# Paradip Port Authority v. Paradeep Phosphates Ltd

- **Citation:** 2025 INSC 971
- **Court:** Supreme Court of India
- **Decided:** 2025-08-12
- **Case number:** Civil Appeal No. 10542 of 2025
- **Bench:** M.M. Sundresh, Rajesh Bindal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/paradip-port-authority-v-paradeep-phosphates-ltd-38626
- **Pages:** 32

## Headnote

The issue pertains to fixation of tariff by the Paradip Port Authority
(Earlier Paradip Port Trust). Whether it would be appropriate if an
expert appellate body is constituted to hear appeals against the
orders passed by the adjudicatory board/Tariff Authority for Major
Ports (TAMP).
Headnotes†
Major Port Trusts Act, 1963 - Major Port Authorities Act,
2021 - In C.A. No.10542 of 2025, an agreement was executed
between the parties, namely appellant-Paradip Port Trust
and respondent-Paradeep Phosphates Ltd on 03.08.1985 for
use of 'captive berth' in terms of the conditions laid down in
the Agreement - Appellant revised scale of rates for use of
various facilities at the Ports - Respondent sought waiver of
interest for delayed payment of certain dues from October
1993 to January 1996 - Proposal rejected by the appellant -
Dispute arose between the parties - Arbitral award was
passed - The Arbitrator held the appellant liable to refund
the enhanced amount of port services from October 1993 till
31.03.1999 - As the period of dispute for determination for
the Arbitrator was from October 1993 till 31.10.2001, for the
period from 01.04.1999 till 31.10.2001, the parties were given
option to approach the TAMP for resolution of their dispute -
Appellate Authority upheld the arbitral award - The award and
appellate order were subject matter of challenge in the Writ
Petition - The High Court dismissed the petition, upholding
the impugned award and the appellate order - Correctness:
Held: The issues required to be considered for revision of rates
applicable to the respondent for use of various facilities, have
* Author
1696
[2025] 8 S.C.R.
Supreme Court Reports
not been considered in the manner these were required to be
considered - The TAMP being an independent authority consisting
of experts, will be the right authority for resolution of dispute between
the parties, which is pending for more than two decades - The
Award of the Arbitrator, the order of the Appellate Authority and
also the order passed by the High Court are set aside - Matter
remitted to TAMP for adjudication of the dispute regarding revision
of tariff applicable to the respondent for the period from October
1993 till 31.03.1999. [Paras 33 and 34]
Major Port Trusts Act, 1963 - Major Port Authorities Act,
2021 - In C.A. No. 10543 of 2025, the order dated 11.01.2023
passed by the High Court is under challenge - Before the High
Court, an order passed by TAMP on 22.11.2011 was the subject
matter of challenge - Vide aforesaid order, tariff proposal for
the financial year 1999-2000 to 2009-10 was determined:
Held: Further, once this Court set aside the award of the Arbitrator,
order of the Appellate Court and also of the High Court pertaining
to the revision of the tariff for the period from October 1993 to
31.03.1999, and remitted the matter to be decided by TAMP, in
opinion of this Court, even the order pertaining to the period in
question also deserves to be set aside as the base for revision
of tariff for subsequent periods is yet to be determined - The
impugned order passed by the TAMP and also the High Court are
set aside - The matter is remitted to the TAMP for decision afresh
along with the matter for the period prior thereto. [Paras 46, 47]
Major Port Authorities Act, 2021 - Constitution of Appellate
Authority:
Held: The process for fixation of tariff presently by the TAMP or
the adjudicatory board, as constituted and provided for under
the 2021 Act, is the job of experts in the field - Direct appeals
have been provided against the order passed by the TAMP or
the adjudicatory board to this Court - Section 60 of the 2021 Act
provides for remedy of appeal against the order passed by the
adjudicatory board to this Court - Meaning thereby, first appeal
against the order passed by the adjudicatory board and at present
in its absence the TAMP, would lie to this Court - It cannot be
denied that fixation of tariff would involve consideration of various
factual aspects, especiall

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[2025] 8 S.C.R. 1695 : 2025 INSC 971
Paradip Port Authority
v.
Paradeep Phosphates Ltd.
(Civil Appeal No. 10542 of 2025)
12 August 2025
[M.M. Sundresh and Rajesh Bindal,* JJ.]
Issue for Consideration
The issue pertains to fixation of tariff by the Paradip Port Authority
(Earlier Paradip Port Trust). Whether it would be appropriate if an
expert appellate body is constituted to hear appeals against the
orders passed by the adjudicatory board/Tariff Authority for Major
Ports (TAMP).
Headnotes†
Major Port Trusts Act, 1963 - Major Port Authorities Act,
2021 - In C.A. No.10542 of 2025, an agreement was executed
between the parties, namely appellant-Paradip Port Trust
and respondent-Paradeep Phosphates Ltd on 03.08.1985 for
use of 'captive berth' in terms of the conditions laid down in
the Agreement - Appellant revised scale of rates for use of
various facilities at the Ports - Respondent sought waiver of
interest for delayed payment of certain dues from October
1993 to January 1996 - Proposal rejected by the appellant -
Dispute arose between the parties - Arbitral award was
passed - The Arbitrator held the appellant liable to refund
the enhanced amount of port services from October 1993 till
31.03.1999 - As the period of dispute for determination for
the Arbitrator was from October 1993 till 31.10.2001, for the
period from 01.04.1999 till 31.10.2001, the parties were given
option to approach the TAMP for resolution of their dispute -
Appellate Authority upheld the arbitral award - The award and
appellate order were subject matter of challenge in the Writ
Petition - The High Court dismissed the petition, upholding
the impugned award and the appellate order - Correctness:
Held: The issues required to be considered for revision of rates
applicable to the respondent for use of various facilities, have
* Author
1696
[2025] 8 S.C.R.
Supreme Court Reports
not been considered in the manner these were required to be
considered - The TAMP being an independent authority consisting
of experts, will be the right authority for resolution of dispute between
the parties, which is pending for more than two decades - The
Award of the Arbitrator, the order of the Appellate Authority and
also the order passed by the High Court are set aside - Matter
remitted to TAMP for adjudication of the dispute regarding revision
of tariff applicable to the respondent for the period from October
1993 till 31.03.1999. [Paras 33 and 34]
Major Port Trusts Act, 1963 - Major Port Authorities Act,
2021 - In C.A. No. 10543 of 2025, the order dated 11.01.2023
passed by the High Court is under challenge - Before the High
Court, an order passed by TAMP on 22.11.2011 was the subject
matter of challenge - Vide aforesaid order, tariff proposal for
the financial year 1999-2000 to 2009-10 was determined:
Held: Further, once this Court set aside the award of the Arbitrator,
order of the Appellate Court and also of the High Court pertaining
to the revision of the tariff for the period from October 1993 to
31.03.1999, and remitted the matter to be decided by TAMP, in
opinion of this Court, even the order pertaining to the period in
question also deserves to be set aside as the base for revision
of tariff for subsequent periods is yet to be determined - The
impugned order passed by the TAMP and also the High Court are
set aside - The matter is remitted to the TAMP for decision afresh
along with the matter for the period prior thereto. [Paras 46, 47]
Major Port Authorities Act, 2021 - Constitution of Appellate
Authority:
Held: The process for fixation of tariff presently by the TAMP or
the adjudicatory board, as constituted and provided for under
the 2021 Act, is the job of experts in the field - Direct appeals
have been provided against the order passed by the TAMP or
the adjudicatory board to this Court - Section 60 of the 2021 Act
provides for remedy of appeal against the order passed by the
adjudicatory board to this Court - Meaning thereby, first appeal
against the order passed by the adjudicatory board and at present
in its absence the TAMP, would lie to this Court - It cannot be
denied that fixation of tariff would involve consideration of various
factual aspects, especially figures involved - This Court may
[2025] 8 S.C.R.
1697
Paradip Port Authority v. Paradeep Phosphates Ltd.
not have the expertise to examine the accounts in detail for the
purpose of fixation of tariff - While deciding appeal against an
order of an expert body, all issues of law and fact are required to
be considered - There are other similar expert bodies which are
headed by technically qualified persons along with persons with
knowledge of accounting and economics - Therefore, it would
be appropriate if an expert appellate body is constituted to hear
appeals against the orders passed by the adjudicatory board/
TAMP. [Paras 48, 52, 54, 58, 60]
Case Law Cited
Patiala Central Cooperative Bank Ltd. v. Patiala Central Cooperative
Bank Employees' Union, 1996 INSC 1056 : [1996] Supp. 6 SCR
347 : (1996) 11 SCC 202; W.B. Electricity Regulatory Commission v.
CESC Ltd. (2002) 8 SCC 715; Rojer Mathew v. South Indian Bank
Limited, 2019 INSC 1236 : [2019] 16 SCR 1 : (2020) 6 SCC 1 -
referred to.
List of Acts
Major Port Trusts Act, 1963; Major Port Authorities Act, 2021.
List of Keywords
Fixation of tariff; Expert appellate body; Constitution of Appellate
Authority; Revision of rates applicable; Revision of tariff.
Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 10542 of 2025
From the Judgment and Order dated 11.01.2023 of the High Court
of Orissa at Cuttack in WP(C) No. 11 of 2010
With
Civil Appeal No. 10543 of 2025
Appearances for Parties
Advs. for the Appellant:
Jaideep Gupta, Sr. Adv., Dipak Kumar Jena, Pramod Kumar,
Ms. Smita Kumari, Pradeep Kumar Verma, Raj Shekhar Jena,
Sandip Munian, Ashutosh Singhdeo.
1698
[2025] 8 S.C.R.
Supreme Court Reports
Advs. for the Respondent:
Shyam Divan, Sr. Adv., Sanjeev K.kapoor, Ms. Anushka Sharda,
Ms. Raveena Rai, Arpith Jacob Varaprasad, Yajas Achal, M/s.
Khaitan & Co..
Judgment / Order of the Supreme Court
Judgment
Rajesh Bindal, J.
Table of Contents*
S. No.
Heading
Paras
Page
I.
Preliminary
1-3
2-3
II.
C.A. No.____ of 2025
arising out of S.L.P.(C) No.9751 of 2023
1.
Factual Aspects
4-16
3-9
2.
Arguments for the Appellant
17
9-13
3.
Arguments for the Respondent
18
13-17
4.
Discussion
19-33
17-28
5.
Conclusion
34
28-29
III.
C.A. No.____ of 2025
arising out of S.L.P.(C) No.9870 of 2023
1.
Factual Aspects
35
29-30
2.
Arguments for the Appellant
36-38
30-32
3.
Arguments for the Respondent
39
32
4.
Discussion
40-46
33-35
5.
Conclusion
47
35-36
IV.
Constitution of Appellate Authority
48-58
36-47
V.
Relief
61-62
47-48
1.
Leave granted.
2.
This order will dispose of two appeals.
* Ed. Note: Pagination as per the original Judgment.
[2025] 8 S.C.R.
1699
Paradip Port Authority v. Paradeep Phosphates Ltd.
3.
The issue pertains to fixation of tariff by the Paradip Port Authority1.
There were two Writ Petitions2 decided by the High Court by a
common order3. Both were filed by the appellant herein. Though the
period involved is different, the High Court had decided both the writ
petitions by a common order. For this reason, both the appeals are
being taken up and decided together.
C.A. NO. ____ OF 2025
ARISING OUT OF S.L.P.(C) NO.9751 OF 2023
FACTUAL ASPECTS
4.
The present appeal has been filed by the Appellant (formerly Paradip
Port Trust) challenging the common order of the High Court dated
11.01.2023 disposing of WP (C) No.11 of 2010.
5.
The aforesaid petition was filed against order dated 19.10.2009
passed by the Appellate Authority in appeal4, which upheld the
arbitral award5 dated 27.12.2002. The Appellant was ordered to
refund the additional amount charged till 31.03.1999 along with
interest, holding the same to be unilaterally enhanced. As far as
refund from 01.04.1999 and interest is concerned, both the parties
were directed to file petition before Tariff Authority for Major Ports
(hereinafter referred to as the TAMP). The award and appellate order
were subject matter of challenge in the Writ Petition.
6.
The High Court dismissed the petition, upholding the impugned
award and the appellate order.
7.
The appellant is a major port authority, governed by the provisions of
the 1963 Act6, which is now renamed as Paradip Port Authority (PPA)
under the 2021 Act7. The 1963 Act was replaced by the 2021 Act.
1
Earlier Paradip Port Trust
2
WP (C) No.732 of 2012 and WP (C) No.11 of 2010
3
Dated 11.01.2023
4
Appeal No.5/L.S/2003
5
Case No.MA/NCJ/12/2001dated 27.12.2002
6
Major Port Trusts Act, 1963
7
Major Port Authorities Act, 2021
1700
[2025] 8 S.C.R.
Supreme Court Reports
8.
The respondent herein was a public sector unit when it entered into
a bilateral agreement with the appellant/Authority on 03.08.1985. The
idea thereof, as is evident from the agreement, was that the appellant/
Authority agreed for construction of berth at Paradip Port, to be known
as Fertilizer Berth, to provide berthing facilities exclusively to the
respondent. The tariff to be paid by the respondent was prescribed in
the Agreement. The rates could be suitably enhanced at such intervals
as would be mutually agreed upon by the parties from time to time.
It was the responsibility of the respondent to make such construction
and install such equipments exclusively at their cost to ensure smooth
handling of its cargo. It was responsible for its maintenance as well.
Clause 19 of the Agreement provided that the respondent shall be
subjected to application of all relevant laws, rules and regulations
of the Paradip Port Trust, as may be applicable from time to time.
9.
In exercise of power conferred under Sections 48 to 52 of the 1963
Act, Traffic Department of Paradip Port Trust issued Notification8 dated
05.10.1993 for revision of scale of rates for use of various facilities
at the Ports. It was conveyed to the respondent. The payments were
made by respondent to the Authority at revised rates.
10. Vide letter dated 11.05.2000, the Appellant/authority while rejecting
request made by the Respondent for waiver of interest on account
of delayed payment of revised port charges, offered the facility of
payment thereof in 3-4 installments. This was replied to by the
respondent vide its letter dated 18.05.2000 seeking waiver of interest
on account of financial condition of the respondent. The appellant/
Authority responded to the same vide letter dated 31.05.2000 again
requesting for deposit of interest by 30.06.2000, failing which services
to respondent's incoming vessels would be stopped. The respondent
filed Civil Suit9 before the Civil Judge (Junior Division) praying for
declaration that appellant/Authority had no right to amend terms
and conditions of bilateral agreement dated 03.08.1985. Further,
the respondent prayed for injunction against appellant from giving
effect to the terms and conditions contained in the scale of rates
published on 05.10.1993, claiming that the same do not form part
of the bilateral agreement.
8
Notification No.1344
9
Original Suit No.115 of 2000
[2025] 8 S.C.R.
1701
Paradip Port Authority v. Paradeep Phosphates Ltd.
11. As the respondent on 15.09.2000 was still a public sector unit, the
Trial Court on that day directed the respondent to obtain clearance
certificate for litigation from the high power committee.
12. The Respondent being a public sector unit as on that date, a
supplementary agreement was signed between the parties on
10.08.2001 providing for resolution of dispute by arbitration. From
a reading of aforesaid supplementary agreement, it is evident that
the same was an informal mechanism for resolution of dispute as
the provisions of the Arbitration Act were strictly made inapplicable.
It may be relevant to add here that there was already a clause for
arbitration in the agreement signed between parties. The same was
not invoked.
13. The arbitrator was appointed. During the process of aforesaid
proceedings, by way of a share purchase agreement dated
28.02.2002, executed between the President of India and Zuari Maroc
Phosphates Private Limited, 76% shareholding of the Respondent
Company was transferred. As a result thereof, from 28.02.2002
onwards, the Respondent Company was a private sector entity.
14. The Arbitrator framed the following issues and answered them:
S. No.
ISSUE
ANSWER
I
What was the scope and
ambit of the agreement
entered into between the
parties?
Clause 19 of the agreement
shall be applicable only for
the other port charges and
cannot provide any help
to unilaterally change the
terms of the agreement.
II
Whether the tariff as provided
in the contract can be revised
unilaterally without the
consent of the other party?
No
III
Whether the rates revised
were reasonable and the
respondent in the given
circumstances was justified
to enhance the rates?
No
1702
[2025] 8 S.C.R.
Supreme Court Reports
IV
Whether the interest claimed
by the Port authorities for
delayed payment was
permissible under the contract
or under the statutory rules
and regulations, etc.?
Yes
V
Whether the claims and
counter claims filed by both
the parties are tenable in law
and on merit?
Port Authorities should
refund the amount charged
by them on the basis of
unilateral enhancement
from the initial dated till
31.03.1999.
As far as the refund and
interest from 1.04.1999 to
till date is concerned, both
the parties should make a
petition to the TAMP.
Finally, vide award dated 27.12.2002, the Arbitrator held the appellant
liable to refund the enhanced amount of port services from October
1993 till 31.03.1999. As the period of dispute for determination for
the Arbitrator was from October 1993 till 31.10.2001, for the period
from 01.04.1999 till 31.10.2001, the parties were given option to
approach the TAMP for resolution of their dispute.
15. As per the procedure agreed upon by the parties, the appellant/
Authority preferred an appeal against the aforesaid Award. After
filing of the appeal, there was lot of litigation between the parties,
which is not relevant for the purpose of the issues raised in the
present appeal, except that on 30.05.2009, resolution was passed
by the Appellant-Authority to withdraw easementary rights given
to the Respondent. A proposal to recover a sum of ₹40.36 Crores
from the Respondent was also approved as arrears towards revision
of tariff in line with IFFCO tariff for the period from March 2002 till
January 2009.
15.1 On 02.06.2009, the aforesaid resolution was communicated
to Respondent invoking clause 21 of the agreement dated
03.08.1985.
[2025] 8 S.C.R.
1703
Paradip Port Authority v. Paradeep Phosphates Ltd.
15.2 Challenging the aforesaid communication dated 02.06.2009,
the Respondent filed Writ Petition10 in the High Court. Noticing
the fact that on the same issue, a Civil Suit No.55/2009 was
pending in court of Civil Judge Junior Division Kujang, which
the Respondent offered to withdraw, and noticing the fact
that proceedings were also pending before TAMP for fixation
of tariff for the earlier periods, matter was left open to be
decided by TAMP.
15.3 Vide order dated 19.10.2009, the Appellate Authority rejected
the appeal filed by the Appellant against the award of Arbitrator
dated 27.12.2002.
15.4 Aggrieved against the order passed by the Appellate Authority,
the Appellant/Authority preferred Writ Petition11 before the High
Court which was dismissed
16. In the Writ Petition filed by Appellant/Authority, the award of the
arbitrator and Appellate Authority was upheld. The order of High
Court is under challenged in this Appeal.
ARGUMENTS FOR THE APPELLANT
17. Mr. Jaideep Gupta, learned senior counsel appearing for the appellant/
Authority, submitted that Clause 1 of the Agreement provides that the
captive berth shall be exclusively used by the respondent, subject
to payment of tariff as mentioned in the Schedule annexed to the
Agreement. The rate was subject to enhancement at such intervals
as would be mutually agreed upon by the parties. Clause 19 of the
Agreement clearly provides that the respondent shall be subjected
to the application of all relevant laws, rules and regulations of the
Authority as may be enforced from time to time. In the case in hand,
certain tariff was fixed when the Agreement was entered into between
the parties on 03.08.1985. That cannot be said to be an Agreement
providing for the tariff fixed for all times to come. That is the reason
why an enabling provision was provided for revision of tariff. The
Agreement clearly envisages application of laws, rules and regulations
to the respondent. In case the parties failed to agree to mutually
settled terms for revision of tariff, the law will take its own course
10
WP (C) No. 86509 of 2009
11
Writ Petition (C) No.11 of 2010
1704
[2025] 8 S.C.R.
Supreme Court Reports
17.1 Learned senior counsel also referred to the pleadings by the
respondent in the civil suit filed. It is the admitted case of the
respondent therein that in the year 1993-94 a proposal was
made by the appellant/Authority for revision of tariff, to which
the respondent objected vide letter dated 16.03.1993. Still, the
appellant/Authority forcibly enhanced the tariff unilaterally from
October 1993. The aforesaid admitted fact in the suit filed by the
respondent clearly establishes that initially an effort was made
for revision of tariff by mutual consent, however, respondent
having not agreed to the same, the Appellant/Authority did not
have any other option but to proceed in terms of provisions of
Sections 48 to 52 of the 1963 Act. A notification was issued
on 05.10.1993. After issuance of the aforesaid notification,
the respondent continued to pay the revised tariff without any
objection till the time the aforesaid civil suit dated 30.06.2000
was filed. The same being cleverly drafted, had only sought
the relief of declaration and permanent injunction. The relief
being that the appellant/Authority could not amend the terms
of the Agreement dated 03.08.1985; the appellant/Authority
could not give effect to the revised rates as published in the
year 1993 and permanently injuncting the appellant/Authority
from giving effect to 1993 Notification. No relief was claimed for
any refund of the amount already deposited by the respondent
in terms of rates revised vide Notification dated 05.10.1993.
17.2 It was further submitted that the aforesaid arguments were
specifically raised before the Arbitrator, in appeal against the
Award and in the Writ Petition before the High Court, however,
the same were not considered. The same goes to the root of
the case and needs examination by this Court. The arbitration
could be in terms of the claim made by the respondent in the
civil suit and not beyond that. In fact, from the conduct of the
respondent, it did not have right to challenge the revised tariff
as notified on 05.10.1993 as without any objection the same
was paid till the filing of the suit dated 30.06.2000. Referring
to Section 55 of the 1963 Act, it was submitted that though no
claim for refund of any amount was made in the civil suit on
the basis of which the arbitration proceedings were conducted,
any claim of refund could be filed within six months only. In the
case in hand, the refund was never claimed by the respondent.
[2025] 8 S.C.R.
1705
Paradip Port Authority v. Paradeep Phosphates Ltd.
It was further argued that there is basic error in the Award of
the Arbitrator because refund was claimed for the period from
October 1993 till 31.03.1999. The issue for revision of tariff was
not considered any further either in appeal or in writ petition.
It was held that the provisions of the Act will not apply even
if there was failure on the part of the parties to agree upon
for revised tariff. Whereas, for the period from 01.04.1999,
the finding given is that TAMP constituted under Section 47A
of the 1963 Act will have jurisdiction to determine the tariff.
In the Award of the Arbitrator the period so mentioned was
from 01.04.1999 to 31.10.2001. In addition to the aforesaid
period vide an order passed by the High Court on 08.07.2009
in Writ Petition No.8509 of 2009, a direction was given for
consideration of such an issue by TAMP even for the period
subsequent thereto.
17.3 Further argument was raised that even otherwise, the claim
made by the respondent, even though it may be considered
admissible for the argument's sake, shall be time-barred as
the suit for raising an issue regarding tariff from October 1993
onwards was filed in June/July 2000.
ARGUMENTS FOR THE RESPONDENT
18. On the other hand, Mr. Shyam Divan, learned senior counsel
appearing for the respondents, submitted that the case in hand does
not call for any interference by this Court. The issue has already been
examined at three different levels, namely, Arbitrator, the Appellate
Authority and thereafter in a Writ Petition by the High Court. There
are concurrent findings of fact. Hence, the scope of interference
by this Court is minimal unless there is grave error, and the views
expressed by the authorities or the court are not plausible.
18.1 The disputed period from the year 1993 to 1999, has been
dealt with in the Award of the Arbitrator. There is no issue after
01.04.1999 as TAMP has been constituted. Even otherwise,
in the factual matrix, specially which are to be dealt with by
the Expert Bodies, the courts adopt a hands-off approach.
Referring to the provisions of the Agreement entered between
the parties on 03.08.1985, the submission is that Clause I
thereof in fact is a primary clause. The tariff rates have been
1706
[2025] 8 S.C.R.
Supreme Court Reports
agreed upon. It further provides that the increase, if any, in
future can only be with mutual agreement. In case the parties
failed to mutually agree upon revision of tariff, the issue may
have to be resolved by an independent third party. It can be
by way of arbitration or may be by any other remedy. Schedule
attached to the agreement was referred to. It was highlighted
from there that some of the rates as agreed upon were fixed
minimum charges whereas some were variable. Clause II of
the Schedule is also relevant in that context which deals with
additional charges payable by respondent, namely, tug hire,
pilotage and port dues only as per the scale of rates and no
other charges like berth hire, warping, mooring or immuring
charges are payable.
18.2 Further, reference was made to Clause 20 of the agreement
which specifies that if there is any dispute arising out of and
in relation to clauses of Agreement or for interpretation of
any terms of the Agreement, the matter shall be referred to
arbitration. Clause 2 of the Agreement clearly specifies that the
entire construction had to be raised by the Respondent. Once
rates have clearly been defined in the agreement as agreed
upon between the parties, there is no need for invocation of
Clause 19 of the Agreement. The rates which have been agreed
upon between the parties are not the normal rates which may
be applicable for any other importer. In the business world,
such types of agreement are entered into which are for mutual
benefit with an idea to promote business.
18.3 In response to the arguments raised by Mr. Jaideep Gupta,
learned senior counsel appearing for the appellant that the
respondents had paid the revised charges from 1993 to 1999
without raising any objection, reference was made to various
correspondence between the parties starting from 16.03.1993.
It was at the stage when there was proposal for revision of
rates as was notified on 05.10.1993. The suit had to be filed
in June 2000 when Respondent was requested to deposit
the net outstanding interest amounting to ₹38,58,718/- latest
by 30.06.2000, failing which Appellant would have stopped
services to the incoming vessels. It was during the pendency
of the suit that on agreed terms the matter was referred to
arbitration on 10.08.2001. It was during the pendency of the
[2025] 8 S.C.R.
1707
Paradip Port Authority v. Paradeep Phosphates Ltd.
arbitration proceedings that Respondent, which was a public
sector unit, was sold off to a private player on 28.02.2002.
18.4 To buttress the argument that the Award of the Arbitrator,
which was upheld by the Appellate Authority and thereafter
by the High Court, has dealt with all the issue threadbare, it
was submitted that firstly, the Arbitrator framed issues with
the consent of both the parties. Insofar as the main issue is
concerned regarding justification of revision of rates, despite
opportunity granted to the respondents no material was placed
before the Arbitrator which could justify revision of rates as
sought by the Appellant/Authority. As far as the enabling
provision in the Agreement regarding revision of the rates by
mutual agreement is concerned, the finding recorded by the
Arbitrator was not disputed.
18.5 Reference was made to the order passed by the Appellate
Authority which again examined the Award of the Arbitrator and
has recorded categoric finding that there was no error therein.
The issue was thereafter considered by the High Court which
also upheld the same. There are limited grounds on which an
award of the Arbitrator can be interfered with.
18.6. He further argued that reliance on the revision of rates by
the Wage Board in 1994, could not be the basis for revision
of tariff in 1993.
DISCUSSION
19. We have heard learned counsel for the parties and perused the
relevant referred record.
20. The facts of the case are not in dispute that an agreement was
executed between the parties, namely Paradip Port Trust and
Paradeep Phosphates Ltd on 03.08.1985 for use of 'captive berth' in
terms of the conditions laid down in the Agreement. At the time when
the aforesaid agreement was executed, the respondent/Paradeep
Phosphates Ltd. was a public sector unit. Clause 1 and 19 of the
Agreement which are relevant for consideration of the issues in
question are extracted below:
"1. That the said Captive berth shall be exclusively
provided for use of the Paradeep Phosphates Ltd., subject
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to payment of the Rate mentioned in the schedule of rates;
annexed to the agreement and will become payable one
calendar month after the berthing of the Ist vessel at this
berth. The rates now charged can be suitably enhanced
at such intervals as would be mutually agreed upon by
the parties from time to time.
x x x x
19. That the Paradip Phosphates, shall be subjected to
the application of all relevant laws, rules and regulations
of the Paradip Port Trust that are for the time being in
force and that would be framed and enforced from time
to time."
20.1. Along with the Agreement a Schedule was annexed which
provided for tariff for different facilities to be used by the
respondent. Part of the same were fixed whereas other charges
namely tug hire, pilotage and port dues were to be paid as
per the scale of rates.
20.2. A perusal of Clause 1 of the Agreement shows that the facilities
could be used subject to payment of the rate mentioned in
the schedule of rates, and the rates charged can be suitably
enhanced at such intervals as would be mutually agreed upon
between the parties from time to time.
20.3. Clause 19 provides that the respondent shall be subjected to
the application of all relevant laws, rules and regulations of
the Paradip Port Trust.
21. Merely because an Agreement was entered into between the parties,
the same cannot override the provisions of law. The terms of the
Agreement only provides for creation of facilities and certain tariff to
be charged from the respondent, which could be revised from time
to time as agreed. In case the parties do not agree with the revision
of tariff the same will not remain in abeyance as some authority
has to resolve this issue. Even the counsel for the respondent did
not dispute this fact. After the aforesaid Agreement was executed,
as cost and overheads on many aspects had increased, vide
communication dated 08.04.1993, the appellant had written to the
respondent mentioning that ever since the agreement was entered
into, the port charges had increased by 50% during 1989, whereas
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Paradip Port Authority v. Paradeep Phosphates Ltd.
no revision of tariff was made for the respondent. Though, as per
the proposed rates, the increase in tariff for others may be in the
range of 40 to 50%, whereas for the respondent the additional tariff
will be only 25%. Option was given to the respondent in case any
discussion was required. From the record before this Court there
was nothing to show that any reply was given by the respondent to
the aforesaid communication.
21.1. Vide Notification dated 05.10.1993, in exercise of power
conferred with the competent authority under Sections 48 to
52 of the 1963 Act, new scale of rates were notified for use
of port facilities. The aforesaid notification in Clause 3.1.1
provided for separate rates for the respondent, as compared
to the normal rates for other users of the port facilities. The
respondent continued paying the revised rates without any
objection.
21.2. A communication dated 11.05.2000 from the appellant to the
respondent has been referred to, which talks about rejection of
the proposal of the respondent for waiver of interest for delayed
payment of certain dues from October 1993 to January 1996
and request for payment of the outstanding amount of interest.
Opportunity was given to pay the arrears in 3-4 installments. In
response to the aforesaid communication, the respondent vide
letter dated 18.05.2000, on the subject of waiver of interest
for belated payment, submitted that the respondent had been
requesting for revision of existing agreement in the present
day context. To dispute payment of interest, it was submitted
that there was no provision in the Agreement for the purpose.
Request for waiver of interest was rejected by the appellant
vide communication dated 31.05.2000. Time was granted up
to 30.06.2000 for payment of the outstanding interest, failing
which the appellant may be constrained to stop the facilities
provided for.
22. The respondent filed a civil suit praying for the following reliefs:
"a) To declare that the Defendants and their agents
have no right to amend the terms and conditions of
the bilateral agreement dated 3.8.1985, unilaterally.
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b)
To declare that the defendant and their agents have
no right to give effect to the terms and conditions
contained in the Scale of Rates published by them in
the year 1993 which do not form part of the bilateral
agreement dated 3.8.1985.
c)
To permanently injunct the defendants their agents
and officers from giving effect to the terms and
conditions contained in the scale of Rates published
by the Defendants in the year 1993. To allow any
other relief(s) as it may deem proper in the facts
and circumstances of the case. And for which act of
kindness the Plaintiff shall ever pray as in duty bound."
23. Interim stay was granted on 30.06.2000. Vide order dated 15.09.2000,
the Trial Court in the aforesaid suit directed the respondent/plaintiff
in the civil suit to obtain clearance from the High Power Committee
as two public sector units were party to the litigation.
24. It may be out of place if not mentioned here that in the Agreement
signed between the parties, Clause 20 provided for reference of
any dispute, arising out of or in relation to any of the clause of the
agreement, to arbitration. The parties agreed for resolution of disputes
by adopting an informal mechanism and an agreement was signed
on 10.08.2000 in that regard. It provided for the reference of dispute
to the Arbitrator as mentioned in the clause, and in case any of the
parties was aggrieved of the award, the remedy of appeal was also
provided. The clause specifically mentioned that the Arbitration Act
shall not be applicable to the arbitration under this clause. The terms
agreed on 10.08.2000 are extracted below:
"In the event of any dispute or differences relating to the
interpretation and application of the provisions of the
contracts, such dispute or difference shall be referred by
either party to the Arbitration of one of the Arbitrators in
the Department of Public Enterprises to be nominated by
the Secretary to the Government of India in charge of the
Bureau of Public Enterprises. The Arbitration Act, 1940 shall
not be applicable to the arbitration under this clause. The
award of the Arbitrator shall be binding upon the parties
to the dispute, provided however, any party aggrieved by
such award may make a further reference for setting aside
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Paradip Port Authority v. Paradeep Phosphates Ltd.
or revision of the award to the Law Secretary, Department
of Legal Affairs, Ministry of Law & Justice, Government of
India. Upon such reference the dispute shall be decided
by the Law Secretary or the Special Secretary/Additional
Secretary when so authorised by the Law Secretary, whose
decision shall bind the Parties finally and conclusively.
The parties to the dispute will share equally the cost of
arbitration as intimated by the Arbitrator."
25. We deem it appropriate to deal with the argument raised by the learned
senior counsel for the respondent at this stage regarding challenge
to the award of the Arbitrator on limited ground as enumerated
under Section 34 of the Arbitration and Conciliation Act, 199612. As
it was agreed upon between the parties that the Arbitration Act will
not be applicable, it was an informal in-house procedure adopted
by the parties for resolution of the dispute where public sector units
were involved, hence, the principles laid down for the examination
of award given under the 1996 Act will not be applicable.
26. On 30.11.2001, a statement of claim was filed before the Arbitrator.
While the matter was at the stage of completion of pleadings, vide
Agreement dated 28.02.2022, the President of India transferred 74%
shares in the respondent company to Zuari Maroc Phosphates Private
Limited. As a result of which the respondent became a private entity
and was no longer a public sector unit. The Arbitrator passed an
award on 27.12.2002 recording certain findings, which were contrary
to law and anomalous.
26.1. The Award held that only Clause '1' of the Agreement will apply
and not Clause '19'. The aforesaid finding goes against the
very basic principle that the entire agreement has to be read
as a whole and not different clauses in isolation.
26.2. On the second issue as to whether the tariff provided in the
agreement could be revised unilaterally by the appellant
without the consent of the respondent, it was opined that the
appellant should have sought consent of the respondent. If the
consent is not received, the appellant could have terminated
the Agreement or referred the matter to an arbitrator to decide
12
Hereinafter referred to as 'the 1996 Act'
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the question of such enhancement. The enhancement of
rates from October 1993 was quashed. For the period from
01.04.1999 onwards, the parties were given liberty to approach
the TAMP. This was done while referring to the instance of
M/s Oswal Chemicals and Fertilizers Ltd.
26.3. On the issue of whether the rates revised were reasonable,
the claim was rejected. But the issue regarding levy of interest
for delayed payments was decided in favour of the appellant
by referring to the regulations framed by the appellant. In that
regard, reference was made to Clause 19 of the Agreement.
27. Further, it was argued that since the exercise had already been
undertaken, no interference was warranted. It is a little surprising to
note that the Arbitrator, Appellate Authority and also the High Court
did not find any justification for revision of rates which were fixed
way back in the year 1985 till 1999. The fact remains that during
the interregnum, periodically the port charges were revised from
time to time vide notifications issued in years 2000, 2005, 2007 and
2011. It cannot be disputed that during the interregnum the cost
of many inputs and services being provided by the appellant must
have increased manifold; even the salaries of the employees and
the wages of the workmen. Calculations in such cases cannot be
with mathematical precision.
28. A perusal of the order passed by the Appellate Authority shows
that the same is totally cryptic. Being the first Appellate Authority, it
was incumbent upon it to re-examine the facts in terms of the law
applicable. The Appellate Authority had merely re-written some of
the findings of the Arbitrator, barely stating that the sole arbitrator
had correctly decided the issue. The Appellate Authority has not
considered the factual aspect of the matter regarding revision of rates.
29. The High Court while considering the issue has totally misdirected
itself by holding that the Agreement will override the provisions of
the 1963 Act. Reliance by Respondent on a judgment in Patiala
Central Cooperative Bank Ltd. vs Patiala Central Cooperative Bank
Employees' Union13 under the Industrial Disputes Act, 1948 was
13
1996 INSC 1056 : (1996) 11 SCC 202
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Paradip Port Authority v. Paradeep Phosphates Ltd.
totally misplaced. The issues, though required to be dealt with in
detail, were not discussed.
30. It is not in dispute that from time to time tariff has been revised
by the appellant in terms of the provisions of the 1963 Act. Three
different notifications have been issued on 27.04.2000, 12.01.2005,
31.10.2007 and 23.05.2011 as pointed out at the time of hearing.
31. A fact that cannot be lost sight of is that by ignoring the arbitration
clause in the Agreement signed between the parties, an informal
mechanism was agreed upon, as both parties were public sector
units. The idea was to resolve the issue. However, the fact remains
that after the informal arbitration process started, with the transfer
of 74% shares of the respondent to a private sector company, the
dispute had taken the shape of contested litigation, which was
required to be adjudged by an expert body and not in the manner
it had been dealt with.
32. It is important to note that the 1963 Act was replaced by the 2021
Act. In the 1963 Act, Chapter V-A, consisting of Sections 47-A to
47-H, was added w.e.f. 09.01.1997. It provides for the constitution
of a 'Tariff Authority' for fixation of scales of units for using various
facilities provided at the port. The authority consisted of a Chairman,
from amongst persons who is or who has been a Secretary to the
Government of India or has held any equivalent post in the Central
Government and two other Members who have expertise in the
subject; one Member from amongst economists having experience
of not less than fifteen years in the field of transport or foreign trade
and another Member from amongst persons having experience
of not less than fifteen years in the field of finance with special
reference to investment or cost analysis in the Government or in
any financial institution or industrial or service sector. Even in the
informal arbitration, the Arbitrator, while deciding the dispute for part
of the period, namely, October 1993 to 31.03.1999 had referred the
parties to invoke the jurisdiction of TAMP for the period subsequent
thereto, namely, 01.04.1999 to 31.10.2001. The reason for this
was that TAMP came into existence on 01.04.1999, even though
the amendment to the 1963 Act had been made earlier in 1997.
The 1963 Act has been replaced by the 2021 Act with effect from
03.11.2021. Section 54 thereof provides for the constitution of an
'Adjudicatory Board' for the purpose of fixation of tariff. Hence, as
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on today, it should be the board which should have adjudicated this
dispute.