Supreme Court Orders Status Quo In Plea By PSA SICAL Terminals Limited

PSA SICAL has been embroiled in a contentious litigation, since the year 2014, over the tariff charges and the royalty being paid by the Cargo Terminal Operator with Chidambaranar Port Trust. The Hon'ble High Court of Madras, vide its judgment dated 07.06.2022 had rejected the challenge before it by PSA SICAL for consideration of the aforesaid issue before a Committee that was specifically formed for this issue. The Government of India had later unilaterally disbanded this Committee, before PSA SICAL was given an opportunity of a hearing before it and replaced it with another Committee, however, the Port Authority was of the view that the new Committee could no longer adjudicate upon the disputes. This led to a confirmation of a liability of over INR 1,027 crore against PSA SICAL.

The Port Authority had also issued a Termination Order on the same date, i.e., 07.06.2022, to terminate the License Agreement with PSA SICAL and indicated that it would initiate appropriate process for dispossession and recovery of dues. Vide today's order passed by the Hon'ble Supreme Court of India, a status quo has been directed due to which the Port Authority would now be restrained from initiating any action towards the above.

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, PSA SICAL 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.

PSA SICAL was represented by Dr. Abhishek Manu Singhvi, Senior Advocate and Mr. Kavin Gulati, Senior Advocate assisted by the team from Karanjawala & Co. led by Ms. Ruby Singh Ahuja, Senior Partner and Ms. Kritika Sachdeva and Mr. Varun Khanna, Senior Associates and the team from ZD Legal led by Mr. Zerick Dastur and Ms. Archana Uppuluri, Advocates.

The Port Authority was represented by Ms. Madhavi Divan, Ld. Additional Solicitor General of India.

Click here to read/ download the order