MASTERS IN BUSINESS ADMINISTRATION (MBA)

Course: Business and Corporate Law (BCL)

Faculty: Prof. Parul Gupta

GROUP CASE DISCUSSION: SESSION 13, 14 & 15

Case 1: Rukmanibai Gupta v Collector

Mr. Rukmanibai Gupta, the appellant applied for and obtained a quarry lease for excavating
limestone in an area covering 25.32 acres in Jabalpur district of the state of Madhya Pradesh under
the relevant Minor Mineral Rules, then in force. The lease was executed by Mr. Gupta and the
State of Madhya Pradesh on June 26, 1961. Subsequently, Madhya Pradesh Minor Mineral Rules,
1961 came into force with effect from August 11, 1961.

By virtue of Rule 24 of 1961 Rules the royalty in respect of quarry leases was regulated as set out
in the Schedule annexed to the Rules. Following were some important rules in that regard;

* In respect of limestone for which Mr. Gupta had obtained a lease, the provision for the rate of
royalty was, 10% of the sale value at the pit's mouth subject to a minimum of 50 naye paise per
ton for limestone, 75 naye paise per ton for slaked lime and Re. 1 per ton for unslaked lime.

*The indenture of lease royalty at the aforementioned rate was payable half yearly, i.e. on 15th
March and 15th September in each year.

* Clause 5 of the new set of rules made it obligatory for the lessee to keep correct and intelligible
books of accounts showing accurately the quantity of mineral extracted, the weight and value of
minerals sold and exported together with name of purchasers or consignees.

*There was a further obligation under the same clause to submit certain statements to the Deputy
Commissioner at Jabalpur on dates prescribed therein.

Mr. Gupta, the appellant was served with a memo on September 21, 1962, assessing the royalty in
respect of limestone quarried by him and demanding a sum of Rs. 35,313.58 p. as arrears of royalty.
On receipt of this memo the appellant made a representation as contemplated by Clause 15 of the
indenture of the agreement between the parties. The clause 15 of the agreement was as under;

Whenever any doubt, difference or dispute shall hereafter arise touching the construction of
these presents or anything herein contained or any matter or things connected with the said
lands or the working or non-working thereof or the amount or payment of any rent or royalty
reserved or made payable hereunder the matter in difference shall be decided by the lessor
whose decision shall be final.

1
The appellant requested for the appointment of an independent arbitrator as the lessor who was the
Governor himself in that case was a party to dispute. It was further contended that the terms of
clause were also not constructed properly and biased towards the lessor. Thus the appellant
challenged the construct of clause 15 of the agreement.

Discussion Point
Did Clause 15 of the agreement between the parties spell out an arbitration agreement and the
decision of the lessor could be treated final and binding?

Case 2: Nucon India (P) Ltd. v. Delhi Vidyut Board (Desu)1

There was an application for the appointment of an arbitrator under Section 11 of the Arbitration
and Conciliation Act, 1996 for adjudicating the dispute arisen between the petitioners and the
respondents.

Delhi Vidyut Board (Desu) awarded a contract to Nucon India (P) Ltd. for the work of construction
of control room building for 400 KV Sub-Station of the respondent (DESU) at Bawana, Delhi.
The letter of intent was issued by Desu, the respondents on August 6, 1991. The contract was for
Rs. 1,10,02,860. Time was the essence of the contract and the work was to be completed within a
time period of six months, that was, June 8, 1992. However the work could not be completed
within six months time.

According to to Nucon India (P) Ltd., the petitioners, the contract could not be completed for
various reasons attributable to the respondents. Thus there arouse a dispute between the two
parties. There was an arbitration clause in the agreement between the two parties and this fact was
not disputed. The petitioners requested to refer the dispute to arbitration and requested the
respondents to appoint an arbitrator.

Despite regular reminders when Desu failed either to make the payment of the claimed amount or
to appoint an arbitrator in terms of the arbitration clause as demanded by the petitioners, the
petitioners filed a petition under Section 11(6) of the Act. The respondents claimed that they did
appoint a sole arbitrator as per the arbitration clause and sent a notice to the petitioner and thus the
petitioners claim under section 11 was not maintainable. However the petitioners claimed that the
arbitrator was appointed only after the application was made under the section 11(6) and even after
repeated requests the petitioner did not do the same before the application was filed under sec
11(6).

Discussion Point
Under the above stated circumstances, was the claim of the petitioner maintainable and
appointment of an arbitrator still required?

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Nucon India (P) Ltd. v. Delhi Vidyut Board (Desu), 2001 (2) Arb LR 135.