Unknown vs Tariff Authority For Major Ports
2023 Latest Caselaw 396 Ori

         IN THE HIGH COURT OF ORISSA AT CUTTACK

           W.P.(C) No.732 of 2012 and W.P.(C) No.11 of 2010

  Board of Trustees of Paradip Port Trust
  (In W.P.(C) No.732 of 2012)
                                                    ....        Petitioners
  Paradip Port Trust
  (In W.P.(C) No.11 of 2010)
                                  -versus-
  Tariff Authority for Major             Ports,
  Mumbai and another
  (In W.P.(C) No.732 of 2012)                       .... Opposite Parties

  Paradeep Phosphates Ltd., Bhubaneswar
  (In W.P.(C) No.11 of 2010)

  For Petitioners             :                 Mr. Saurjya Kanta Padhi,
                                             Senior Advocate assisted by
                                             Mr. K. J. Prakash, Advocate

  For Opposite Parties        :                  Mr. Ashok Kumar Parija,
                                              Senior Advocate assisted by
                                             Mr. S. Satyakama, Advocate
        CORAM:
        THE CHIEF JUSTICE
        JUSTICE M.S. RAMAN
                              JUDGMENT

11.01.2023 Dr. S. Muralidhar, CJ.

1. These two writ petitions are by the Paradip Port Trust (PPT) through its Board of Trustees. The first writ petition i.e. W.P.(C) No.11 of 2010 challenges an Award dated 27th December, 2002 passed by the Joint Secretary and Arbitrator in the Department of Public Enterprises disposing of the claims of the Opposite Party

Paradeep Phosphates Ltd (PPL) and the counter claims of PPT. Also challenged is the order dated 19th October, 2009 passed by the Additional Secretary and Appellate Authority, Department of Legal Affairs, Ministry of Law and Justice, dismissing the appeal filed by the PPT against the aforementioned Award dated 27th December, 2002 of the Joint Secretary.

2. On 24th February 2010, while setting down the writ petition for a final hearing, an interim order was passed that the Award dated 27th December, 2002 and the Appellate Order dated 19th October, 2009 "shall not be given effect to without the leave of this Court."

3. By a subsequent order dated 2nd April 2010, this Court declined to vary or modify the said order. The Court noted in the said order that arising from the execution proceedings filed by PPL for enforcement of the Award, SLP(C) No.14811 of 2009 was pending in the Supreme Court of India. It may be noted here that the said SLP was subsequently disposed of by an order dated 12th January, 2016 declining to interfere with the order of this Court and permitting the parties to urge all the pleas in the present writ petitions.

4. As far as W.P.(C) No.11 of 2010 is concerned, the relevant facts are that PPT is a Major Port Trust governed by the Major Port Trust Act, 1963 (MPT Act) and is now renamed as Paradip Port Authority (PPA) under the Major Port Authority Act, 2021 (MPA Act). On 3rd August 1985, PPT entered into an agreement with PPL,

which was at that point in time a Government of India undertaking. Under the agreement, PPL was provided with the facility of using a 'captive berth' at the Paradip Port. The relevant clauses of the said agreement read as under:

"xxx xxx xxx Whereas the Paradip Phosphates Ltd., for import of raw materials, machineries, equipments and export of its finished products in future, essentially require berthing facilities in the Paradip Port.

AND

Whereas the Paradip Trust agreed for construction of such a Berth in the Paradip Port, hereinafter called the Fertilizer Berth, meant and proposed to provide berthing facilities exclusively for the Paradip Phosphates Ltd. on the following amongst other terms and conditions.

1. That the said Captive berth shall be exclusively provided for use of the Paradip Phosphates Ltd., subject 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 1st 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.

xxx xxx xxx

4. That the Paradip Phosphates Ltd., shall be completely responsible to manage the facilities built by them for unloading and loading of ships and for storage, handling and transportation of Cargo at the Fertilizer Berth in any manner, mechanically or manually and the Paradip Port Trust shall not be responsible in any manner whatsoever. To carry out the above work only personnel of the Paradip Phosphates Ltd., or its authorized representatives shall be used.

xxx xxx xxx

19. That the Paradip Phosphates Ltd., 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."

5. It must be noted at this stage that under the MPT Act a procedure was provided for fixing scales of rates for services performed by Board. Chapter-VI of the MPT Act is titled "Imposition and Recovery of Rates at Ports" and Section 48 of the MPT Act speaks of framing of scale of rates by the Board of Trustees of a port. Under Section 52 of the MPT Act, every scale of rates and every statement of conditions framed by the Board "shall be submitted to the Central Government for sanction and shall have effect when so sanctioned and published by the Board in the Official Gazette."

6. At the time of entering into the agreement, the berth hire charges was fixed at Rs.30 lakhs per month and as regards wharfage, the rate was fixed at Rs.70 per metric ton (MT) for wharfage up to 3 lakhs MT per annum with a reducing scale up to Rs.10 per MT where the wharfage was Rs.12 lakhs MT and above. Till 1993, there was no change in the above rates.

7. On 5th October 1993, in exercise of the powers under Sections 48, 49, 50 and 52 of the MPT Act, the Board of Trustees of PPT published scale of rates applicable to all users of the Port including PPL. In terms of the revised rates while the berth hire charges remained unchanged at Rs.30 lakhs per month, the wharfage rates

varied from Rs.65 per MT for wharfage upto 5 lakhs MT per annum to Rs.50 per MT where the wharfage was between 5 and 10 lakhs and Rs.25 per MT where the wharfage was 10 lakhs and above.

8. It is the case of PPL that it kept protesting against a unilateral action of PPT in revising the above tariffs. Since both the entities viz., PPL and PPT were Public Sector Undertakings (PSUs) at the relevant time, the corresponding two Ministries viz., Ministry of Surface Transport and Ministry of Fertilizers were involved in negotiations for settling the issue. It appears that on 31st May 2000, the Traffic Manager of PPT handed over the decision of the Board of Trustees to PPL requiring the PPL to deposit the up-to-date interest on all delayed payments in terms of the revised tariff. Claiming this to be the trigger, PPT filed Original Suit No.115 of 2000 in the Court of the Civil Judge (Junior Division), Kujanga challenging the revision of the tariff notified by PPT on 5th October, 1993.

9. Since both the PPT and PPL were PSUs, their disputes were referred for adjudication to the Joint Secretary, Ministry of Heavy Industries, Department of Public Enterprises, Government of India on 31st August, 2001. While the disputes were pending adjudication by way of arbitration by the Joint Secretary, the Government of India (GOI) decided to disinvest its shares in PPL. The GOI's equity share holding was, on 28th February 2002, transferred to M/s. Juari Agro, a private sector enterprise under the Birla Group. With this transfer of shares, PPL ceased to be a PSU.

10. It must be noted here that another important change took place with the constitution of the Tariff Authority for Major Ports (TAMP) with effect from 1st April, 1999. This was done Amendment Act of 1997, whereby Chapter V-A was inserted in the MPT Act. Under Section 47-A of the MPT Act, the TAMP was constituted. This was to be a three-Member body with the Chairperson being selected from amongst persons who are presently or had been Secretary to the Government of India or held any equivalent post in the Central Government and having experience in the management and knowledge of the functioning of the ports; a Member from amongst economists having experience of not less than fifteen years in the field of transport or foreign trade; and a third 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 services sector."

11. Consequently, for the period post 1st April, 1999 for further revision of the tariff fixed by it, the PPT went before the TAMP. The final order of TAMP was rendered on 22nd November 2011, which declined to revise the tariff as claimed by PPT resulting in PPT filing the second writ petition i.e. W.P.(C) No.732 of 2012 to challenge the aforementioned order of the TAMP.

12. Mr. Saurjya Kanta Padhi, learned Senior Counsel appearing for the PPT submits that notwithstanding Clause 1 of the agreement in

terms of which the rates were to be "suitably enhanced at such intervals as would be mutually agreed upon by the parties from time to time", the power of the Board of Trustees of PPT to revise the tariff under Section 48 of the MPT Act remained unaffected. In other words, it is submitted that a clause in the agreement between the parties cannot override the statutory power under Section 48 of the MPT Act. In support of such contention, reliance is placed on the decision of the Supreme Court of India in Patiala Central Cooperative Bank Ltd. v. Patiala Central Cooperative Bank Employees' Union (1996) 11 SCC 202. It is further submitted the Arbitrator/Joint Secretary overlooked this legal position in the Award dated 27th December, 2002, which decided the issue in favour of PPL.

13. Secondly, it is submitted by Mr. Padhi that PPL's claim was itself barred by laches. It was raised seven years after the revision of the tariff by the PPT on 5th October, 1993. Consequently, PPL's claims ought to have been rejected on that ground alone. Thirdly, it is submitted that with PPL now being no longer a PSU, it could not claim parity with other PSU fertilizer companies like IFFCO. It would be inequitable to expect PPT to continue to charge the low rates fixed way back in 1985, which rates have virtually continued unchanged till date.

14. As regards the decision of TAMP declining the proposals of PPT for revision of tariff, it is submitted that PPT was not afforded an opportunity of being heard before the final decision was taken by

TAMP and, therefore, its order ought to be interfered with by this Court.

15. Appearing for PPL, Mr. Ashok Kumar Parija, learned Senior counsel, points out that as far as the Award dated 27th December, 2002 as affirmed in appeal by the Appellate Order dated 19th October 2009, it covered the period between 1993 to 1st April, 1999 during which time PPL was in fact a PSU. For the period subsequent thereto, the position stood covered by the order of TAMP, which was a statutory body specifically tasked with fixing tariffs in terms of Section 47-A of the MPT Act.

16. Mr. Parija submits that the scope of interference by this Court in exercise of its writ jurisdiction under Article 226 of the Constitution of India with the decision of a tariff fixing body like the TAMP is limited. It is submitted that only where manifest unreasonableness or arbitrariness is made out and where there has been a violation of the procedural requirements can there be interference by the Court. He points out that the proceedings before the TAMP involved several 'joint hearings' and adequate opportunity was provided to the PPT to respond to the counter proposals and submissions of the PPL throughout the hearings.

17. Mr. Parija refers to the decision of the Supreme Court in Reliance Infrastructure Limited v. State of Maharashtra (2019) 3 SCC 352 and urges that this Court should not interfere with the reasoned order of the TAMP or for that matter with the award and

the Appellate Order of the functionaries of the GOI, which have been challenged in W.P.(C) No.11 of 2010. He submits that the plea that the claim of PPL vis-à-vis the first tariff revision effected on 5th October, 1993 was time barred overlooked the fact that the said tariff was not in fact put into operation till May, 2000 at which point PPL went to the civil court with Original Suit No.115 of 2000. Accordingly, he submits that PPL's claims could not be said to be time barred.

18. The above submissions have been considered. The agreement between PPT and PPL dated 3rd August, 1985 was entered into at a time when Section 48 of the MPT Act was very much in place. Conscious of this, clause 1 of the agreement stated that the rates could be suitably enhanced "at such intervals as would be mutually agreed upon by the parties from time to time." In other words, PPT was aware even at the time it entered into the agreement that notwithstanding its power under Section 48 of the MPT Act, if it wanted to revise the rates as indicated in the agreement, it would have to follow the procedure agreed upon by the parties in terms of agreement.

19. The fact situation in the decision in Patiala Central Cooperative Bank Ltd. (supra) was different. Under Section 19 of the Industrial Disputes Act (I.D. Act), a settlement between the Management and the Workmen was given a statutory colour. Section 19 of the I.D. Act lays down that a settlement shall come into operation on such date as is agreed upon by the parties to the

dispute, and if no date is agreed upon, the date on which the memorandum of the settlement is signed by the parties to the dispute. It is in the above context that the Supreme Court was called upon to answer the question whether the agreement could be enforced even if it was contrary to law. The Supreme Court noted in that context that the binding effect of the agreement was in fact provided by Section 19 (2) of the I.D. Act which also laid down the period during which the agreement would be binding notwithstanding the notice of termination given by one of the parties. It was then observed by the Supreme Court as under:

"32. The provisions of Section 19(2) make an agreement between the employers and the employees binding. It also lays down the period during which it shall be binding. It also provides the manner in which the agreement can be terminated inter partes. It does not follow from this provision that a competent legislature cannot legislate on any matter which forms part of the agreement. Nor does Section 19 have the effect of validating any infirmity in the agreement. If the agreement is contrary to any law or if the agreement cannot be implemented without violating any provision of law, then the agreement cannot be enforced at all. There is nothing in sub-section (2) of Section 19 to suggest that even such an agreement will continue to be binding upon the employers and the employees and enforceable against express provision of law. If after the agreement has been entered into, any law is passed and the agreement cannot be enforced without violating that law, then clearly the agreement cannot be enforced. The law will prevail.

33. Sub-section (2) of Section 19 merely extends the period during which the agreement will be enforced, but it does not provide that the agreement will be valid and binding notwithstanding any law to the contrary."

20. The context as far as the present case is concerned is distinctly different. No mention is made in Section 48 of the MPT Act of any agreement between parties at all. In other words, Section 48 appears to operate in a field independent of an agreement between the parties as regards fixation of tariffs. At the same time, there is nothing in Section 48 of the MPT Act that prevents the parties from entering into a different arrangement of fixation of rates. Interestingly, there is no non obstante clause in Section 48 of the MPT Act, which would give precedence to the rates fixed thereunder over the rates fixed in terms of an agreement between the parties. Therefore, unlike Section 19 of the I.D. Act, the legislative intent behind Section 48 of the MPT Act does not appear to give it precedence over tariff that has been fixed pursuant to a mutual agreement between the parties. Consequently, this Court is not persuaded that the decision in Patiala Central Cooperative Bank Ltd. (supra) is relevant as far as the present case is concerned.

21. As far as the plea of laches is concerned, the Court finds that in the original Award dated 27th December, 2002 reference is made to the claims preferred by PPL, the counter claims of PPT and on that basis the learned Arbitrator framed five issues, none of which pertains to limitation. When the matter was taken in appeal, submissions pertaining to limitation were made. Nevertheless, the Appellate Authority appears to have accepted the plea of PPL that "on the Appellant's (PPT) own showing, the cause of action has arisen in May 2000 and the reference of disputes to arbitration has

taken place well within a period of 3 years from the said date of reckoning."

22. PPT does not appear to have insisted upon payment by PPL of the revised tariff till 2000. It must be noted here that at that point in time both PPT and PPL were PSUs and it is definitely plausible that the corresponding administrative Ministries were negotiating for a settlement of the dispute. Consequently, this Court is not persuaded that the Arbitrator ought to have rejected the claims of PPL as been time barred or barred by laches.

23. Even on merits, the Court finds that there is a very detailed discussion both in the Award dated 27th December, 2002 as well as the Appellate Order dated 19th October, 2009 of the basis for fixation of the original tariff and the revised tariff while accepting the claims of PPL in that regard.

24. The fact that PPL had itself constructed the berth, which was to be exclusively used by it and which was acknowledged in the agreement dated 3rd August, 1985, was taken note of both by the Arbitrator as well as the Appellate Authority in accepting the plea of PPL regarding fixation of the tariff that appeared to be concessional as far as PPT was concerned. The Court is not persuaded that on merits either the Award dated 27th December, 2002 or the Appellate order affirming it calls for interference.

25. As far as the period after 1st April, 1999 is concerned i.e. the period during which PPL ceased to be a PSU, the Court has carefully perused the impugned order of the TAMP dated 22nd November, 2011. Placed on record as part of the writ petition is also the detailed proceedings drawn up by the TAMP on 29th November, 2010 where in paras 3 and 8, a specific reference is made to the joint hearings held with both parties by the TAMP. Further, reference is made to the proposals by PPT with requisite documents, the comments made by PPL on PPT's proposals, the forwarding of those comments to PPT for its remarks and setting out in tabular form the respective stands of both PPT and PPL as well as the specific replies given by them to the queries of the TAMP. In other words, spread over several hearings there was a joint deliberation by the TAMP with the parties on the proposals and counter proposals for the purposes of fixation of the tariff. A bare perusal of the order dated 29th November, 2010 reveals that what was undertaken was an elaborate exercise of tariff fixation taking into account a variety of factors that would have relevance for the exercise. It is truly the work of an expert body specifically tasked with tariff fixation in terms of Section 47-A of the MPT Act.

26. Then, we have the final order dated 22nd November, 2011. Mr. Padhi emphasizes on para 5 of this order, which reads as under:

"5. The final proposal dated 2 September 2011 filed by the PPT before this Authority is found to be based on the position emerged in the meeting held on 15 July 2011 between PPT & PPL. It is noteworthy that the Order dated 29 November 2010 passed by this Authority disposing of the

earlier proposal of PPT for fixation of tariff for berth FB-1 also stipulates that the PPT should file its proposal in consultation with PPL. Since both the parties have undergone the process of mutual consultation between them and the minutes of the meeting reflects the views of both the parties, setting up of personal hearing in this case was not considered necessary."

27. He accordingly submits that there was a denial of personal hearing afforded to PPT before the final order was passed.

28. A perusal of the above paragraph shows that it refers to all the steps that were gone through before arriving at the final determination. As correctly pointed out by the TAMP, both parties underwent a process of mutual consultation between them and the minutes drawn up of the earlier proceedings reflected both their views. It was in that context that the TAMP considered it not necessary to afford a further 'personal hearing' before the final order was passed. This is not to say that there was no hearing at all. In fact, as already noted in the TAMP's own order dated 29th November 2010, there were joint hearings on several dates, and exchange of information between the parties and deliberations thereon. Consequently, it is not possible to accept the plea of the PPT that it was denied an opportunity of being heard before the final order was passed by TAMP.

29. Indeed, the scope of interference by this Court in its writ jurisdiction with the decision of a tariff determining body is limited. In a similar context, while reviewing the decision of the

Maharashtra Electricity Regulatory Commission (MERC), the Supreme Court in Reliance Infrastructure Limited (supra) observed as under:

"38. MERC is an expert body which is entrusted with the duty and function to frame regulations, including the terms and conditions for the determination of tariff. The Court, while exercising its power of judicial review, can step in where a case of manifest unreasonableness or arbitrariness is made out. Similarly, where the delegate of the legislature has failed to follow statutory procedures or to take into account factors which it is mandated by the statute to consider or has founded its determination of tariffs on extraneous considerations, the Court in the exercise of its power of judicial review will ensure that the statute is not breached. However, it is no part of the function of the Court to substitute its own determination for a determination which was made by an expert body after due consideration of material circumstances.

39. In Assn. of Industrial Electricity Users v State of A.P. (2002) 3 SCC 711, a three-Judge Bench of this Court dealt with the fixation of tariffs and held thus: (SCC p. 717, para

11) "11. We also agree with the High Court that the judicial review in a matter with regard to fixation of tariff has not to be as that of an Appellate Authority in exercise of its jurisdiction under Article 226 of the Constitution. All that the High Court has to be satisfied with is that the Commission has followed the proper procedure and unless it can be demonstrated that its decision is on the face of it arbitrary or illegal or contrary to the Act, the court will not interfere. Fixing a tariff and providing for cross-subsidy is essentially a matter of policy and normally a court would refrain from interfering with a policy decision unless the power exercised is arbitrary or ex facie bad in law."

30. PPT has not been able to persuade this Court that the impugned decision of the TAMP suffers from any manifest arbitrariness or unreasonableness or that the procedure as envisaged under the MPT Act and in particular Section 47-A thereof has been violated. Consequently, the Court is not persuaded that any grounds have been made out by PPT for interference with the final decision dated 22nd November, 2011 of the TAMP.

31. At this juncture, the Courts notes that in its order dated 12th January, 2016 in SLP (C) No.14811 of 2009 (Paradeep Phosphates Ltd. v. Paradeep Port Trust), the Supreme Court had noted that "in case the award is upheld, the High Court shall ensure that it is executed without any delay." It is accordingly directed that PPT will implement the impugned Award within a period of twelve weeks from today.

32. For the aforementioned reasons, the Court finds no grounds are made out for granting any of the reliefs prayed for in these writ petitions. They are accordingly dismissed, but in the circumstances with no order as to costs. The interim order passed earlier stands vacated.

                                                      (Dr. S. Muralidhar)
                                                         Chief Justice

                                                         (M.S.Raman)
M. Panda                                                     Judge