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2015 Supreme(Mad) 2063
IN THE HIGH COURT OF JUDICATURE AT MADRAS
V. RAMASUBRAMANIAN, J.
Board of Trustees of VO Chidambaranar, Port Trust – Appellant
Versus
PSA SICAL Terminals Limited & Others – Respondents
Original Petition No. 389 of 2014
Decided On : 09-06-2015
For the Petitioner:G. Masilamani, Sr. Counsel for S. Yashwanth, Advocate
For the Respondent:R1, Vijay Narayan, Sr. Counsel asst. by Zerick Dastur for M/s. Jagar Associates, Advocates
Headnote:
Arbitration and Conciliation Act, 1996 – Sections 34, 42 – Arbitration – This is a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an award passed by a Tribunal comprising of respondents 2 to 4. – Whether what transpired in the first sitting of the Arbitral Tribunal could be taken to be a novation – What is the effect of Section 42 irrespective of whether there was novation or not. – Held, Section 42 states that if an application under Part I had been made in a Court with respect to "an arbitration agreement", then, it is that Court alone which will have jurisdiction over the arbitral proceedings as well as of subsequent applications arising out of "that agreement". – The expression "that agreement" connotes the agreement out of which the earliest application arose. – Therefore, if the original arbitration agreement had really undergone a complete change leading to novation, Section 42 will have application only to the proceedings that take place after such novation. – Let us take for instance a case where an application under Section 9 is filed in a Court and arbitral proceedings are initiated. – During the course of the arbitral proceedings, a settlement is reached and the parties enter into a fresh contract which contains an arbitration agreement. – If such a fresh contract containing an arbitration agreement leads to a fresh dispute, Section 42 will have no application to the first application filed in relation to a fresh dispute. – This is for the reason that this will be the first application in relation to a new dispute. – Therefore, it is clear that if and when a novation actually takes place, Section 42 cannot be invoked. – But, this question has become one of mere academic importance in this case in view of my finding on the first issue. – There was no novation, the petitioner ought not to have filed this petition under Section 34 before this Court. – The petitioner ought to have filed this original petition only before the Principal District Court, Tuticorin. – Therefore, office is directed to return this original petition to the petitioner, so as to enable them to present the original petition before the Principal District Court, Tuticorin. – The petitioner is granted time till 30.6.2015 to take back the original petition and re-present the same before the Principal District Court. – Order Accordingly
1. This is a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an award passed by a Tribunal comprising of respondents 2 to 4.
2. I have heard Mr. G. Masilamani, learned senior counsel for the petitioner and Mr.Vijay Narayan, learned senior counsel for the first respondent.
3. The brief facts leading to the petition on hand are as follows:-
(i) After becoming successful in a Global Tender floated by the petitioner for the development of Seventh Berth as a Container Terminal and for the Operations and Maintenance of the same for 30 years on Build Operate and Transfer basis, the first respondent herein was granted a license by the petitioner under an agreement dated 15.7.1998. It is relevant to state here that the first respondent is a Joint Venture between the Port of Singapore Authority and two companies by name The South India Corporation (Agencies) Limited and Nur Investment and Trading Private Limited.
(ii) Under Appendix 12 to the agreement, the first respondent was obliged to pay a royalty to the petitioner every year, for a period of 30 years. The royalty was to increase gradually from year to year.
(iii) In the year 2002, the Tariff Authority for Major Ports issued an order reducing the tariff. Aggrieved by the reduction of tariff, the first respondent filed two writ petitions on the file of this court. The writ petitions ended in a compromise, on the basis of which they were disposed of on 17.8.2005.
(iv) Thereafter, the Ministry of Shipping issued a directive on 17.4.2006 under Section 111 of the Major Ports Act, holding that the first respondent is not entitled to claim royalty as a pass through. Consequently, the Tariff Authority passed a revised tariff order dated 23.8.2006. Once again the first respondent challenged the same by way of a writ petition on the file of this court.
(v) Even during the pendency of the writ petition, the first respondent submitted a representation on 6.10.2006 invoking Article 14 of the Licence Agreement dated 15.7.1998. It was claimed in the representation that in view of the change of law, adversely and substantially affecting the rights of the licensee, an amendment was necessary to the terms of the agreement. But the representation was rejected by the petitioner by an order dated 27.10.2006, on the ground that the issue is subjudice in the writ petition. This order was again challenged by the first respondent before this court in a writ petition in W.P.No.43461 of 2006. The said writ petition was disposed of on 21.8.2007 directing the petitioner to consider the representation afresh. On the very next day namely 22.8.2007, the previous writ petitions of the first respondent were also ordered directing the Ministry of Shipping and the Tariff Authority to consider the matter and pass orders afresh.
(vi) In pursuance of the orders passed in the writ petitions, the Tariff Authority issued revised orders on 30.12.2008. This order dated 30.12.2008 and another order of the Ministry of Shipping became the subject matter of two writ petitions filed by the first respondent in W.P. Nos. 1350 and 1351 of 2009. These writ petitions were allowed by a learned Judge, forcing the Tariff Authority to file an appeal in W.A.No.1845 of 2009. The first respondent also filed an appeal in W.A.No.1961 of 2010 challenging an observation made in the order of the learned Judge.
(vii) But in the year 2012, the first respondent invoked the Arbitration Clause contained in Article 15.3.1 of the licence agreement, by a letter dated 19.11.2012. The first respondent nominated the third respondent herein as their arbitrator. The petitioner nominated the fourth respondent as their arbitrator and both of them nominated the second respondent as the Presiding Arbitrator.
(viii) The sum and substance of the claim of the first respondent before the Arbitral Tribunal was that in terms of Article 14.3 of the licence agreement, the first respondent is entitled to seek a modification of the ter
