The present invention relates to a novel herbal composition comprising extract of leaves of Polyalthia longifolia and method of manufacture of said composition. The present invention relates to a herbal extract selectively comprising a compound 16-hydroxycleroda-3,13(14)-dien-15,16-olide (compound 1), as a bioactive marker and optionally other active(s). The invention also discloses methods of administration of the said herbal composition for the treatment of various inflammatory disorders. Optionally the said extract may be combined with other bioactive substances to obtain a synergistic effect.