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2003 DIGILAW 534 (ORI)

Industrial Development Corporation of Orissa v. Utkal Moulders Limited

2003-08-26

A.S.NAIDU

body2003
JUDGMENT A. S. NAIDU, J. — An application filed by M/s. Utkal Moulders Ltd. (respondent) under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’) having been allowed by the District Judge, Khurda in Arbitration Misc. Case No. 479 of 2002, the appellants have approached the portals of this Court under Section 37 of the said Act. 2. Appellant No.1-Industrial Development Corporation of Orissa Limited (IDCOL) is a Company owned by the Government of Orissa. Appellant No.2 - IDCOL Kalinga Iron Works Limited is a subsidiary Company of appellant No. 1 and is engaged in produc¬tion of Pig Iron. “Coke” is an essential ingredient for produc¬tion of pig iron. To ensure sufficient and effective supply of “Coke” it was felt necessary to make permanent arrangement by setting up a Coke Oven Plant within the premises of appellant No. 2. Respondent-Company approached and gave a proposal for setting up a manufacturing plant within the premises of appellant No. 2 and an agreement was executed between appellant No.2 and the respond¬ent No. 29.8.1992 stipulating that appellant No. 2 would provide land for establishing the Coke Oven Plant and also supply Coal and the respondent, in return, would make necessary production and supply Coke to appellant No. 2. Agreement stipulating inter se rights and liabilities was executed between the parties. 3. It is alleged by the appellants that dissensions cropped up from the very beginning inasmuch as the respondent did not fulfil the liability vested upon it in consonance with the agreement. Consequently the appellants were subjected to unsur¬mountable hardship and were constrained to issue a notice on 19.6.2002 intimating the decision to take over operation of Coke Oven Plant. After receiving said notice, the respondent ap¬proached the District Judge, Khurda under Section 9 of the Act with a prayer for interim protection by way of restraining the appellants from taking over possession/operation of Coke Oven Plant setup by the respondent over the lease-hold land of the appellants situated at Barbali and for other consequential re¬liefs. 4. After receiving said notice, the respondent ap¬proached the District Judge, Khurda under Section 9 of the Act with a prayer for interim protection by way of restraining the appellants from taking over possession/operation of Coke Oven Plant setup by the respondent over the lease-hold land of the appellants situated at Barbali and for other consequential re¬liefs. 4. The learned District Judge relying on different clauses of the agreement and other documents by the impugned order dated 23.12.2002 held that the Coke Oven Plant should be preserved in the interest of both the parties until redressal of the dispute by the Arbitration Tribunal and the appellant were restrained from taking over possession, management and operation of the Coke Oven Plant till then. 5. Mr. Rath, learned counsel for the appellants in his usual vehemence submitted that the Court below has not appreciat¬ed the facts properly and has misinterpreted the stipulations made in different Clauses of the agreement. It is forcefully submitted that the respondent-company has totally failed to keep up its commitments and committed more breach of the terms of the agreement than complying with the same thereby causing immense prejudice to the IDCOL. Coke being the basic necessary ingredient for manufacturing Pig Iron, due to timely non-supply of the same by the respondent, IDCOL was subjected to great loss. The Plant, though set up, was lying idle which was not in the interest of either party and it was a fit case where IDCOL should be permit¬ted to run the plaint. 6. Mr. Mohanty, learned Senior Advocate appearing for the respondent the other hand strongly repudiated the allegations levelled by the appellants. It is submitted that the respondent has invested seven Crores of rupees for setting up the Coke Oven Plant whereas IDCOL has only contributed eleven lakhs. The land over which the plaint in question has been set up, has been sub-leased to the Company. It is also forcefully submitted that IDCOL totally failed to keep up its commitment thereby prejudicing the rights of the respondent-Company. It was emphatically submitted that the respondent-Company was ready and willing to run the Coke Manufacturing Unit and abide by the terms and conditions of the agreement subject to the condition that the appellant-IDCOL fulfils all the undertakings made by it. 7. It was emphatically submitted that the respondent-Company was ready and willing to run the Coke Manufacturing Unit and abide by the terms and conditions of the agreement subject to the condition that the appellant-IDCOL fulfils all the undertakings made by it. 7. Section 9 of the Arbitration and Consolidation Act stipulates that a party may before or during the arbitral pro¬ceeding apply to a Court for any interim measure or protection or preservation of the lis or for such other interim orders as may be deemed proper and the Court shall have the power to pass such orders as deemed just and proper. 8. After hearing learned counsel for both the parties, keeping in mind the limitation of a Court while dealing with a petition filed under Section 9 of the Arbitration and Concilia¬tion Act and in view of the fact that the main dispute is still to be adjudicated by the Arbitration Tribunal, I thought it just and proper not to delve into the inter se dispute at this state. According to me, any such attempt would amount to pre-judging the issues in controversy. Therefore, without expressing any opinion with regard to the rights of the parties, I feel ends of justice equity would be better served if the Coke Oven Plant is permitted to function, as otherwise the entire plant will be damaged and become a junk by the time the disputes are settled. I, therefore, direct that : (i) the respondent, who has admittedly established the plant, and has invested huge amount, shall operate the plant by procur¬ing cooking coal for the time being and manufacture “Hard Coke”. Opportunity would be given to the appellants to purchase the product at the very first instance at the market rate prevailing for long term supply of Hard Coke. (ii) In case appellant No.2 does not require or refuse to pur¬chase the hard Coke which will be produced by the respondent, then it will be open for the respondent to sell the same in open market. It is once again reiterated that first option to purchase the coke should be given to appellant No. 2 and only on refusal or lack of response, the same can be sold in open market. It is once again reiterated that first option to purchase the coke should be given to appellant No. 2 and only on refusal or lack of response, the same can be sold in open market. (iii) In the event the appellants are in a position to supply coal in future, the respondent will be bound to accept the same as per the terms of the agreement and sell the coke manufactured by its to the appellants strictly in consonance with the terms of the agreement and stipulations made above. (iv) The respondent would not close the plant or stop manufacturing Hard Coke till disposal of the dispute and shall submit the accounts to the Arbitration Tribunal. With the aforesaid observations and directions the appeal is disposed of. Appeal disposed of.