PSA-Sical gets apex court relief in Royalty dispute with VOC Port

Supreme Court orders shipping ministry and Chidambaranar Port Trust to maintain status quo, restrains port authorities from taking any action against the firm

Granting major relief to PSA-Sical Terminals Ltd, which operates a cargo terminal at the VO Chidambaranar Port in Thoothukudi, the Supreme Court on Friday ordered the Ministry of Shipping and the Chidambaranar Port Trust to maintain the status quo, restraining the Port Authority from initiating any action against the firm.

Early this month, a division bench of the Madras High Court had dismissed an appeal by the company seeking relief on a single bench order to settle the dispute over royalty payments. PSA-Sical, a joint venture between Port of Singapore Authority and Sical Logistics, has been embroiled in litigation since the year 2014, over the tariff charges and the royalty being paid by the Cargo Terminal Operator with Chidambaranar Port Trust.

PSA Sical was represented by Abhishek Manu Singhvi, Senior Advocate and Kavin Gulati, Senior Advocate, who was  assisted by the team from Karanjawala & Co. The Port Authority was represented by Madhavi Divan, Additional Solicitor General of India.

On June 7, the Madras High Court had rejected a plea before it by the company for considering the aforesaid issue before a committee specifically formed for the purpose. The Central Government had later unilaterally disbanded this committee before it could hear PSA-Sical, and replaced it with another committee. However, the Port Authority was of the view that the new Committee could no longer adjudicate the disputes. This led to a confirmation of a liability of over Rs 1,027 crore against PSA-Sical.

The Port Authority had also issued a termination Order on June 7, to terminate the license agreement with the company and indicated that it would initiate an appropriate process for dispossession and recovery of dues.

The disputes had originated between the parties under a License Agreement which was awarded to PSA Sical in 1998 to inter alia design, engineer, finance, erect and operate berth no. 7 of the Port called “Container Terminal” for a period of 30 years. Under the said License Agreement, the company had to pay fixed royalty every month to the Port Authority. However, as time passed, the Port Authority kept escalating the Royalty Charges every year, eventually the same being much higher than the average container handling charges that it allowed PSA Sical to charge, thus making it commercially unviable to operate, information shared by Karanjawala & Co said.