SC relief to PSA-SICAL in royalty dispute with VOC Port


In a major relief to cargo terminal operator PSA-SICAL Terminals Ltd, the Supreme Court on Friday ordered the Shipping Ministry and the V.O. Chidambaranar Port Trust, Thoothukudi to maintain status quo, restraining the authorities from initiating any action against the firm.

PSA SICAL has been embroiled in a contentious litigation, since 2014, over the tariff charges and the royalty being paid by the cargo terminal operator to the Chidambaranar Port Trust.

On June 7, the Madras High Court had rejected the challenge by PSA-SICAL to consideration of the issue by a special committee.

The Central government 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 Rs 1,027 crore against PSA-SICAL.

The port authority had also issued a termination order on the same date on June 7, to terminate the license agreement with PSA-SICAL and indicated that it would initiate the appropriate process for dispossession and recovery of dues.

With Friday's apex court order, the port authority would now be restrained from initiating any action towards the company.

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 a fixed royalty every month to the port authority. However, as time passed, the port authority kept escalating the 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 Senior Advocates Dr. Abhishek Manu Singhvi and Kavin Gulati assisted by the team from Karanjawala & Co.

The port authority was represented by Additional Solicitor General Madhavi Divan.


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