Supreme Court orders status quo in an appeal by PSA-Sical Terminals

BL Chennai Bureau | | Updated on: Jun 19, 2022

The Apex Court issued notices and allowed a counter affidavit to be filed

In a relief to PSA-Sical (petitioner), the private container terminal operator at VO Chidambaranar port in Thoothukudi, Tamil Nadu, the Supreme Court on Friday ordered a  status quo on an appeal filed by the petitioner against the termination notice issued by the VOC Port Authority.

The order by a vacation bench comprising Justice JK Maheshwari and Justice Hima Kohli, after hearing, issued notice to the Ministry of Shipping and the VOC Port Authority (respondents) and let the counter affidavit be filed. In the meanwhile, the status quo as on date shall be maintained, the order said.

PSA-Sical, which signed a 30-year contract with Tuticorin Port Trust (now called VO Chidambaranar Port Authority) in 1998, was served a termination notice (second notice) on June 7 by the port authority for non-payment of royalty dues to the tune of ₹1,090 crore as on December 31, 2021. The notice was issued after the terminal operator lost an appeal in the Madras High Court.

Legal battle

PSA-Sical, a joint venture between the Port of Singapore Authority and Sical Logistics, has been operating the terminal for the last 23 years. The terminal, which has an annual capacity to handle 4.17 lakh twenty-foot equivalent units (TEUs), handled 2.13 lakh TEUs in 2021-22, according to VOC port data.

But for over a decade, PSA-Sical and the port authority have been locked in a legal battle over the payment of royalty. Multiple litigations were filed, and all of them were decided in favour of the port authority.

The first termination notice was issued to the operator in October 2021 after the Supreme Court ruled in favour of the port authority. Subsequently, PSA-Sical approached the Madras High Court against the termination order, but a single judge dismissed the writ petition in January. The operator then went on appeal. However, the Division Bench dismissed the appeal, upholding the order of the Single Judge.

The Division Bench, comprising Justice M Duraiswamy and Justice TV Thamilselvi, in its order on June 7, said that with PSA-Sical having accepted and entered into an agreement with the VOC Port Authority for payment of royalty with a provision for yearly escalation, it cannot turn around and take a different stand now.

Published on June 19, 2022
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