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High Court of Judicature at Madras
V. RAMASUBRAMANIAN, J.
The Board of Trustees of Chennai Port Trust, represented by its Chairman
Versus
Chennai Container Terminal Private Ltd., & Others
O.P. No. 493 of 2013
Decided On : 08-01-2014
(b). Arbitration and Conciliation Act, 1996, Section 34 – a minority decision is not always irrelevant- it should be taken as a step in the overall development of legal principles- In a challenge of an arbitral award u/s 34 of the Arbitration & Conciliation Act, the court can refer to the minority judgment of the tribunal.
(c). Contract Act, 1872, Section 2 – while deciding on the admissibility criteria of the pre contract correspondences it was held that in England the pre contract correspondences are not admissible after a contract has been entered into because the correspondences, the thought process of the parties, everything is in English whereas the in the Indian scenario, as English is not the mother tongue of the parties the actual intention of the parties can be construed by the pre contract correspondences- hence a rigid applicability of the said English principle is not favorable in the Indian context and a reference to such correspondence is held valid.
(d). Law of Contract – If a contract entered into between the parties is not drafted properly, a party cannot be made to undergo the repercussions of a faulty drafting- it is not correct for one party to have unjust benefit over the other party because of a flaw in the language of the contract.
1. This is a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an award passed by an Arbitral Tribunal, setting aside a notice of termination of a Concession Agreement and directing the petitioner to refund an amount of Rs.63,86,21,493/- to the first respondent.
2. I have heard Mr. T.R. Rajagopalan, learned Senior Counsel for the petitioner and Mr. Navroz H. Seervai, learned Senior Counsel for the first respondent.
3. The petitioner is a body corporate constituted under the provisions of the Major Port Trusts Act, 1963. It owns and operates the container terminal in Chennai Port.
4. With a view to develop and manage the Chennai container terminal and to make it a hub port, through Private Sector participation, the Ministry of Surface Transport, Government of India, invited on 20.11.1997, International Parties, to submit their proposals for the project. In response, 3 entities submitted their bids. One of them was a company by name P&O Australia Ports Pty. Ltd., which formed a Consortium along with 3 other companies by name Jakari Express Pvt Ltd., Mumbai, Meherji Cassinath Ltd., Mauritius and Chettinad Logistics Pvt Ltd. The bid submitted by the said Australian Company was provisionally accepted. Therefore, the said company along with its Consortium members, floated a Special Purpose Vehicle by name Chennai Container Terminal Limited and the same was incorporated on 12.9.2000.
5. Thereafter, the Board of Trustees of the Port of Chennai, who is the petitioner herein, awarded a licence to the said special purpose vehicle namely Chennai Container Terminal Limited, which is the first respondent herein, under a Concession Agreement dated 9.8.2001. The licence was intended to enable the first respondent herein "to take over the existing container terminal, extended berth and iron ore berth and redesign, design, engineer, finance, erect, operate, replace container handling equipment and maintain and maintain and repair the container terminal".
6. In pursuance of the said licence Agreement, the first respondent took over the container terminal and commenced operations on 30.11.2001. The licence was to be in force for a period of 30 years and was not renewable. As per the agreement, the first respondent was obliged to provide a specific quantity of output in the form of non-transshipment traffic. To ensure that the first respondent performed its obligations in terms of the agreement, Article 5.06 of the licence Agreement required the first respondent to provide a performance bank guarantee, valid for one year at a time. The guarantee was to be renewed year after year, depending upon the anticipated amount of royalty payable for the next year. The last of such guarantees was provided for a sum of Rs.46.08 crores valid for the period 1.12.2007 to 30.11.2008.
7. In December 2007, the petitioner raised a dispute that the output was not as per the terms and conditions of the agreement. Therefore, by a communication dated 17.12.2007, the petitioner informed the first respondent that the first respondent failed to achieve the required percentage of non-transshipment traffic, as per Article 3.09(a) of the licence Agreement and that therefore, the first respondent should pay an amount of Rs.63,86,21,493/-.
8. When the correspondence was in progress, the petitioner encashed the performance bank guarantee provided by the first respondent to the tune of Rs.46,08,00,000/-. Thereafter, the petitioner also issued a notice of intent to terminate the agreement, on 6.3.2008.
9. In an attempt at resolving the dispute, a meeting was held on 10.3.2008 between the representatives of both parties and it was resolved to constitute a Committee to look into the quantum of non-transshipment traffic. Pending final decision, the petitioner demanded from the first respondent, a sum of Rs.17 crores (after adjusting the bank guarantee amount already encashed) and the petitioner also allowed the first respondent to continue to
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