of \963
cannot be kept out while the court considers the question whether on the facts
of a case, any interim protection should be granted; so, the court had
necessarily to consider the well known restrictions on the grant of interim C
orders; (ii) grant of an injunCtion by way of interim measure to permit AS to
carry on the mining operations pending the arbitration proceedings
notwithstanding the termination of the contract by O.M.M. was not permissible
in law.

· Disposing of the appeals, the Court D
HELD 1.1. 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 E
appointment of a receiver since the Section itself brings in, the concept o(
'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· F
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 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 , G
injury and the concept of just and convenient while passing interim measures
under Section 9 of the Act. tpara 101 (224-E, F, G, HI

American Jurisprudence, 2nd Edition referred to.

H
216 SUPREME COURT REPORTS [2007] 8 S.C.R.

A 1.2. 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, the relevant provisions of the
Specific Relief A,ct cannot be kept out of consideration. For, the grant of that
interim injunction has necessarily to be based on the principles governing
B 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
C reliefs. (Para 1411227-F, G; 228-A)

Nepa Limited v. Mano) Kumar Agrawal, AIR (1999) Madhya Pradesh
57 overruled.

Coppee Leva/in NV v. Ken-Ren Fertilisers and Chemicalsb, (1994) 2
_,
D Lloyd's Report I 09 at I I 6) referred to.

Dr. Banerjee in his Tagor Law Lectures on Specific Relief. referred to.

Commentary on Interim and Conservatory Measures in ICC Arbitration
Cases by Professor Lew; David Bean on Injunctions. , referred to.
E
1.3. 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. It ~as 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. But, at
F the same time, whether an interim measure per""!itting AdhunikSteels to
. carry on the mini·ng operations, an extraordinary mea~ure in itself in the
face of the attempted termination of the contract by p.M.M. private Limited
or the termination of the contraCt by O.M.M. Private f:.imited, could be granted
or not, would again lead the court to a considerationiofthe classical rules for
G the grant of such an interim measure. Whether an interim mandatory
injunction could be granted directing (he continl!an.ce of the working ofthe
contract, had to be considered in the light of the well-~ettled 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
H. an injunction. Therefore, on the whole, it would not be correct to say that the
ADHUNIK STEELS LTO v. ORISSA MANGANESE AND MINERALS PVT. LTfl 217
power under Section 9 of the Act is. totally independent of the well known A
-+ principles governing the grant of an interim injunction that generally govern
the courts ift' th.is connection. fPara 18) 1229-B, C, D, E, Fl

. 2. The approach that at the initial stage, only the existence of an
arbitration clause need be considered is not justified. fPara 1511228-AI
·B
The Siskina (1979) AC 210, Fourie v.,le Roux, (2007) 1 W.L.R. 320,
referred to,

3.1. 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. C
Pri~ate 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 Proce<lure, an
interim injunction could be granted restraining the breach of a contract and D
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.
!Para 2011230-E, Fl

3.2. The High Court has held that this was not a case where the damages E
that may be suffered by Adhunik Steels by the alleged breach of contract by
O.M.M. Private Limited could 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 ~annot be said F
. -~
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 AdhunikSteels is
upheld by the arbitrator while passing the award. fPara 20) (230-F;.231-A)

4. O.M.M. Private Limited cannot.enter i.rito a similar transaction with
any other entity since that would also entail the apprehended violation of Rule
G.
37 of the Mineral Concession Rules, 1960, as put forward by it. lt therefore
ap~ars to be just and proper to direct O.M.M. Private Limited not to enter
·into a contractfor mining and lifting of minerals with any other entity until
the; conclusion. of the arbitral proceedings. (Para 211 (231-B, C]
H
-
218 SUPREME COURT REPORTS [2007) 8 S.C.R.

A 5. There is 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 Adhuliik Steels, since ultimately Adhunik Steels;
B if it ~ucceeds, 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 restrain O.M.M. Private Limited from carrying _><_

on any mining operation in the mines concerned pending the arbitral \----

proceedings. (Para 22) (231-D, E)
c 6. There is considerable dispute as to whether Rule 37 of the Mineral
Concession Rules, 1960 has application. The District Court and the High
rourt 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
D in terms of the arbitration agreement between the parties. It is not proper for
the Court 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. Therefore, that question is left open for being
decided by the arbitrator. (Para 19)(230-A, B, CJ

E 7. The attempt made by O.MM. 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. The Court is not concerned
~ith 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
F other contract even if it be between the same parties. Moreover, the Court
could not be bound by what an arbitrator might have held in an arbitration ...1.,-

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.
(Para 19) (230.,.C, DJ

G 8. The arbitration proceedings must be expedited. 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, the Court would have requested the Chief Justice'ofthe
):--.._ ;.
Orissa High Court or hi~ nominee to take up and dispose of the application
under Section 11(6) of the Act expeditiously. But the Court put it to the parties _
H
AOHUNIK STEELS LTD v. ORISSA MANGANESE AND MINERALS PVT. LTD [BALASUBRAMANY AN,!.) 2 }9

•• 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
A
course. The Court, therefore, in the interests of justice appointed a sole
arbitrator to adjudicate on the dispute between the parties. It was expected
that the sole arbitrator would enter upon the reference and pronounce his
award expeditiously. IPara 25) 1232-B, C, DI .B
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6569 of2005.
"'·
...,
From the Judgment & Order dated 18.03.2005 of the High Court of
Orissa at Cuttack in Arbitration appeal No. 26 of 2004.

WITH c
Dushyant Dave and Shyam Divan, Sr. Adv., Smita Bankoti, Anirudh and
Devendra Singh for the Appellant.

C.A. Sundaram and Ranjit Kumar, Sr. Adv., Arvind Kumar, Laxmi Arvind,
-4 Mahesh Agarwal, Gopal Jain and Poonam Prasad for the Respondent. D
....
The. Judgment of the Court was delivered by

P.K. BALASUBRAMANY AN, J. 1. These Cross Appeals by Special
Leave challenge the order passed by the High Court of Orissa in an appeal
under Section 37(l)(a) of the Arbitration & Conciliation Act, 1996. The said E
appeal was one filed by the respondent in C.A.-No. 6569 of2005 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"
F
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. G
Private Limited entered into an agreement dated 14.5.2003 with Adhunik Steels
for raising the manganese ore \)n .its· behalf. The term of the agreement was
__,.;
IO years with effect from 18.5.2003, it·conferred onAdhunikSteels an option
to s~ek a renewal for a further t~rm.

H
220 SUPREME COURT REPORTS [2007). 8 S.C.R.

A 3. According to Adhunik Steels, pursuant to this agreement, it had
mobilized hµge 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. Qn 24.11.2003,
O.M.M. Pri.vate Limited issued a notice to Adhunik Steels purporting to
B 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 con~act 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 ofO.M.M. Private Limited itselflo~ing
its rights as a lessee, the contract had to be terminated. Adhunik Steels,
C alleging that it had incUfred considerable expenditure and had already incurred
losses, moved the District Court at Sundargarh under Section 9 or' the Act
for an injunction restraining O.M.M. Private Limited from termil)ating the
contract and from dispossessing ft:dhunik Steels from the site of the mines
and for other consequential reliefs. The said application, \\.:as opposed by
O.M.M. Private Limited on various grounds. Ultimately, by order dated
D 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
terinination 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
E · J.ribunal constituted in terms of the arbitration agreement.
4. We may notice here that prior to approaching .the Distrkt 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 <;=alcutta High Court and-the said objection' was
F upheld by the Calcutta __ High Court and that had led to Adhuriik Steels .J.- I.

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
G 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 conti:act. ··'
If further held that the balance of convenience was in favour of the grant of
H an jrijunction agairtst O.M.M. Private Limited as sought f9r by Adhunik
I
...

ADHUNIK STEELS LTD v. ORISSA MANGANESE AND MINERALS PVT.LTD [BALASUBRAMANYAN, J.] 22 J

-~ Steels, and that if an order of injunction was not granted, the very purpose A
of initiating the arbitration proceeding would be defeated. Following the
decision of the Madhya Pradesh High Court in Nepa Limited v. Mano}
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 B
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 c
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. ,D
" Private Limited filed an appeal before the High Court· ofOrissa. It was argued
on behalr 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 Adhi,mik Steels. It was alternatively contended that in
terms of Section 41 of the Specific Relief Act, no injunction can be granted
E
for continuance of the contract and the working of the contract involved
intrinsic details in its performance exte~ded over a period of I 0 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 F
agreement was not specifically enforceable as it was te~inable and ·in any
ev_ent, since Adhunik Steels could be compensated in terms of money, even
if its claim was ultimately upheld, it was not a case for granr-of an interim
injunction in terms of Section 14(3) ofthe Specific Relief Act. The learned
judge of the High Court came to the prima facie ,conclusion that Rule 37 of
the Mineral Concession Rules, 196-0 had no application to the facts of the
G
case. The learned judge also held that in view of clause 8.2 of the agreement,
_A Section 14( l )(c) of the Spedfic Relief Act was not attracted. But the learned:
' ju~ge upheld the contention on behalf of O.M.M. Private Limited that the
loss, if any, that may be sus~ained 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 H
222 SUPREME COURT REPORTS [2007) 8 S.C.R.

A 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 °"'1rt allowed the appeal filed by O.M.M. Private
.'
B Limited and set aside the order -Qf injunction passed by the District Court,
Sundargarh. Feeling aggrieved thereQy, Adhunik Steels has filed its appeal.
Feeling aggrieved by the finding that itti.le 37 of Mineral Concession Rules, /
1960 does not hit the contract in question artd 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 ap~eal.
c
8. There was considerable debate before us on tlfe..wiope of Section 9
of the Act. According to learned counsel for Adhunik Steels, Section 9 of the r
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 .:.

D 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 I
'-·

preservation or custody of the subject matter of the arbitration agreement ,.
irrespective of whether the order that may be passed was in a mandatory fonn
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
E 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 tenninate the agreement and what would be its consequences, the court
had not only the power but the duty to .protect the right of Adhunik Steels -,
I
conferred by the contract when approached under Section 9 of the Act.
F 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:
G The existence of a dispute may put at risk the property :which fom1s r
.the subject of the reference, or the rights of a party in respect of that
property. Thus, the disp.ute may prevent perishable goods fr.om 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
H h_as to wait until after the award has resolved the dispute, unnecess~i-y
t
ADHUNIK STEELS LTD•·. ORISSA MANGANESE AND MINERALS PVT. LTD [BALASUBRAMANY AN. J ] 223

hardship may be caused to the parties. Again, there may be a risk that A
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, B
·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 C
the property.
(iv) The securing of the amount in dispute."

Learneti counsel also relied on 'International Commercial Arbitration in
UNCITRAL Model Law Jurisdictions' by Dr. Peter Binder, wherein it is stated: D
"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:
E
"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.
· Other.wise, the claimant could end up with a worthless arbitral award
due to the fact that the losing party has moved his attachable assets F
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 ofthe 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." G.
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 H
224 SUPREME COURT REPORTS {2007) 8 S.C.R.

A 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
B protectfon 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 interirri orders, like the
principle that a contract of personal service would not be specifically enforced
c or that no injunction would be granted in certain circumstances as envisaged I
I
by Section 14 and Section 41 of the Specific Relief Act. Thus, it was contended F
that grant of an injunction by way of interim measure to pennit 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.
D
I 0. It is true that Section 9 of the Act speaks of the court by way -of
> I

an interim measure passing an order for protection, for the preservation,
....
interim custody or sale of any goods, whicb are the subject matter. of the
arbitration agreement and such interim measure of protection as may appear
j
to the court to be just and convenient. The grant of an interim prohibitory
E injunction or an interim mandatory injunction are governed by well known f
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
prindples that governed the grant of an interim injunction. Same is the
position regarding the appointment of a receiver since the Section itself ~
F brings in, the concept of 'just and convenient' while speaking of passing any -< ~
interim measure of prot~ction. 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 ;
G approach an ordinary court of the country without providing a special
I

procedure or a special set of rules in that behalf, the ordinary rules followed
t
\
by that court would govern the exercise of power conferred by the Act. On t
)--

H
that basis also, it is not possible to keep out the concep~ 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.
l
t
1
ADHUNIK STEELS LTD I'. ORISSA MA'\GA"'ESE AXD ).i!NERALS PVT.LTD [BALASUBRAMANY AN, l J 225
..,...._
11. The power and jurisdiction of courts in arbitral matters has been the A
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
Leva/in NV v. Ken-Ren Fertilisers and Chemicafsb, (1994) 2 Lloyd's Report B
109 at 116:
"
--,
"there is plainly a tension here. On the one hand the concept of
arbitration as a consensual process reinforced by the id~as of.
transnationalism leans against the involvement of the mechanisms of
state through the medium of a municipal court. On the other side there
c
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,
., D
9th Joint Colloquium, Lord Mustill in "Comments and Conclusions" described
the relationshi~ further:

"Ideally, the handling ofarbitral 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 E
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." F

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 G
......
Measures in ICCArbitration C~ses', has indicated: :
__,. ·'.I
"The demonstration of irreparable or perhaps subs~antial harm is alsQ
necessary for the grant of a measure. This is because it. is not
appropriate to grant a measure where no irreparable or substantial
H
..

226 SUPREME COURT REPORTS [2007] 8 S.C.R.

A hann comes to the movant in the event the measure is not granted. ~-

The final award offers the means of remedying any hann, reparable or
otherwise, once detennined."

The question was considered in Channel Tunnel Group Ltd And Anr. v.
Balfour Beatty Construction Ltd., (1993) Appeal Cases 334. The trial judge
B 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
C power to grant injunction but on facts thought it inappropriate to grant one.
In fonnulating 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 .....
D 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 perfonnance 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
E plainly favours the grant of relief. In the combination of circumst~ces
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
F 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
G specific perfonnance and the injunction (See David Bean on Injunctions). The
Specific ReEef 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. ':k

According to Dr. Banerjee in his Tagor Law Lectures on Specific Relief, the i
remedy for the non perfonnance of a duty are (1) compensatory, (2) specific.
H
ADHUNIK STEELS LID v. ORISSA MANGANESE AND MINERALS PVT.LID [BALASUBRAMANYAN. J.) 227

In the fonner, the court awards damages for breach of the obligation. In the A
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 fonn of judicial redress. Thus, the Specific Relief Act, 1963 purports to
define and amend the law relating to certain kinds of specific reliefs obtainable B
in civil courts. It does not deal with the remedies connected with compensatory
reliefs except as in~idental 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 C
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 perfonn D
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 v. Manoj Kumar Agrawal, AIR (1999) MADHYA
PRADESH 57, a learned judge of the Madhya Pradesh High Court has E
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 F
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 G
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
H
i,
228 SUPREME COURT REPORTS [2007] 8 S.C.R.

A 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:

B "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 p!aintiff for the enforcement of which the defendant is amenable
to the jurisdiction of the court. The right to obtain an interlocutory
c 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."
D He concluded:
'-
"To come within the sub-rule the injunction sought in the action
must be part of the substantive relief to which the plaintiffs 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
E
of some legal or equitable right belonging to the plaintiff in this
country and enforceable here by a final judgment for an injunction."

v.
16..: Recently, in Fourie le Roux, (2007) 1 W.L.R. 320, the House of
Lords speaking through Lord Scott of Foscote stated:
F "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:

G "Whenever an _interlocutory injunction is applied ·for, the judge, if_
otherwise minded to make the order, should, as a matter of good
practice, pay carefol 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
H necessary. The yardstick in section 37(1) of the 1981 Act, "just and
ADHUNIK STEELS LID,. ORJSSA MANGANESE MD MINERALS PVT LTD (BALASUBRAMA.'iY ~--. J] 229

convenient", must be applied having regard to the interests not only A
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 B'
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 C
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 O.M.M. Private Limited for a period
of IO 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 D
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 E
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 terminal.Jn 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
p
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.
tennination 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 Q
feel that it Wl!Uld 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
ofan jpterim 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
H
230 SUPREME COURT REPORTS [2007) 8 S.C.R.
,.
A case. ---c
19. No doubt, there is considerable dispute as to whether Rule 37 of the
Mineral Concession Rules, 1960 has application. The District Court $nd 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
B 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 .1-.L

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
c 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 /

D 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 circumstances,. an order of
E injunction could be granted restraining O.M.M. Private Limited from interfering
with Adhunik Steels' working of the contract whieh 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 Adhuhik Steels. In terms of
F 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
G be suffered by Adhunik Steels by the alleged breach of contract by Q;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 .A.dhunik
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
H
(
.•
t '
~

ADHUNIK STEELSLlD•. ORISSAMANGANESEAND MINERALS PVT. LlD[BALASUBRAMANYAN. J.J23}

-->
~~-
at the end of it, it will not be possible to assess the compensation that might A
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 ifO.M.M. Private Limited is pennitted
to enter into other agreements with others for the same purpose, it would be B
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 0.M.M. Private Limited cannot enter into a similar transaction with any
other entity since that would also entail the apprehended violation of Rule c.
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. D
Private Limited from carrying on the mining operations by itself. It has got
J 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 0.M.M. Private Limited cannot prejudice Adhunik Steels, since
ultimately Adhunik Steels, if it succeeds, would be entitled to get, if not the E
main relief, compensation for the tennination 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. F
-,..
23. We think that we should refrain from 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 G
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 H
232 SUPREME COURT REPORTS [2007) 8 S.C.R.

A 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 tenns of the
mining lease .

. 25. We think that the arbitration proceedings must be expedited. We are
B told that .the application for appointment of an arbitrator made before the
Ghit;f 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
C 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,
fonner Chief Justice of India as the sole arbitrator to decide the dispute
D 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.
E
vs. Appeals disposed of.