Royalty issue with VOC Port: Setback for PSA-Sical Terminals as it loses appeal in the Madras HC


In a major setback to PSA-Sical Terminals Ltd (appellant), which operates a container terminal at the VO Chidambaranar Port in Thoothukudi, the Division Bench of the Madras High Court on Tuesday dismissed an appeal filed by it against an order of the Single Bench on a petition by the operator to settle a dispute over royalty payments.

The appellant owes royalty dues of around ₹1,250 crore to the VOC Port Authority from 2011 as the terminal operator and the port authority were locked in multiple litigations, all of which have now been decided in favour of the port authority.

The appellant signed a licence agreement with the Port Authority on July 15, 1998 to design, engineer, finance, erect, operate, replace Container Handling Equipment and to maintain and repair the Container Terminal at the Port for 30 years. It has been operating in the Terminal for over a period of 20 years.

The Division Bench comprising Justice M Duraiswamy and Justice TV Thamilselvi in its order said the appellant having accepted and entered into an agreement with the port authority for payment of royalty with a provision for yearly escalation, they cannot now take a different stand.

Royalty holds good: SC

When the Supreme Court had decided the royalty issue as per the terms of the agreement by setting aside the award of the Arbitral Tribunal, thereby negativing the revenue share basis, the said issue no longer survives for being dealt with by the Committee, the Bench said.

Once the Apex Court has pronounced an order holding that royalty holds the field and it has not been changed since entering into an agreement between the parties, the purpose of constitution of the Committee on July 21, 2020 to consider the issue between the appellant and the Port Authority, having attained finality at the hands of the Apex court, nothing remains to be deliberated by the Committee, which resulted in the disbandment of the Committee.

The appellant in November 2021 filed a petition to set out the manner in which the disputes between the appellant and the Port Authority are to be settled within a time frame to be determined by this Court. However, the Division Bench said it is also a settled position of law that the courts cannot direct the Government to frame a policy for settlement of disputes and that with regard to the policy decisions, the courts, normally, shall not interfere.

‘Bound to pay port authority’

The Single Judge observed that once the Supreme Court has rendered its decision, the appellant and its holding company are bound to pay the sum due to the Port Authority and that through continuous litigative process, the appellant and its holding Company are preventing the Port Authority from collecting the huge amount due to i.

The Single Judge, taking into consideration all these aspects, found no arbitrariness in the act of the Port Authority and rightly dismissed the writ petitions.

Though there is no dispute with regard to the ratio laid down in the judgments relied upon by the learned senior counsels appearing for the appellant, since the facts and circumstances of the cases on hand are different, the same are not applicable.

“For the reasons stated above, we do not find any ground to interfere with the order passed by the learned Single Judge. The Writ Appeals are liable to be dismissed. Accordingly, the Writ Appeals are dismissed. No costs. Consequently, the connected miscellaneous petitions are closed,” the Division Bench said.

Published on

June 09, 2022

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