Bombay High Court
Mis Morning Star Shipping And Trading … vs Vyaghreshwar Mineral Industrial … on 23 February, 2026
2026:BHC-OS:4930
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION PETITION (L) NO.399 OF 2026
M/s. Morning Star Shipping And
Trading Pvt Ltd. ...Petitioner
V/s.
Vhyaghreshwar Minerals Industrial ...Respondent
Producer Co-operative Society Limited
________________
Mr. Rajiv Chavan, Senior Advocate with Mr. Sanjeev Singh, Ms. Sonam
Pandey, Ms. Asmi Desai & Mr. Siddharth Mishra i/b. Mr. Ritesh A. Singh
for the Petitioner.
Mr. Mayur Khandeparkar with Mr. H.V.Kode and Ms. J.S. Karnik for the
Respondent.
________________
CORAM: SANDEEP V. MARNE, J.
RESERVED ON: 17 FEBRUARY 2026.
PRONOUNCED ON: 23 FEBRUARY 2026.
JUDGMENT:
1) The Petitioner has filed this Petition under Section 9 of the
Arbitration and Conciliation Act, 1996 (Arbitration Act) seeking interim
measures before commencement of the arbitral proceedings. Petitioner
seeks interim measures for restraining Respondent from interfering
with its lawful business and operations relating to raising, excavating,
processing, transporting and selling Bauxite Ore from the Mahal Mirya
Bauxite Mine in accordance with the Agreement/Deed for Raising and
Selling of Bauxite Ore dated 12 January 2021. The Petitioner also seeks
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interim measures to restrain the Respondent from obstructing,
preventing or interfering with its right to remove, transport, store or
dispose of the excavated Bauxite Ore. The Petitioner also seeks
direction against the Respondent to provide the User ID and Password
for Integrated Lease Management System (ILMS) Portal required for
issuance of Transit Passes for transport of Bauxite Ore from the mine
site to purchasers/ end users. The Petitioner also seeks direction to
Respondent to comply with all requisite statutory and regulatory
requirements inter-alia in respect of GST registration for ensuring
lawful movement, sale and invoicing of the Bauxite ore.
2) The Petitioner is a private limited company engaged in the
business of mining related operations. The Respondent is a co-
operative society registered under the provisions of the Maharashtra
Co-operative Societies Act, 1960 and carries on activities connected
with mineral extractions and mining operations. The Respondent
represented to the Petitioner that it is a lawful holder of valid mining
lease in respect of Mahal Mirya Bauxite Mine admeasuring
approximately 79.981 hectares situated at village Mahal Mirya, Taluka-
Pen, Dist. Raigad. According to the Petitioner, its Director and Chairman
of Respondent-Society were known to each other and Petitioner was
already engaged in the activities of purchase and sale of Bauxite ore
from the Respondent. The Petitioner and the Respondent entered into
the Agreement for Raising and Selling of Bauxite Ore dated 12 January
2021, under which the Respondent permitted and authorized the
Petitioner to raise and sell Bauxite Ore from the subject mine to the
extent of 1,50,000 Metric tons Bauxite Ore per annum. The duration of
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the Agreement was from the date of signing thereof till 13 December
2028. The Petitioner agreed to pay to Respondent a sum of Rs.
3,00,00,000/- out of which Rs.2,00,00,000/- was paid on signing of the
agreement and Rs. 1,00,00,000/- was payable within 90 days. It was
agreed that out of the said sum of Rs. 3 crores, Rs. 1.50 crores were
payable as goodwill non-refundable amount and Rs. 1.50 crores were to
be adjusted against royalty payable under the Agreement. Petitioner
agreed to pay royalty at the rate of Rs.80 per MT plus applicable GST for
Bauxite Ore extracted from the mine. The Agreement provided for
adjustment of advance amount of Rs. 1.50 crores from the royalty
payable by the Petitioner.
3) The Petitioner states that the Chairman of Respondent-Society,
Mr. Ashok Patil represented to the Petitioner that his own company M/s
AGP Minechem Pvt. Ltd. was fully capable of raising, excavating and
extracting the Bauxite Ore from the subject Mine and accordingly the
Petitioner entered into Agreement with M/s AGP Minechem Pvt. Ltd.
(AGP Minchem) for excavating of 1,50,000 metric ton Bauxite Ore per
annum. The Petitioner states that the Respondent made Petitioner
execute an agreement with Ms. Rekha Godbole, Managing Committee
Member of the Respondent under which she was to be compensated at
the rate of Rs. 10 per MT Bauxite Ore raised and extracted from the
subject Mine. The Petitioner claims that it has paid the entire
agreement amount of Rs. 3 crores to the Respondent. According to the
Petitioner, it was mutually decided that Rs. 40 out of royalty rate of Rs.
80 per MT would be deducted and adjusted towards the advance
amount of Rs. 1.50 crores paid by the Petitioner. That subsequently, it
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was decided to adjust the entire royalty at the rate of Rs. 80 per MT
towards the advance paid by the Petitioner.
4) Petitioner claims that it later discovered that Respondent had
approval for mining plan permitting extraction of only 98,004 MT per
annum and not 1,50,000 MT per annum. The Petitioner thereafter
engaged with the technical consultants for the purpose of enhancing
and revising the mining plan for improving the approved capacity to
1,50,000 MT per annum. During the course, the Petitioner was informed
that a Bank Guarantee was mandatory for approval of the enhanced
mining capacity. That though the responsibility of submitting Bank
Guarantee was on the Respondent, Petitioner in good faith remitted
amount of Rs. 20,00,000/- to the Respondent for furnishing the Bank
Guarantee. According to the Petitioner the Agreement was executed by
misrepresentation of mining capacity of 1,50,000/- MT per annum and
on account of actual reduced approved capacity of only 98,004 MT per
annum, the Petitioner could not excavate Bauxite Ore of desired volume
so as to justify payment of the royalty at the rate of Rs. 80 per MT.
Petitioner claims to have suffered quantified loss of Rs. 1,69,58,904.11/-
calculated at margin of Rs. 200 per metric ton. The Petitioner also
claims that it has also suffered loss on account of Respondent’s failure
to deposit the GST collected from it.
5) The Respondent served the Petitioner with notice dated 18
November 2025 terminating the Agreement on ground of failure to pay
sum of Rs. 20,00,000/-, delay in payment of royalties etc. Petitioner
replied to the termination notice on 4 December 2025. According to the
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Petitioner the Respondent changed and blocked the User ID and
Password of ILMS Portal and thereby prevented the Petitioner from
issuing Transit Passes, thereby obstructing transportation, sale and
movement of the Bauxite Ore. In the above backdrop, Petitioner has
filed the present Petition seeking interim measures in following terms:
34. THE CLAIMANT THEREFORE PRAYS THAT;
a) Pending the hearing and final disposal of the arbitration
proceedings and until the execution of the arbitral award that may
be passed therein, restrain the Respondents, their office bearers,
committee members, agents, servants, employees, assignees,
transporters, contractors, or any other persons claiming through or
under them, by an order and injunction of this Hon’ble Court, from
directly or indirectly interfering in any manner whatsoever with the
lawful business and operations of the Petitioner relating to raising,
excavating, processing, transporting, and selling bauxite ore from
Mahal Mirya Bauxite Mine, admeasuring approximately 79.981
hectares, situated at Village Mahal Mirya, Taluka and District
Raigad, Maharashtra, strictly in terms of the Agreement/Deed for
Raising and Selling of Bauxite dated 12th January 2021, including
interference with the Petitioner’s agents, servants, employees,
transporters, contractors, or any persons acting for and on behalf of
the Petitioner.
b) Pending the hearing and final disposal of the arbitration
proceedings, restrain the Respondents, their agents, servants,
employees, assignees, or any persons claiming through or under
them, by an order and injunction, from obstructing, preventing, or
interfering with the Petitioner’s right to remove, transport, store, or
dispose of the excavated bauxite ore, finished material, overburden,
or any other raw material already raised and lying at the mine site,
or from interfering with the continuation of mining-related
operations already commenced.
c) Pending the hearing and final disposal of the arbitration
proceedings, direct the Respondents, in the interest of justice,
equity, and smooth conduct of mining operations, to forthwith
provide and/or activate the User ID and Password for the Integrated
Lease Management System (ILMS) portal, which is mandatorily
required for issuance of Transit Passes for transportation of bauxite
ore from the mine site to purchasers/end users, and further direct
the Respondents to ensure uninterrupted, continuous, and future
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access to the ILMS portal, so as to prevent any operational or
financial loss to the Petitioner.
d) Direct the Respondents to comply with all requisite statutory and
regulatory requirements, including but not limited to providing
and/or facilitating the GST registration details/GST number, and
taking all consequential steps necessary to make the GST framework
operational for the mining operations undertaken by the Petitioner,
so as to ensure lawful movement, sale, and invoicing of bauxite ore.
e) Grant ad-interim reliefs in terms of prayers (a) to (d) above.
f) Award costs of the present petition to the Petitioner.
g) Pass such further and other orders as this Hon’ble Court may
deem fit and proper in the facts and circumstances of the present
case.
6) The Respondent has appeared in the Petition and filed affidavit-
in-reply opposing the same. The Petitioner has filed rejoinder, to which
the Respondent has filed sur-rejoinder. Since the pleadings in the
Petition are complete, the same is taken up for hearing and final
disposal.
7) Mr. Chavan, the learned Senior Advocate appearing for Petitioner
submits that the Respondent has erroneously terminated the
Agreement on the false pretext and that the reason for termination is
actually to enable AGP Minechem to perform the contract of excavation
of Bauxite Ore for the remainder period. That AGP Minechem is a
company of chairman of Respondent-Society. That the termination is
effected to remove the Petitioner and for ensuring direct contractual
relationship of Petitioner with AGP Minechem. That after Petitioner’s
termination, the contract is awarded to AGP Minechem.
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8) Mr. Chavan further submits that the Petitioner had paid the
entire amount of Rs. 3 crores under the agreement to the Respondent.
That nothing is due and payable on the part of the Petitioner to the
Respondent. That as per own statement of the Respondent, an amount
of Rs. 76,03,366/- is actually due and payable by Respondent to the
Petitioner. That the entire allegation of delayed payment of royalty is
false as parties agreed for adjustment of the entire amount of royalty
against the advance payment of Rs. 1.5 crores. That the allegation of
nonpayment of amount of Rs. 20,00,000/- is factually incorrect as
Petitioner has completed payment of entire amount of Rs. 3 crores as
per the Agreement. He submits that clause 23 of the Agreement
provides for issuance of notice of 3 months before the termination,
which is not issued by the Respondent. That the contract could be
terminated only in the event of Petitioner indulging in illegal mining or
failure to pay royalty to the Respondent. That both the eventualities
have not occurred in the present case. That therefore the termination is
illegal.
9) Mr. Chavan further submits that the Bauxite Ore worth Rs.
5 crores, which is already excavated by the Petitioner, is lying at the
mine site and the Petitioner is being prevented for transporting and
selling the same. That the said extracted Bauxite Ore belongs to the
Petitioner and Respondent’s new contractor (i.e. Respondent’s
Chairman) is actually transporting and selling the same. He further
submits that grant of urgent interim measures is necessary to preserve
the subject matter of arbitration. He submits that since the termination
of the agreement is wholly illegal, Respondent cannot be permitted to
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excavate the Ore through the company belonging to its chairman. That
the goodwill charges of Rs. 1.5 crores are paid by the Petitioner to
Respondent under a hope that the Petitioner would be entitled to
extract the Ore from the mine site up to 13 December 2028. That the
Respondent cannot terminate the contract and retain the goodwill
charges. That Respondent has already collected advance royalty of Rs.
1.50 crores and more than 50% of the said advance royalty amount is
yet to be adjusted against Petitioner’s liability to pay royalty to the
Respondent. He prays for grant of interim measures as sought for in
the Petition.
10) Mr. Khandeparkar, the learned counsel appearing for the
Respondent opposes the Petition contending that grant of interim
measures in favour of the Petitioner is not warranted considering
passage of long time after termination notice dated 18 November 2025.
He submits that the new contractor, who is engaged vide Agreement
dated 24 November 2025, has already commenced the operations at the
site from 24 November 2025. That the new contractor is not impleaded
to the petition and grant of any interim measures would directly affect
the interest of the said contractor. Mr. Khandeparkar would submit that
payment of royalty within stipulated time was a material term of the
contract. Inviting my attention to para 6 of the Termination Notice, he
would submit that Petitioner always delayed payment of the royalty and
has failed to pay royalty after 31 January 2023. That Petitioner has also
not paid amount of Rs. 20,00,000/- towards initially agreed amount of
Rs. 1.50 crores towards advance royalty. That the concept of deduction
from advance royalty could commence only after Petitioner made full
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payment of Rs. 1,50,00,000/-. That since full advance amount of royalty
is not paid, Petitioner is not entitled for adjustment of royalty. He
further submits that Petitioner was expected to extract 1,50,000 MT of
Bauxite Ore per annum. As against expected extraction quantity of
6,00,000 MT, Petitioner has extracted only 2,74,789.502 MT Bauxite Ore
from 2021 till date. That Petitioner itself has terminated the contract
with its sub-contractor alleging shortfall in extraction and that
therefore shortfall is an admitted position. That Respondent is unable
to recover the full mining potential from the Mine on account of failure
on the part of the Petitioner to extract even half of mining potential.
That Petitioner has not sought stay on Termination Notice. That the
Respondent has claims against the Petitioner. That Petitioner has
already invoked arbitration clause vide notice dated 26 December 2025.
That Petitioner has failed to submit Bank Guarantee required for the
purpose of enhancement of mining capacity to 1.50 lakh MT per annum
in violation of contractual stipulations. That Petitioner has been
repeatedly given notices from 10 June 2025 and that the ground of
failure to issue three months’ prior notice is baseless.
11) Mr. Khandeparkar further submits that the claim of Respondent
of Bauxite Ore worth 5 crores lying at the site is entirely fallacious as
Petitioner’s own statement issued to its sub-contractor shows
extraction of only 276.19 and 15,239.11 metric tons in April and May
2025 respectively and even if the entire quantity (15,515 MT) is said to
be lying at the site, the value thereof would not exceed Rs. 8 lakh
considering the average margin indicated by the Petitioner of Rs. 200
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per MT. Mr. Khandeparkar would accordingly pray for dismissal of the
Petition.
12) Rival contentions of the parties now fall for my consideration.
13) The disputes and differences between the parties have arisen out
of Agreement for Raising and Selling Bauxite Ore dated 12 January
2021, under which the Respondent had granted to the Petitioner license
to extract maximum quantity of 1,50,000/- MT per year Bauxite Ore
from the Mine site for period upto 13 December 2028 on payment of
royalty at the rate of Rs. 80 per metric ton + GST. The Agreement
provided for payment of sum of Rs.3,00,00,000/- by Petitioner to the
Respondent, out of which, Rs. 1.50 crores was for goodwill of the
Respondent and was not refundable whereas the balance amount of Rs.
1.50 crores was towards advance royalty, which was to be adjusted as
per clause 5 of the Agreement. After adjusting the royalty against
advance, the Petitioner was required to pay to the Respondent royalty
on or before 7th day of each month. The relevant Clause Nos.1, 2, 5, 6, 7,
10, 20, 22 and 23 in the agreement read thus.
1. The duration of this agreement is for a period commencing from
signing of this agreement to 13 December 2028.
2. The CONTRACTOR shall extract and raise a maximum quantity
of 1,50,000MT per year as per Environmental permission. However,
in the event of shortfall in the extraction and raising of the Bauxite
ore on the part of the CONTRACTORs, the MINE OWNER shall be
eligible for the royalty equivalent to excavated/mined or under this
contract. This payment will be made on or before 15 June of every
year before the next season starts.
5.The CONTRACTOR agrees to pay MINE OWNER sum of Rs. 3 Crs
(Rs. Three Crore only as per below understanding: –
I. Rs. 2Crs on signing of agreement, paid as per below –
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a. Through RTGS dated on 10.12.2020 amounting to
Rs.9,00,000/-
b. Through IMPS dated on 10.12.2020 amounting to
Rs.1,00,000/-
c. Through RTGS dated on 18.12.2020 amounting to
Rs.1,00,00,000/-
d. Through RTGS dated on 18.12.2020 amounting to
Rs.60,00,000/-
e. Through RTGS dated on 24.12.2020 amounting to
Rs.10,00,000/-
f. Through NEFT dated on 11.01.2021 amounting to
Rs.20,00,000/-
II. Rs. 1 Cr within 90 days of signing of agreement.
It is further agreed that Rs. 1.5 Crs will be MINE OWNER
GOODWILL (non – refundable) and balance Rs. 1.5 Crs will be
adjustable against MINE OWNER ROYALTY. The balance
adjustment in MINE OWNER ROYALTY from date of 3 er. complete
Payment will be as below: –
I. During First year/ season, Rs.10 lakhs will be deducted.
II. During Second year/ season, Rs. 20 lakhs will be deducted.
Ill. During Third year/ season, Rs. 20 lakhs will be deducted.
IV. During Fourth year/ season, Rs. 20 lakhs will be deducted.
V. During Fifth year/ season, Rs. 20 lakhs will be deducted.
VI. During Sixth year/ season, Rs. 20 lakhs will be deducted.
VII. During Seventh year/ season, Rs. 20 lakhs will be deducted.
VIII. During Eight year/ season, Rs. 20 lakhs will be deducted.
6. The MINE OWNER’s Royalty payable under this contract by the
CONTRACTOR shall be Rs. 80 per metric ton plus GST / taxes at
actual for the Bauxite ore extracted from the said mine. The
minimum guarantee of yearly Mine owner royalty will be equal to
the quantity approved in the Environmental Clearance certificate or
equivalent to excavated / mined ore. The monthly MINE OWNER
Royalty amount for current month will be paid in coming month
against supporting tax invoice on or before 7th of every month. Rs.
20,00,000 on signing of agreement, paid as per below –
I. Through NEFT dated on 11.01.2021 amounting to Rs.
10,00,000/- in advance against MINE OWNER Royalty.
II. Through NEFT dated on 11.01.2021 amounting to Rs.
10,00,000/- in against Government Royalty.
7. All the taxes like Government royalty, cess, dead rent, etc., in
connection with or regarding the raising of Bauxite ore for carrying
out this agreement shall be paid by the MINE OWNER through
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assistance from CONTRACTOR, The Government Royalty, DMF
NMET & TCSas on date payable to Mine Owner through Contractor
will be Rs. 110 pes metric ton for the Bauxite ore extracted from the
said mine. In case there is difference in royalty either increase or
decrease will be paid or debited to Mine Owner from time to time
on submission of proof of revised royalty rates. The MINE OWNER
will timely raise invoice on CONTRACTOR for the Government
Royalty amount paid from time to time. It will be Duty of the
contractor to see that there is no default or arrears payment of
Government dues. Needles to state that the amount paid to
Government statutory authority is additional separate/Independent
to the Royalty paid to the mine owner by the contractor.
10. All the Bauxite ore to be extracted in the said mine shall solely
remain property of the CONTRACTOR as per this Agreement with
MINE OWNER and Subject to Clause no. 2 &7.
20. The MINE OWNER assures the CONTRACTOR that they will do
or cause to be done all the formalities that may be required to be
done for the smooth operation of this agreement as also the said
mines for the sale of the product of the said mine. The MINE
OWNER shall also do or cause to be done all Government
formalities, filling of necessary documents with the concerned
Government departments, filling of returns, further Environmental
Clearance up to 13.12.2028, furnishing information from time to
time at the cost of CONTRACTOR, etc the MINE OWNER has also
assured that he will give application for sale permits duly signed to
the CONTRACTORs or their representatives as and when requested
by them.
22. If at any time any dispute or question arises between the parties
touching the meaning, construction, or effect of this Agreement or
of any clause or thing herein contained of regarding the respective
liabilities and rights under this Agreement, then every such dispute
or question except where specifically provided shall be referred to
arbitration, as per the provisions of the Arbitration and
Conciliation Act 1996 as amended from time to time and for the
time being in force. The place of arbitration or sitting shall be at
Mumbai.
23. This Agreement can only be terminated if the CONTRACTOR
has done any illegal mining or fails to pay MINE OWNER royalty on
timely basis. The notice period will be for 3 months and after
settling the account by the MINE OWNER with CONTRACTOR on
account of any money or advance received from time to time under
this Agreement.
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14) Under clause 10 of the Agreement, the extracted Bauxite Ore was
the property of Petitioner, who was entitled to sale the same in the
market. Respondent’s entitlement was only to the extent of receipt of
royalty at agreed rate of Rs. 80 per metric ton in addition to goodwill
amount of Rs. 1.50 crore initially.
15) Petitioner claims that the Agreement was executed on a
misrepresentation by the Petitioner that it had the approved limit of
1,50,000 MT per annum, which actually turned out to be only 98,004
MT per annum. On the other hand, it is Respondent’s case that the
mining plan approved was available upto the limit of 1,50,000/- MT per
annum and only environmental clearance was required to be obtained
in respect of the entire limit of 1,50,000 MT per annum on submission
of a bank guarantee. Respondent accuses Petitioner of not submitting
the bank guarantee, resulting in non-grant of environmental clearance
in respect of the entire approved mining limit of 1,50,000 Mt per
annum. However, it is not necessary to delve deeper into this aspect as
the same is not really relevant to decide the issue of interim measures.
16) There is no dispute to the position that the Petitioner had
engaged the sub-contractor named AGP Minechem, who was actually
raising and extracting the Bauxite Ore from the mining site. Petitioner
was apparently selling the raised and extracted ore by AGP Minechem
in the market. According to the Petitioner itself, AGP Minechem did not
extract Bauxite Ore of expected quantity of 1,50,000 MT per year and
there was shortfall every year, resulting in total shortfall quantity of
4,20,028 MT during the years 2021 to 2025. This is reflected in
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Petitioner’s notice to AGP Minechem issued on 12 December 2025.
However, it appears that the Agreement between Petitioner and
Respondent did not provide for any minimum quantity of Bauxite Ore
which was expected to be extracted. Clause 2 of the Agreement provided
for ‘maximum’ quantity and not ‘minimum’ quantity of Bauxite Ore.
The Respondent, on the other hand, contends that it is unable to
receive the expected amount of royalty on account of gross under-
extraction by the Petitioner. Petitioner has sought to highlight that the
Respondent itself is responsible for under-extraction as the sub-
contractor AGP Minechem is the company of Respondent Society’s
chairman. Again, this aspect is not relevant at this stage for deciding
Petitioner’s entitlement for interim measures.
17) Petitioner’s contract has been terminated by the Respondent vide
notice dated 18 November 2025. There are multiple reasons cited in the
notice for termination (i) failure to pay amount of Rs. 20,00,000/- out of
agreed sum of Rs. 3 crores. (ii) delay in payment of royalty, (iii) under-
extraction of Bauxite Ore (iv) non-payment of royalty (v) failure to
submit shortfall bank guarantee of Rs. 26,98,300/- to the Indian Bureau
of Mines, (vii) engagement in malpractices and cheating of third parties
by taking advances from them and not supplying them the agreed
supply of cement grade Bauxite Ore from the mine, (vii) default in
payment to AGP Minechem.
18) Respondent has contended that Petitioner has failed to pay the
initial agreed amount of Rs. 1.50 + 1.50 = 3 Cr. and that there is short
payment of Rs. 20 lakh. On the other hand, Petitioner contends that the
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whole amount of Rs. 3 crores. is paid by it. There is thus some degree of
dispute between the parties on the issue of payment of the entire initial
amount of Rs. 3 crores. Mr. Khandeparkar has contended that the
arrangement for adjustment of royalty against advance would kick-in
only after the entire amount of Rs. 3 crores. is paid. Prima facie, the
contention appears to be against the records and also contrary to the
conduct of parties. There is Respondent’s document on record ( to which
reference is made in latter part of the order ) which seems to suggest
adjustment of royalties by the Respondent. Again at this stage, it is not
necessary to conduct detailed factual inquiry into that aspect.
19) So far as the allegation of delay in payment of royalty is
concerned, the chart in paragraph 6 of the Termination Notice depicts
delay in making payment of royalties on various dates. The chart
further depicts that beyond 31 January 2023, the Petitioner has not paid
any royalty to the Respondent. Paragraph 7 of the Termination Notice
indicates that Rs. 1,05,79,535/- is due and payable to the Respondent
towards extracted Ore. This is sought to be explained by Mr. Chavan by
contending that initially, parties had agreed to adjust royalty at the rate
of Rs. 40 per MT from the advance amount (of Rs. 1.50 crores), which
was subsequently raised to Rs. 80 per MT and this is why, parties were
making adjustment against the advanced royalty paid. Mr. Chavan has
accordingly submitted that nothing is payable by the Petitioner to
Respondent towards royalty. Mr. Chavan has strenuously relied on the
statement shared by Respondent’s chairman Mr. Ashok Patil on 15 May
2025 in support of his plea of adjustment of entire royalty of Rs. 80 per
MT and contends that an amount of Rs. 76,03,366/- is still available
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with the Respondent towards advance royalty. There appears to be some
discrepancy between the statement shared by Mr. Patil and the
contractual terms. While Mr. Patil’s statement does seem to suggest
adjustment of royalties initially @ Rs. 40 per MT and later @ Rs. 80 per
MT, clause 5 (II) of the Agreement indicates that the permissible
adjustment was only Rs. 10 lakh for first year and Rs. 20 lakh for each of
the year from second year onwards. The Agreement provided for
adjustment of entire advance royalty of Rs. 1.50 crore during the 8-year
contract period. Mr. Chavan submits that the adjustment has taken
place as per the oral agreement between the parties. As of now, Mr.
Chavan is unable to point out any correspondence or written agreement
for adjustment of entire royalty from advance paid, on the basis of
which it can be inferred that the parties have varied or novated the
contractual terms. Again, this aspect needs to be adjudicated in the
arbitral proceedings by evaluating the evidence and it is too early to
record even a prima facie finding of Petitioner being in arrears of
royalty.
20) One of the grounds for termination of the Agreement is alleged
gross under-extraction by the Petitioner from the mine. In para 9 of
termination notice it is alleged by the Respondent as under:-
9) It is also clear from the date of the said agreement that outer
permissible limit of the mine to extract yearly 1,50,000 MT of ore
was not able to be achieved by you which directly caused huge
losses to the society in the corresponding value of non-extraction of
ore calculated as Mine owner’s royalty which is totally against the
spirit of the contract and intent of both the parties to the said
agreement. Needless to state that from the year 2021 to till date you
have extracted only 2,74,789.502 MT as against the Total of
approximately more than 6,00,000 MT and society has suffered
huge monetary losses.
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21) Mr. Chavan has countered this allegation of under-extraction by
contending that no minimum quantity of extraction is agreed in the
Agreement, which talks of only maximum quantity. There can be no
doubt that under-extraction can affect royalty entitlement of the
Petitioner. Again, this aspect can be considered by the arbitral tribunal
during final adjudication of the claims.
22) Petitioner has contended that the termination is effected for
ensuring that the Chairman of the Respondent directly operates the
mining site to the exclusion of the Petitioner. There is no denial to the
position (i) that AGP Minechem is the company of Respondent’s
chairman Mr. Ashok Patil; (ii) Petitioner engaged AGP Minechem as
sub-contractor who actually raised and extracted the Ore in pursuance
of the contract awarded to the Petitioner; (iii) Respondent has not
executed the contract with AGM Minechem. While Petitioner accuses
Respondent’s Chairman of awarding contract to himself, Mr.
Khandeparkar has contended that the Petitioner is estopped from
raising this contention since he has accepted the distinction between
AGP Minechem as company and Mr. Patil as a person while sub-
contracting the work. In my view, whether there is any malafide
intention on the part of the Respondent in terminating the contract and
awarding the same to the company of its Chairman would be a relevant
factor for deciding Petitioner’s claim for damages.
23) Petitioner’s claim of Respondent unjustly enriching itself by
retaining the goodwill amount of Rs. 1.5 crores and also the amount of
advance royalty needs to be adjudicated while deciding the claims
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finally. If the termination is proved to be illegal, the Arbitral Tribunal
can consider the prayer for refund of both the amounts. However, at this
stage, that would not be a relevant factor for considering Petitioner’s
entitlement for interim measures.
24) I believe Petitioner’s entitlement for interim measures needs to
be considered in the light of the nature of prayers sought in the
Petition. Petitioner’s ultimate claim is for performance of the
terminated contract. The termination has occurred on 18 November
2025. Petitioner has failed to move this Court with necessary alacrity.
By now, period of 3 months has expired from the date of termination of
the contract. A new contractor is already at the site by virtue of
Agreement dated 24 November 2025 executed with AGP Minechem Pvt.
Ltd. The Respondent has produced on record various documents to
indicate commencement of mining activities at the site by the new
contractor. The new contractor has apparently paid amount of Rs. 1
crore towards Government royalty on 12 December 2025. The activities
of raising, extracting and selling the Ore has been going on for the last 3
months and Petitioner appears to be aware of the same. Respondent has
relied on WhatsApp message sent by Petitioner to Ultratech Cement
dated 28 November 2025 for preventing it from procuring the ore from
the new contractor. However Petitioner failed to approach this Court
immediately after the termination and has filed the Petition only on 7
January 2026. The voluminous documents produced along with the
reply indicates that the new contractor has already taken over mining
operations at the site. It is difficult to believe that the ore already raised
or extracted by the Petitioner (value of which is claimed at Rs. 5 crores)
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can still be at the site when the new contractor is operating the mine
for the last 3 long months. The claim of ore worth Rs.5 crores lying at
the site is unbelievable considering the date presented by the Petitioner
to its sub-contractor, which indicates that only 15,515 MT was
extracted in the months of April and May 2025, and there is no
extraction activity in other months. Petitioner can prove the quantum
of extracted Ore and claim its value before the Arbitral Tribunal.
25) Since new contractor is already appointed by the Respondent and
since mining operations have already commenced by the new
contractor, it would not be appropriate to reinstate the Petitioner’s
contract at this stage. Petitioner’s claim against the Respondent would
ultimately be in terms of money. If Petitioner is successful in proving
that the contract is unlawfully terminated, the Tribunal can award
damages. It is well settled that though interim mandatory injunction
can be granted in a given case, the party praying for the same needs to
make out a strong prima facie case. In the present case, Petitioner’s
reinstatement in the Mine would also mean ouster of the new
contractor, who is not even made party to the Petition. Even if the new
contractor is not a party to the arbitration agreement, this Court can
make interim measures even against third parties in exercise of powers
under Section 9 of the Arbitration Act. However, Petitioner has chosen
not to implead the new contractor in the present Petition. Also, a very
strong prima facie case is not made out for ensuring that Petitioner is
reinstated at the Mine site. The other two parameters of irreparable loss
and balance of convenience are also not fulfilled in the present case.
Petitioner would not suffer any irreparable loss as it can be awarded
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damages if termination is found to be unlawful. The balance of
convenience is tilted against the Petitioner as the new contractor is
operating the mine for the last 13 months. In my view therefore, no
interim measures deserve to be granted considering the unique facts
and circumstances of the present case.
26) The interim measures under Section 9 of the Arbitration Act are
to be granted essentially to preserve the subject matter of arbitration.
Since new contractor has already been appointed at the site, who has
taken over mining operations and has made payment of huge amount of
Rs. 1 crore towards Government royalty, the stage of preserving the
mining site, which is subject matter of arbitration, has already
surpassed. What Petitioner now expects is restoration of status quo
ante. Considering the peculiar facts and circumstances of the present
case where Petitioner can adequately be compensated in terms of
money, it would not be appropriate to reinstate it as mining contractor
in respect of the mining site by removal of the new contractor. Reliance
by Mr. Chavan on the judgment of the Apex Court in Arcelor Mittal
Nippon Steel India Limited V/s Essar Bulk Terminal Limited 1 is
inapposite as the said judgment is an authority on the issue of
permissibility for Court to make interim measures under Section 9 after
constitution of Arbitral Tribunal.
27) The Respondent has not disputed existence of arbitration
Agreement. It appears that the Petitioner has already invoked
arbitration vide notice dated 26 December 2025. Mr. Khandeparkar, on
1 (2022)1 SCC 712
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instructions, fairly conceded that Arbitral Tribunal can be constituted
for adjudication of disputes and differences between the parties.
28) I accordingly, proceed to pass the following order:-
(i) Petitioner’s prayer for interim measures is rejected.
(ii) However, Arbitral Tribunal is constituted for adjudication of
disputes and differences between parties as under:
(A) Smt. Justice Anuja Prabhudessai, former Judge of this court
is appointed as sole arbitrator to adjudicate the disputes and
differences between the parties arising out of the Agreement
for Raising and Selling Bauxite Ore dated 12 January 2021. The
contact details of the Arbitrator are as under:-
Office Address:- 106, Aracadia Building NCPA Marg,
Nariman Point, Mumbai-400021.
Email ID:- [email protected]
(B) A copy of this order be communicated to the learned
sole Arbitrator by the Advocates for the Petitioner within a
period of one week from the date of uploading of this order.
The Petitioner shall provide the contact and communication
particulars of the parties to the Arbitral Tribunal alongwith a
copy of this order.
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(C) The learned sole Arbitrator is requested to forward the
statutory Statement of Disclosure under Section 11(8) read
with Section 12(1) of the Act to the parties within a period of 2
weeks from receipt of a copy of this order.
(D) The parties shall appear before the learned sole
Arbitrator on such date and at such place as indicated by her,
to obtain appropriate direction with regard to conduct of the
arbitration including fixing a schedule for pleadings,
examination of witnesses, if any, schedule of hearings etc.
(E) The fees of the sole Arbitrator shall be as prescribed
under the Bombay High Court (Fee Payable to Arbitrators)
Rules, 2018 and the arbitral costs and fees of the Arbitrator
shall be borne by the parties in equal portion and shall be
subject to the final Award that may be passed by the Tribunal.
30. The Tribunal shall adjudicate the claims of the parties
uninfluenced by the findings recorded in the judgment.
31. With the above directions the Petition is disposed of.
[SANDEEP V. MARNE, J.]
Page No.22 of 22
Signed by: Megha S. Parab
23 February 2026
Designation: PA To Honourable Judge
Date: 23/02/2026 17:49:01
