Research › Search › Judgment

Orissa High Court · body

2011 DIGILAW 299 (ORI)

Birat Chandra Dagara v. Taurian Exim Pvt. Ltd.

2011-05-17

L.MOHAPATRA

body2011
JUDGMENT L. MOHAPATRA, J. — This appeal was disposed of by judgment dated 18.3.2005. The appellant filed Civil Appeal No.3397 of 2005 arising out of S.L.P.(C) No.10573 of 2005 before the Hon’ble Supreme Court assailing the said judgment. After hearing the parties, the Hon’ble Supreme Court passed the following order and remitted the matter back to this Court for fresh consideration of the appeal. The order passed by the Hon’ble Supreme Court is quoted below:- “In our opinion Rule 37 of Mineral Concession Rules, 1960 has a vital bearing on the issue involved in this appeal. This question was either not argued before the appellate Court or was not considered by the Court. Be that as it may, since Rule 37 has a direct impact on the issue involved in the case, we think it appropriate that the impugned order be set aside and the matter be remanded back to the High Court for fresh consideration of the appeal bearing in mind the provisions of Rule 37 of Mineral Concession Rules, 1960.” 2.The impact of Rule 37 of Mineral Concession Rules, 1960 (hereinafter called ‘the Rules’) was neither pleaded in the appeal nor was any argument advanced in relation to the same. Accordingly the Court while disposing of the appeal did not consider the impact of Rule 37 of the aforesaid Rules. After remand, learned counsel for both sides were heard again with regard to impact of Rule 37 of the aforesaid Rules on the issue involved in this appeal. 3.Though from the impugned order passed by the learned Civil Judge (Senior Division), Rairangpur, it appears that impact of Rule 37 of the Rules had been raised, no such pleading was taken in this appeal and consequently learned counsel appearing for the parties did not make any submission in that regard. 4.In order to determine the impact of Rule 37 of the Rules to the issue involved in this appeal, it is necessary to narrate brief facts of the case specially with reference to the irrevocable Power of Attorney executed by the appellant in favour of the respondents. 5.The appellant had been granted mining lease in respect of Suleipat Iron Ore Mine covering an area of 1527.10 acres or 618 hectors. 5.The appellant had been granted mining lease in respect of Suleipat Iron Ore Mine covering an area of 1527.10 acres or 618 hectors. Not being able to operate the mine for want of technical know-how, funds, he persuaded the respondents to advance a sum of Rs.98.00 lakhs and operate the mine under an irrevocable Power of Attorney. It is the case of the plaintiff-respondents that the defendant-appellant also suggested that he was ready and willing to transfer the said lease hold right permanently in favour of the plaintiff-respondents after obtaining due permission from the authority and during that interregnum period i.e. from the date of advancement/execution of irrevocable Power of Attorney till the date of execution and registration of final document of transfer, the absolute right to manage, operate the mines in question, raise, transport and sale of ore, shall rest with the plaintiff-respondents on the basis of the irrevocable Power of Attorney. The plaintiff-respondents accepted such suggestion of the defendant-appellant and advanced a sum of Rs.76.00 lakhs in between 21.6.2002 and 26.7.2002. A further sum of Rs.22.00 lakhs was also paid in cash on different dates making it a total of Rs.98.00 lakhs. The defendant-appellant executed a general irrevocable Power of Attorney in favour of the plaintiff-respondents and registered the same on 09.7.2002. Under the terms of the said Power of Attorney the plaintiff-respondents were to take possession, manage works, raise, despatch-and sale minerals from the said mine. Suddenly the defendant-appellant revoked the Power of Attorney on 16.7.2002, as a result of which the plaintiff-respondents filed the aforesaid suit for declaration that the deed of revocation dated 16.7.2002 is void, illegal and inoperative and for further declaration that in view of the registered irrevocable Power of Attorney dated 09.7.2002 executed by the sole defendant in favour of plaintiff no.1 and backed by payments as indicated in the plaint, the plaintiff-respondents are entitled to operate the suit schedule mine as described in Schedule-A to the plaint. A prayer for permanent injunction was also made in the said suit. An application under Order 39, Rule 1 of C.P.C. was filed by the respondents to restrain the appellant from managing, operating, raising or extracting iron ore from the said mines and also to restrain the appellant from interfering with the management, operation, raising or extraction of iron ores from the said mines. An application under Order 39, Rule 1 of C.P.C. was filed by the respondents to restrain the appellant from managing, operating, raising or extracting iron ore from the said mines and also to restrain the appellant from interfering with the management, operation, raising or extraction of iron ores from the said mines. 6.From the record, it appears that no objection had been filed by the defendant-appellant to the application filed by the plaintiff-respondents under Order 39, Rule 1 of C.P.C. but later on a written statement was filed in the suit. From the pleadings thereof it is seen that neither execution of the general irrevocable Power of Attorney by the defendant-appellant in favour of the plaintiff-respondent is in dispute nor the revocation is in dispute. The payment of Rs.98.00 lakhs by the plaintiff-respondents to the defendant-appellant is also not in dispute. The only question directed to be considered by this Court is the impact of Rule 37 of the Rules to the issue involved in this appeal. In order to determine the same it is necessary to refer to some of the terms and conditions of the said general irrevocable Power of Attorney. The defendant-appellant states in the Power of Attorney that he thought it fit to execute a Power of Attorney in favour of the plaintiff-respondents to raise, despatch and sale of minerals apart from looking after the official work in Central Office at Suleipat as well as to have supervision control over operation and all the acts and deeds connected with the working of the mines. The relevant clauses of the said Power of Attorney are quoted below:- “Clause-1 -To take possession, manage works, raise, despatch and sale minerals from my mines specially described above. Clause-2 -To appoint, engage supervisor, employees and other persons in my capacity whatsoever for the purpose of carrying out the above mining operation according to law and other allied activities on such salary and remuneration as may be considered necessary by my said Attorney. Clause-3 -To exercise all control over such affairs and workmen, staff and employee and on my behalf and in my name. Clause-9 -To sue demands for recovery and receive from all any person or money due of such bills for minerals supplied and to sign, sell and deliver proper receipts releases acquaintances and discharge for all payments, received against such operation on my behalf and in my name. Clause-9 -To sue demands for recovery and receive from all any person or money due of such bills for minerals supplied and to sign, sell and deliver proper receipts releases acquaintances and discharge for all payments, received against such operation on my behalf and in my name. Clause-10 -To check, verify, settle and adjust all accounts in connection with the aforesaid Mineral working and business and to pay all dues to receive the balance or settle or settlements of such accounts to make sign and give good and sufficient discharge for the same. Clause-12- The Power of Attorney shall remain operative till above mining lease over Suleipat Iron Mines expires or the transfer of the same in favour of M/s Taurian Exim Pvt. Ltd. takes places, whichever is earlier. Clause-13-This Power of Attorney shall remain operative till by above mining rights, title and interest exists. It shall not be revoked by me during the subsistence of the residual period of the lease.” With reference to the above quoted clauses of the Power of Attorney, it was contended by Sri Ashok Kumar Parija, learned Senior Counsel appearing on behalf of the appellant that the defendant-appellant under the said Power of Attorney has created an interest in favour of the plaintiff-respondents in respect of the said mine, which is prohibited under Rule 37 of the Rules without previous consent in writing of the State Government. In order to substantiate the above submission Sri Parija, learned Senior Counsel further submitted that the intention behind execution of the Power of Attorney was to permit respondent no.1 to raise, despatch and sale minerals and also to look after official work in Central Office at Suleipat and supervise and control operation of the mine and all other acts connected with the working of the mines. The first clause of the Power of Attorney empowers the plaintiff-respondent no.1 to take possession, manage works, raise, despatch and sell minerals from the mines and under Clause-3 of the Power of Attorney the plaintiff-respondent no.1 is to exercise all control over such affairs and workmen, staff and employees. It was also contended with reference to Clauses-12 and 13 that the said Power of Attorney was to remain operative till the mining lease over Suleipat Iron Ore Mines expires or the transfer of the same in favour of plaintiff-respondent no.1 takes place, whichever is earlier. It was also contended with reference to Clauses-12 and 13 that the said Power of Attorney was to remain operative till the mining lease over Suleipat Iron Ore Mines expires or the transfer of the same in favour of plaintiff-respondent no.1 takes place, whichever is earlier. It was also contended that the Power of Attorney was to remain operative till mining rights of the defendant-appellant, title and interest exist. Referring to Rule 37 of the Rules, Sri Parija learned Senior Counsel contended that the defendant-appellant, who is the lessee without the previous consent in writing of the State Government could not have created an interest in favour of plaintiff-respondent no.1 and according the said Power of Attorney is hit by Rule 37 of the Rules. With reference to Rule 37(1)(b) of the Rules it was contended by Sri Parija, learned Senior Counsel that the defendant-appellant should not have entered into any kind of arrangement or understanding whereby the defendant would or may be directly or indirectly financed to a substantial extent by or under which his operations or undertakings would or may be substantially controlled by any person or body of persons other than him. In this connection it was also contended that admittedly for the purpose of execution of the said Power of Attorney a sum of Rs.98.00 lakhs had been advanced by the plaintiff-respondents to the defendant-appellant and therefore, execution of such Power of Attorney on receipt of a sum of Rs.98.00 lakhs giving authority to the plaintiff-respondents to have control over the mines is prohibited under Rule 37(1)(b) of the Rules,. It was also brought notice of the Court that in the meantime the entire amount of Rs.98.00 lakhs has been paid back to the plaintiff-respondents and therefore the interest created under the Power of Attorney no more subsists in favour of the plaintiff-respondents and accordingly no order of injunction can be passed against the defendant-appellant. 7.Sri P. Chatterjee, learned Senior Counsel appearing for respondents contended that admittedly an irrevocable Power of Attorney has been executed by defendant-appellant in favour of the plaintiff-respondents. All the acts done by the plaintiff-respondents on the basis of said Power of Attorney are on behalf of the defendant-appellant as an agent and therefore, no interest is created in favour of the plaintiff-respondents in relation to the mines. All the acts done by the plaintiff-respondents on the basis of said Power of Attorney are on behalf of the defendant-appellant as an agent and therefore, no interest is created in favour of the plaintiff-respondents in relation to the mines. Interpreting the same clause of the Power of Attorney, on the basis of which submissions were made by Sri Parija, learned Senior Counsel for defendant-appellant, Sri Chatterjee, learned Senior Counsel submitted that the supervision and control over the mines for the purpose of raising minerals or sell of minerals is to be done by the plaintiff-respondents as an agent of the defendant-appellant and accordingly neither Rule 37(1)(a) nor 37 (1)(b) of the Rules has any application to the issue involved. 8.For convenience Rule 37(1)(a) and (1)(b) of the Rules are quoted below:- Rule 37(1) : The lessee shall not, without the previous consent in writing of the State Government and in the case of mining lease in respect of any minerals specified in Part A and Part B of the First Schedule to the Act, without the previous approval of the Central Government. (a)Assign, Sublet, mortgage, or in any other manner, transfer the mining lease, or any right, title or interest therein, or (b)Enter into or make any bona fide arrangement, contract or understanding whereby the lessee will or may be directly or indirectly financed to a substantial extent by, or under which the lessee’s operations or undertakings will or may be substantially controlled by, any person or body of persons other than the lessee.” Under Rule 37(1) (a) a lessee without the previous consent in writing of the State Government cannot create an interest in favour of anyone and under Rule 37(1)(b) the lessee without the previous consent in writing of the State Government cannot enter into or make any bona fide arrangement, contract or understanding whereby the lessee will or may be directly or indirectly financed to a substantial extent, by, or under which the lessee’s operations or undertakings will or may be substantially controlled by, any person or body of persons other than the lessee. Another relevant provision is the last proviso to Rule 37(2). Another relevant provision is the last proviso to Rule 37(2). It provides that the lessee shall not charge or accept from the transferee any premium in addition to the sum spent by him, in obtaining the lease and for conducting all or any of the operations referred to in Rule 30 in or over the land leased to him. 9.In order to come to a conclusion as to whether Rule 37(1)(a) and (b) of the Rules have any impact on the issue involved or not, it is necessary to analyze the irrevocable Power of Attorney and find out the intention of the parties. On perusal of the said Power of Attorney, it appears that the defendant-appellant thought it fit to execute a Power of Attorney in favour of plaintiff-respondents to raise, despatch and sale minerals apart from looking after the official work in Central Office at Suleipat as well as to have supervision control over operation and all the acts and deeds connected with the working of the mines. Clause-12 of the Power of Attorney provides that the Power of Attorney shall remain operative till the above mining lease over Suleipat expires or transfer of the same in favour of respondent no.1 takes place, whichever is earlier. From this Clause, it is clear that the appellant intended to transfer the mining lease in favour of respondent no.1 and till such transfer takes place, he also intended to hand over the mines to respondent no.1 for the purpose of raising and selling minerals and also for having total control over functioning of the mines. Clause-13 of the Power of Attorney prescribes that the Power of Attorney shall remain operative till the right of the appellant over the said mine exists. 10.On a conjoint reading of both the above Clauses of the Power of Attorney, it is clear that the appellant, who was the lessee in respect of the mines intended to transfer the mines in favour of respondent no.1 awaiting approval of the competent authority under the Rules and during the interregnum period the appellant wanted, respondent no.1 to operate the mines, raise minerals, sale it in the market and also have full control over functioning of the mines. For the interregnum period the appellant had received a consideration of Rs.98.00 lakhs from respondent no.1 Therefore, the appellant not only intended to transfer the lease in favour of respondent no.1, awaiting approval of the competent authority for such transfer but also authorized respondent no.1 to operate the mines, raise and sale minerals and have full control over functioning of the mines. Therefore, the appellant by executing the said Power of Attorney created an interest in favour of respondent no.1 in violation of Rule 37(1)(a) of the Rules. By permitting respondent no.1 to have full control over the functioning of the mines to the exclusion of the appellant, who is the lessee on receipt of a consideration of Rs.98.00 lakhs, Rule 37(1)(b) of the Rules has also been violated. 11.I am therefore, of the view that the irrevocable Power of Attorney executed by the appellant in favour of respondent no.1 is in contravention of Rule 37(1)(a) and (b) of the Rules. Consequently prima-facie such Power of Attorney which has been executed in contravention of statutory Rules cannot be acted upon. The trial Court was therefore, not justified in granting the order of injunction on the basis of an irrevocable Power of Attorney, which prima-facie appears to have been executed in contravention of Rule 37(1)(a) and (b) of the Rules. I accordingly, set aside the impugned order dated 17.5.2003 passed by the learned Civil Judge (Senior Division), Rairangpur in I.A. No.12 of 2003 arising out of C.S. No.38 of 2003 and allow the appeal. The F.A.O. is accordingly disposed of. There shall be no costs. FAO disposed of.