Madras High Court
M/S.X-Press Container Lines (Uk) Ltd vs The Board Of Trustees Of The Port Of … on 13 March, 2026
Author: C.V.Karthikeyan
Bench: C.V. Karthikeyan
2026:MHC:1055
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 02.02.2026
PRONOUNCED ON : 13.03.2026
CORAM
THE HONOURABLE MR JUSTICE C.V. KARTHIKEYAN
AND
THE HONOURABLE MR.JUSTICE K.KUMARESH BABU
OSA(CAD) No. 39 of 2021
and
CMP No.11337 of 2021
M/s.X-Press Container Lines (UK) Ltd
Represented by its Power of Attorney
R.Subramaniam, S.P.Centre ‘B’ Wing,
41/44 Minoo Desai Marg,
(Behind Radio Club), Colaba,
Mumbai 400001.
Appellant(s)
Vs
The Board of Trustees of the Port of Chennai
Rajaji Salai,
Chennai 600001.
Respondent(s)
PRAYER: Appeal filed under Section 13 (1) of Commercial Courts Act read
with Order XXXVI Rule 1 of the OS Rules to set aside the order passed by the
learned Judge dated 17.09.2020 in OP No.511 of 2009, allow the present appeal
and consequently pass any such or further orders.
For Appellant(s): Mr.J.Sivanandharaaj, Senior Counsel
For Mr.V.Sankara Narayanan
For Respondent(s): Mr. Niranjan Rajagopalan
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JUDGMENT
(Judgment of the Court was made by C.V.Karthikeyan, J.)
The first respondent in O.P.No.511 of 2009 aggrieved by the order dated
17.09.2020 allowing the said Original Petition has filed the present appeal.
2.O.P.No.511 of 2009 had been filed challenging the Award dated
17.01.2009 by the Arbitral Tribunal, by which Award, the Tribunal had granted
a sum of Rs.1,21,91,869/- to be refunded to the claimant/appellant herein
together with interest. The learned Single Judge vide his order dated 17.09.2020
had set aside the said Award necessitating the claimant before the Arbitral
Tribunal to file the present appeal.
3.The appellant M/s.X-Press Container Line (UK) Ltd., had entered into
Berth Reservation Agreement on 18.01.1995 with the respondent, the Board of
Trustees of the Port of Chennai for a period of two years till 24.09.1997 to use
the Berth at the West Quay with back up area and the container handling
equipment for the use of handling of containers carried by the vessels of the
appellant and also including discharge and loading of containers.
4.The respondent Port of Chennai forwarded a communication to the
appellant on 28.02.1997 complaining that the appellant had breached the terms
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of the agreement and that a sum of Rs.62,48,950.32 was due for payment under
the Berth Reservation Scheme and further that an advance payment for the
second year of operation including Berth Hire Charges, Berth Reservation
Charges, Annual Maintenance and Annual Licence Fee to a total sum of
Rs.1,00,13,000/- had not been paid, again in breach of the Berth Reservation
Agreement. It was held out that if the aforementioned amounts were not paid,
the respondent would issue a formal notice of termination of agreement. The
appellant by its correspondence on 08.03.1997 had refuted the claims. However,
the respondent issued a notice of termination on 16.03.1997. The respondent
also called upon the appellant to pay a further sum of Rs. 62,48,950.32 towards
Penal Levy for Shortfall. A further letter was addressed by the respondent on
22.04.1997, again demanding payment of the said sum. The appellant by letter
dated 25.04.1997 had accepted the calculation of Berth Hire Charges and Berth
Reservation Charges, but however, disputed the calculation of Penal Levy for
Shortfall in throughput.
5.In view of the dispute that had arisen, the appellant sought appointment
of an Arbitrator to examine and adjudicate the dispute. The appellant also
denied the claim for a sum of Rs.1,00,13,000/- and further claimed that Penal
Levy on Shortfall was wrongly calculated at Rs.540/- by the respondent. The
appellant also nominated its Arbitrator and called upon the respondent to
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nominate their Arbitrator. Thereafter, correspondences were exchanged between
the parties with each other reiterating their respective claims.
6.The appellant then filed OP No.292 of 2001 under Section 11 of the
Arbitration and Conciliation Act, 1996 seeking appointment of a second
Arbitrator. By order dated 28.09.2004, an Arbitrator was appointed by the
Court.
7.This order was challenged by the respondent by filing W.P.No.7692 of
2005. Stay of the arbitration proceedings was granted. The appellant filed
W.A.No.1459 of 2005 and a direction was issued by the Court for the arbitration
proceedings to continue and that the issue of limitation or any other issue can be
raised before the Arbitral Tribunal.
8.The appellant filed its claim statement before the Arbitral Tribunal. The
respondent filed a counter claim and also filed a petition under Section 43 of the
Arbitration and Conciliation Act, 1996 and yet another petition under Section 16
of the said Act contending in both petitions that the claim was barred by the law
of limitation and that the Tribunal does not have jurisdiction to entertain the
claim.
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9.The Tribunal however dismissed both the applications. The respondent
then filed CMA No.134 of 2007 challenging the orders of the Tribunal. Stay
was granted by this Court.
10.The appellant then filed SLP (Civil) No.5660 of 2007. The Hon’ble
Supreme Court had dismissed the above SLP, but directed that the arbitration
proceedings should continue and that the Award should also be pronounced, but
should not be executed till CMA No.134 of 2007 had been disposed of.
11.CMA No.134 of 2007 was disposed of on 09.10.2007 holding that the
appeal was not maintainable and granting liberty to raise all issues when a
petition is filed under Section 34 of the Act.
12.The Arbitral Tribunal passed an Award on 17.01.2009 granting the
claim in favour of the appellant herein. Challenging that Award, the respondent
had filed OP No.511 of 2009 under Section 34 of the Act. A learned Single
Judge of this Court, by order dated 17.09.2020, allowed the Original Petition
and set aside the Award. The learned Single Judge had refused to exempt the
period of negotiation between 27.08.1999 and 13.07.2000 from the period of
limitation and had held that the claim before the Arbitral Tribunal was barred by
the law of limitation. The learned Judge had also refused to hold that the
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respondent herein had admitted to refund the payment levy collected from the
appellant and had also communicated that settlement of the same would be
made. The learned Single Judge had also observed that the Award suffered from
patent illegally. It was also observed that the computation of quantum by the
Arbitral Tribunal was not in accordance with the terms of the contract and that
the findings by the Tribunal with respect to the Berth Hire Charges were based
on no evidence. Holding as above, the Award was set aside. Challenging those
reasonings given by the learned Single Judge, the present appeal had been filed.
13.Heard arguments advanced by Mr.J.Sivanandharaaj, learned Senior
Counsel for the appellant and Mr. Niranjan Rajagopalan, learned counsel for the
respondent.
14.Mr.J.Sivanandharaaj learned Senior Counsel after taking this Court
through the facts of the case pointed out the correspondences between the
parties, wherein, initially there was refusal to appoint an Arbitrator by the
respondent which forced the appellant to file an Original Petition under Section
11 of the Act seeking appointment of an Arbitrator. A former Judge of this
Court was appointed as an Arbitrator.
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15.The learned Senior Counsel pointed out that at the time when such an
order was passed, it was considered to be an administrative order. The
respondent herein therefore filed a writ petition challenging the said order. A
Writ Appeal was also filed and an Arbitral Tribunal was constituted.
16.The appellant then filed a claim statement before the Tribunal. The
respondent also filed a counter claim and also presented petitions under
Sections 43 and 16 of the Act, raising issues of jurisdiction and limitation. The
Tribunal held in favour of the appellant. The respondent filed a Civil
Miscellaneous Appeal before this Court. Stay was granted. The appellant
challenged the grant of stay before the Hon’ble Supreme Court, wherein, the
Tribunal was directed to proceed further. It was however held that enforcement
should be kept in abeyance till the disposal of the Civil Miscellaneous Appeal.
Finally, the Civil Miscellaneous Appeal was dismissed as not maintainable.
17.The learned Senior Counsel pointed out that the Arbitral Tribunal had
then proceeded to adjudicate the claim and had granted an Award in favour of
the appellant. The learned Senior Counsel stated that there was no delay either
in issuing notice under Section 21 of the Act or in proceeding further with
arbitration. The learned Senior Counsel argued that the delay if any was only on
the part of the respondent who protracted and challenged every order including
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the appointment of an Arbitrator though the agreement between the parties
provided for settlement of disputes through arbitration. The learned Senior
Counsel assailed the order of the learned Single Judge who had held that the
proceedings were barred by the law of limitation and further held that the Award
suffered from patent illegality.
18.The learned Senior Counsel pointed out that the learned Single Judge
had unfortunately misdirected himself in holding that the judgment relied on in
S.B.P. & Company Vs. Patel Engineering Limited and another reported in
(2005) 8 SCC 618 would operate retrospectively. The learned Senior Counsel
pointed out that the dictum laid down in the aforementioned judgment was that
an order under Section 11 of the Arbitration and Conciliation Act was in
exercise of judicial power and not an exercise of administrative power. The
learned Senior Counsel further stated that though the respondent had candidly
admitted to the claim of the appellant, the learned Single Judge had still rejected
the contention that such admission was binding on the respondent nor gave rise
to the claim being adjudicated against the respondent.
19.The learned Senior Counsel further argued that the Limitation Act
would not apply since the order passed under Section 11 of the Act should be
held to be an administrative order and there cannot be any limitation placed in
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challenging any administrative order. The learned Senior Counsel further
pointed out Section 18 of the Limitation Act, 1963 and more particularly,
Explanation (a), which speaks about the effect of acknowledgment to a person
other than the person entitled to the property or right. In this connection, the
learned Senior Counsel pointed out that the respondent in their minutes in a
meeting had acknowledged their liability to the claim of the appellant and such
meeting was attended by a representative of the Association to which the
appellant belongs. The learned Senior Counsel further pointed out that during
the course of discussion between the parties, limitation should freeze. He
expressed grievance that the learned Single Judge had not considered this
aspect. The learned Senior Counsel therefore urged that this Court should set
aside the order and allow the appeal and restore the Award of the Arbitral
Tribunal.
20.Mr.Niranjan Rajagopalan, learned Counsel for the respondent claimed
that the proceedings before the Arbitral Tribunal suffered owing to being barred
by law of limitation. The learned counsel stated that recording of the minutes
relied on by the appellant should be discarded by this Court as had been done by
the learned Single Judge since it was a discussion between two members of the
respondent which can never be interpreted as an acknowledgment of debt. The
learned counsel pointed out that even if it should be taken as an
acknowledgment, it had not been independently communicated by the
respondent to the appellant and therefore, could never bind the respondent. The
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learned counsel further pointed out that no evidence had been adduced with
reference to the Hire Charges collected from third parties/Port users and grant of
Award on that basis should be set aside and had been correctly set aside by the
learned Single Judge. The learned counsel stated that the order of the learned
Single Judge requires no interference and urged that the appeal should be
dismissed.
21.We have carefully considered the arguments advanced and perused the
material records.
22.This appeal had been filed under Section 37 of the Arbitration and
Conciliation Act, 1996. Section 37(1)(c) provides that an appeal could be filed
against an order setting aside an arbitral award under Section 34 of the Act.
23.The grounds to set aside the Arbitral Award as provided under Section
34 are extremely narrow. The learned Single Judge had set aside the award on
the ground that it suffered from patent illegal. It was also held that the claim
was barred by the law of limitation. This would require examination of the
terms of the agreement entered into between the appellant and the respondent
and more importantly, the correspondences exchanged between them to
determine whether there was an acknowledgment of liability by the respondent
and whether such acknowledgment would bind the respondent and whether
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there were periods of negotiations and whether the period of negotiations could
be adjudicated as a period when the limitation stood freezed.
24.The appellant M/s.X-Press Container Line (UK) Ltd had entered into a
Berth Reservation Agreement on 18.01.1995 with the respondent, the Board of
Trustees of the Port of Chennai for Reservation of 200 metres of Berth for a two
year tenure ending on 24.09.1997. The appellant had necessity to use the Berth
for the purpose of berthing its vessels and discharging and loading of its goods
and to handle containers. It had been further provided in the agreement that if
the whole or any part of the conditions had been violated, the agreement could
be terminated by either party upon written notice of 30 days. The appellant was
also liable to pay Berth Hire Charges, Berth Reservation Charges, Maintenance
Charges and License Fee apart from payments towards electricity, watersupply
and for other amenities as provided or arranged by the respondent. The
agreement also provided referring disputes before two Arbitrators, one to be
appointed by the appellant and the other by the respondent. If there was a
difference as to the adjudication of the Award, an Umpire could be appointed by
the said Arbitrators. It was also contended that the decision should be final and
binding on the parties and the provisions of the Arbitration Act 1940 and the
Rules thereunder shall apply.
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25.We would have to take immediate recourse to Section 85 of the
Arbitration and Conciliation Act, 1996 and more specifically to Section 85(2) of
the said Act which provides that the provisions of the Arbitration Act, 1940
which stood repelled under Sub Section 1 of Section 85 would apply only to
arbitration proceedings which had commenced before the Arbitration and
Conciliation Act, 1996 came into force and that the Arbitration and Conciliation
Act, 1996 shall apply in relation to arbitral proceedings which commenced on
or after this Act had come into force. Section 85 in entirety is extracted
hereunder:
85. Repeal and saving.-(1)The Arbitration
(Protocol and Convention)Act, 1937 (6 of 1937), the
Arbitration Act, 1940 (10 of 1940) and the Foreign
Awards (Recognition and Enforcement) Act, 1961
(45 of 1961) are hereby repealed.
(2)Notwithstanding such repeal,
(a)the provisions of the said enactments shall
apply in relation to arbitral proceedings which
commenced before this Act came into force unless
otherwise agreed by the parties but this Act shall
apply in relation to arbitral proceedings which
commenced on or after this Act comes into force;
(b)all rules made and notifications published,
under the said enactments shall, to the extent to
which they are not repugnant to this Act, be deemed
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respectively to have been made or issued under this
Act.
26.We are constrained to point out the above provision since the appellant
and the respondent in their agreement dated 18.11.1995 which had been entered
into before 1996 Act came into effect had stated that any dispute should be
referred to arbitration under the provisions of the Arbitration Act, 1940. The
Arbitration and Conciliation Act, 1996 received the assent of the President on
16.08.1996 and was published in the Gazette of India on 16.08.1996. The
appellant had raised a dispute regarding the claim for Berth Hire Charges, Berth
Reservation Charges and Penal Levy Short fall and had sought appointment of
an Arbitrator by the respondent. This would effectively mean that the earliest
date when the arbitration proceedings commenced as provided under Section 21
of the said Act would be from 25.04.1997, after the Arbitration and Conciliation
Act, 1996 had come into force. The provisions of that Act therefore would cover
the adjudication of disputes though the parties had agreed that the disputes will
be covered through arbitration under the provisions of the Arbitration Act, 1940.
Section 21 of the Arbitration and Conciliation Act, 1996 is as follows:
21. Commencement of arbitral
proceedings.—Unless otherwise agreed by the
parties, the arbitral proceedings in respect of a
particular dispute commence on the date on which
a request for that dispute to be referred to
arbitration is received by the respondent.
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27.In the instant case, the Berth Reservation Agreement between the
appellant and the respondent was on 18.01.1995. Thereafter, the respondent
addressed a letter on 28.02.1997 to the appellant herein serving notice of
violation of the terms of the Berth Reservation Agreement. It was pointed out in
the said communication that the appellant had not furnished the forwarding
schedule of the vessel to be handled at the dedicated berth. It was further stated
that the appellant had not furnished details on throughput for the period from
25.09.1996 till the date of the communication/28.02.1997, for the second year
of the operation. It was further pointed out that there were outstandings payable
towards the Berth Hire Charges and Berth Reservation Charges and the amount
payable was also quantified. A demand was also made for the Penal Recovery
for Shortfall of throughput for the first year of operation. It was also pointed out
that an advance payment of the Berth Hire Charges and Berth Reservation
Charges, Annual Maintenance and Annual License Fee for the second year of
operation had not been paid. It was finally informed that the violations indicated
should be rectified and the payment due to the respondent should be paid
immediately, failing which, notice terminating the agreement would be issued.
28.The appellant issued a reply on 14.03.1997 stating that in their earlier
letter dated 08.03.1997, they had clarified the points raised. The appellant also
enclosed a cheque for Rs.1,00,13,000/- as advance payment for the second year
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of operation. They raised a dispute over the demand for Penal Recovery for
shortfall of throughput for the first year of operation and also on the calculation
of wharfage charges and the rates at which they had been calculated. The
appellant had given their calculation and sought confirmation about the
correctness of the same.
29.The respondent addressed a further letter on 16.03.1997 stating that
though there has been rectification of the violations pointed out, still there were
further breaches, namely, in payments due to the Port towards the Berth
Reservation Charges and Penal Recovery for the short fall in throughput during
the first year of operation. The amount payable was crystallised at
Rs.62,48,950.32. It was again held out that if there was no compliance or
rectification of the breach, the respondent would issue a notice to terminate the
agreement on the expiry of 21 days from that date/16.03.1997.
30.The examination of the aforementioned correspondences would show
that a dispute had been raised by the respondent complaining breach of the
terms of the Berth Reservation Agreement. The appellant had complied with
the demand, particularly, the advance payment for the second year of operation.
The respondent also noticed that there was part compliance of the demands
raised by them, but however in their communication dated 16.03.1997 had
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stated that the appellant had not paid the Berth Reservation Charges and the
Penal Recovery for shortfall in throughput during the first year of operation and
therefore, by letter dated 16.03.1997 had threatened to terminat the agreement,
effective from 21 days from the date of the said communication.
31.The appellant then issued a communication dated 27.03.1997 pointing
out that the points of dispute should be re-examined, particularly, relating to
Berth Hire Charges, Berth Reservation Charges and Penal Levy for shortfall.
They further enclosed a cheque for the total amount demanded namely,
Rs.62,48,950.32 which they paid under protest with an understanding that after
the issues are examined the excess amount paid would be refunded to the
appellant.
32.Thereafter, they had stated as follows in the said letter,
Since the Berth Reservation agreement also
provides for arbitration, we would also request
you to consider appointing an Arbitrator so that
the two Arbitrators – one appointed by you and
the other appointed by us can arbitrate on the
various issues that are involved and come to a
settlement.
33.This communication is a clear indication that since the Berth
Reservation Agreement provides to refer disputes to arbitration, the issue should
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be so referred. The appellant had called upon the respondent to appoint an
Arbitrator which would enable the appellant to also nominate an Arbitrator who
both could constitute the Arbitral Tribunal to examine the disputes which had
arisen between the parties.
34.Section 21 of the Act which had been extracted above clearly
stipulates that the commencement of arbitral proceedings would be the date on
which a request for the dispute to be referred to arbitration is received by the
respondent before the Tribunal. The aforementioned communication from the
appellant is a request to refer the disputes to arbitration and therefore, we hold
that the commencement of arbitration with reference to the disputes between the
appellant and the respondent was 27.03.1997, the date of the said
communication.
35.The respondent issued a further communication on 22.04.1997 once
again reiterating the issues in dispute, namely, the Berth Hire Charges, Berth
Reservation Charges and the Penal Levy for shortfall, but however, not
answering the demand raised by the appellant to nominate an Arbitrator in the
manner prescribed under the Berth Reservation Agreement. The appellant had
replied by a communication dated 25.04.1997 and had accepted to the
calculation of the respondent with reference of Berth Hire Charges and Berth
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Reservation Charges, but raised a protest over the calculation relating to the
Penal Levy for shortfall. According to the appellant, the amount payable under
this category was Rs.3,84,440/- whereas, the respondent had claimed a sum of
Rs.65,35,080/-. They then stated as follows:
In our letter we have already said that since
the Berth Reservation Agreement provides for
arbitration, an Arbitrator may please be
appointed by you so that your Arbitrator and our
Arbitrator can arbitrate on this particular issue
and come to a settlement.
Since we have paid a substantially higher
amount than what is due to the Port and are
losing a considerable amount of interest on the
excess amount that is now lying with you, we
request you to please appoint an Arbitrator
immediately and inform us so that the matter can
be settled as early as possible.
36.It is thus seen that the appellant had again reiterated their demand to
refer the dispute to arbitration and had again sought the respondent to nominate
an Arbitrator immediately. The respondent then issued a communication dated
19.07.1997 wherein, with respect to call to referring the disputes to arbitration,
they had stated as follows:
With regard to your request for appointment
of Port’s Arbitrator for referring the alleged
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Arbitration does not arise at this stage.
37.They further stated as follows:
In the light of the above, it is informed that
the Port is painfully constrained to issue advance
notice of 15 days as per agreement for you to
make immediate arrangements to pay the sum of
Rs.37,21,680/-being the levy of wharfage due for
the shortfall of 6892 TEUs in the guaranteed
throughput of 37.500 TEUs for the nine month
period ending 24.6.97 as per the agreement. It is
further informed that non-payment of the same
would amount to breach of the terms and
conditions of the Agreement and would invite
termination of licence.
38.Thus, though the respondent had stated that there was no arbitral
dispute and that the issue of arbitration does not arise at that stage, they had still
made a demand for a sum of Rs.37,21,680/-. They had further stated that if the
said amount is not paid, the respondent would terminate the license.
39.It is thus seen that till this stage, though the appellant had disputed the
claim of the respondent towards the Penal Levy for shortfall and had also called
upon the respondent to appoint an Arbitrator, the respondent had stated that the
issues were not arbitrable and had rather held out a threat to terminate the
agreement, not for the first time, but for the second time.
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40.The appellant then issued a communication dated 01.08.1997 again
disputing the stand taken by the respondent and again reiterating the demand for
nomination of an Arbitrator and more specifically, nominating an Arbitrator on
their side and naming the Arbitrator also. In their communication dated
01.08.1997, they had stated as follows:
In view of the difference in perception of the
agreement provisions leading to a dispute between
Chennai Port Trust and X-Press Container Line
on the issues relating to berth Hire and penal levy
in the Berth Reservation Agreement dated 18th
January ‘95 we have appointed Mr.P.C.Tilak, 13,
Norton 1st Street, Mandavali, Madras 6000028 as
our Arbitrator. We would request you to please
nominate your Arbitrator at the earliest.
41.The appellant then addressed a further communication on 25.04.1998
again reiterating that the disputes should be referred to arbitration. They had
stated as follows:
In our letter dated 1.8.97, we have advised
you of the appointment of Mr.P.C.Tilak as our
arbitrator. We had also requested you to nominate
an arbitrator from your side but till date we have
not heard anything from you in this regard. We
would request you to please let us have your reply
together with your cheque for the above amount
within 15 days from the date of this letter.
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42.They had very specifically given their calculation for the penal levy
payable and had stated that the amount was Rs.7,02,000/- and had stated that the
respondent had collected a sum of Rs.1,02,56,760/-. The appellant therefore
raised a demand against the respondent for the sum of Rs.94,54,769/-.
43.They issued a further communication on 06.01.1999 and stated that
they were informed that the respondent would work out the excess amount
charged towards Penalty and excess Berth Hire Charges and refund the balance
to the appellant. The letter in entirety is extracted below.
We refer to your letter no. A/32551/87/T
(M&S) dated 27.8.98 and the discussions that
were held with the Traffic Manager, Chennai Port
Trust and other senior officials in respect of the
amounts paid towards excess berth Hire and penal
recovery, that is to be refunded to us.
During Mr. Raman’s meeting with the
Traffic Manager and others on 31 August 1998,
we were informed that the Port Trust would work
out the excess amount charged towards penalty
and excess berth Hire Charges collected and
refund the balance to us shortly.
We have received a note ref:
AS(MF)A/5690/98/AR dated 16.9.98 indicating
that an amount of Rs.18,76,780/- has to be
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refunded towards excess penal recovery.
However, we are still awaiting the excess berth
Hire Charges that you have collected.
We would request you to please make
immediate arrangements to refund the amount of
Rs 18,76,780/- towards penalty and also the
amount that has to be refunded to us towards
excess collection of berth Hire Charges.
44.It is thus seen that the appellant had laid a claim against the respondent
and had also nominated an Arbitrator in accordance with the Berth Reservation
Agreement and had been demanding the respondent to nominate an Arbitrator
on their side. It is also to be noted that in this communication dated 06.01.1999,
the appellant had also stated that the Traffic Manager had stated that the excess
amount charged towards Penalty and excess Berth Hire Charges collected would
be worked out and refunded to the appellant.
45.By a further communication dated 27.08.1999, the appellant again
placed a demand for refund of the amounts and further stated as follows:
In June’99, we had called on Mr. Muthu
Srinivasan, FA&CAO and brought to his attention
the inordinate delay in refunding the amount to us.
We were assured by the FA&CAO that the details
have already been compiled and the amounthttps://www.mhc.tn.gov.in/judis ( Uploaded on: 13/03/2026 05:07:50 pm )
23/44 OSA(CAD) No. 39 of 2021would be refunded to us in about a week’s time.
We regret that up to now the amount has still not
been refunded.
46.The appellant had again stated that there had been an assurance
extended by the officials of the respondent that the amount would be refunded
to the appellant. The appellant in their communication dated 05.01.2000 again
raised a demand for refund of the excess levy collected as Berth Reservation
Charges. They further stated as follows in the said communication.
We would also like to point out that when
our representatives met the Chairman on the
issues, we were informed by the Chairman that
orders have already been passed for refund of the
amount on the above two aspects.
47. The appellant had stated that they had been informed by Chairman
that orders had already been passed for refund of the amount to the appellant.
48.The Advisory Committee of the respondent had a meeting on
04.04.2000 and the minutes recorded therein were communicated on
25.04.2000. Quite apart from the Chairman and other officials of the
respondent, the representatives of the Chennai Steamer Agents’ Association, All
India Shippers’ Council, Chennai Port Stevedores’ Association and Chennai
Custom House Agents’ Association had participated in the said meeting. One of
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the issues raised was with reference to the amount due and payable to the
appellant and it had been recorded as follows:
When the Chairman wanted information on
the latest position on the refund claims of M/s.BIL,
M/s.XCL, FA&CAO informed that in the case of
M/S.XCL, refund of Berth Hire Charges collected
from non-licensee’s vessels berthed in Licensee’s
berth during the BRS period has been decided as
approved by CPT and on refund of excess penal
levy collected from M/s.XCL, amount has been
worked out deciding the ratio of empty and loaded
containers. LA’s opinion has also been obtained
and the settlement will be made shortly. To a
query from Shri Rahushankar on implementation
of TAMP’s order on port too paying interest for
delayed settlement, FA&CAO and TM pointed out
the practical difficulties in implementing TAMP’s
order.
49.A careful reading of the minutes recorded shows that the respondent
had approved refund of Berth Hire Charges and had also calculated the amount
to be refunded towards the excess Penal Levy. It was also minuted that Legal
Advisor’s opinion had been obtained and that the settlement will be made
shortly.
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50.This communication had been pointed out by the learned Senior
Counsel for the appellant as an acknowledgment of the debt of an existing
liability which had also been communicated to the agent of the appellant who
was present during the meeting. The appellant raised a further demand for the
refund of the excess amount calculated by the respondent by a communication
dated 29.05.2000.
51.Thereafter, the appellant filed the petition under Section 11 (3) of the
Arbitration and Conciliation Act, 1996 before the Original Side of this Court in
OP No.292 of 2001 seeking appointment of a second Arbitrator in terms of the
agreement dated 18.01.1995. The point to be now considered is whether the
claim of the appellant stood barred by the law of limitation.
52.The letters exchanged between the appellant and the respondent have
been extracted above.
53.The Berth Reservation Agreement between the appellant and the
respondent is dated 18.01.1995. The respondent by a communication dated
28.02.1997 had raised a dispute stating that the appellant was due and payable
the Berth Hire Charges, Berth Reservation Charges and Penal Levy for shortfall
of throughput for the first year. The total amount was crystallised at
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Rs.1,00,13,000/-. The appellant by a communication dated 14.03.1997 stated
that they are enclosing a cheque for the said amount of Rs. 1,00,13,000/- and
had also given their calculation for the Penal Levy at Rs.3,84,440/- and
requested confirmation of the same and had in the alternative sought adjustment
of the said amount with Berth Hire Charges lying to their credit. The
respondent by communication dated 16.03.1997 however contended that the
total amount payable had been reworked to Rs.62,48,950.32 and stated that if
the amount is not paid, they would terminate the agreement. As a matter of fact,
they had held out this threat of termination of the agreement even in their
communication dated 28.02.1997, whereby, they had demanded a sum of
Rs.1,00,13,000/-. The appellant by their communication dated 27.03.1997
informed that they would pay the full demand of Rs.62,48,950.32 and enclosed
a cheque stating that the amount had been paid under protest.
54.The appellant then invoked the clause relating to settlement of
disputes through arbitration and called upon the appellant to appoint an
Arbitrator. As pointed out earlier, under Section 21 of the Arbitration and
Conciliation Act 1996, the arbitral proceedings are deemed to commence from
the date when the notice invoking the arbitration clause is issued. The appellant
had issued such a notice on 27.03.1997.
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55.The respondent by their communication dated 22.04.1997 stated that
the collection of various charges from the appellant was proper and demanded a
further sum of Rs.5,81,568.62. They however did not address the demand for
appointment of an Arbitrator.
56.The appellant, by their communication dated 25.04.1997 stated that
they are due and payable only a sum of Rs.3,84,440/- and pointed out that they
had paid under protest a sum of Rs.62,48,950.32 by letter dated 27.03.1997.
Again the appellant demanded appointment of an Arbitrator by the respondent
to adjudicate this point of dispute. They had specifically stated that they had
paid a substantially higher amount than what was due to the respondent and that
they are losing considerable amount of interest on the excess amount paid and
therefore again urged appointment of an Arbitrator by the respondent. There
was no reply by the respondent to this communication. They again did not
specifically address the demand for appointment of an Arbitrator.
57.The appellant then issued a further communication on 20.06.1997,
wherein, again they reiterated their demand for appointment of an Arbitrator and
to refer the disputes to the arbitration. The respondent did not reply to this
demand.
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58.The respondent by their communication dated 19.07.1997 stated that
there was no dispute and that therefore the question of arbitration did not arise
that stage. They then informed that the said communication was an advance
notice of 15 days for payment of a sum of Rs.37,21,680/- and that non payment
would invite termination of the license.
59.It is thus seen that the communications between the appellant and the
respondent did not have convergence on any issue at any point. The respondent
had initially demanded the appellant to pay the Berth Hire Charges, Berth
Reservation Charges and Penalty for shortfall in throughput. The appellant had
paid Rs.1,00,13,000/-, the amount demanded. The respondent raised a further
demand of Rs.62,48,950.32/-. The appellant paid that amount under protest and
demanded appointment of an Arbitrator by the respondent. There was no direct
reply to this demand. But in every communication by the respondent, there was
a threat to terminate the agreement. By a further communication dated
19.07.1997, the respondent stated that there was no arbitrable issue and that
there was no dispute between the parties, but raised a further demand for a sum
of Rs.37,21,680/- and again held out a threat of termination of the agreement.
60.The appellant by their communication dated 01.08.1997 claimed that
they had paid all amounts including the sum of Rs.37,21,680/- and sought an
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official receipt for the said amount and again demanded the issue to be referred
to arbitration and also appointed Mr.P.C.Tilak as their Arbitrator. The
respondent did not reply to this communication. The respondent have not
produced any document to show that they had actually appointed an Arbitrator.
There are no documents produced by the respondent that they had protested
against the appointment of Mr.P.C.Tilak as an Arbitrator. There are no
documents produced by the respondent expressing willingness to refer the issue
to arbitration.
61.The appellant by their further communication dated 25.04.1998 had
again later raised a protest over the amount demanded and had given their
calculation and stated that it was the respondent who has to pay the appellant a
sum of Rs.95,54,760/- and raised a demand for the said amount. They again
reiterated the appointment of Mr.P.C.Tilak as Arbitrator and requested
appointment of an Arbitrator by the respondent. There was no indication that
the respondent ever replied to this letter.
62.It is thus seen that the respondent was demanding amounts from the
appellant and threatening termination. The appellant then turned the tables
around and claimed that it was the respondent who was liable to pay a
substantial sum of Rs.95,54,760/- being excess amount collected from the
appellant. It is further seen that though the appellant had been demanding the
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disputes to be referred to arbitration and had also appointed their Arbitrator, the
respondent had failed to address this particular issue directly even though
correspondences had been exchanged between the parties.
63.The appellant by communication dated 04.06.1998 again raised a
demand for the amount payable by the respondent and stated that they would
take legal action in this regard.
64.The appellant by a further communication dated 06.01.1999
specifically stated that a discussion was held with the Traffic Manager, Chennai
Port Trust and other Senior Officials with respect to the excess amount paid by
them and refundable by the respondent and specifically stated that the Traffic
Manager and others in the meeting on 31.08.1998 had stated that the Port Trust
would work out the excess amount charged and refund the balance.
65.This statement by the appellant indicating admission by the official of
the respondent that excess amount had been collected from the appellant was
not replied by the respondent. It could only be inferred that the respondent had
not just admitted that excess amount had been collected, but had also not
protested that an admission had been made by the Traffic Manager on this
aspect.
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66.The appellant issued a further communication on 27.08.1999, wherein,
they very specifically stated that they had called upon Muthu Srinivasan, FA
&CAO who assured that details have been compiled and that the amount
collected in excess would be refunded in about a weeks’ time. This again is a
specific allegation of direct admission of liability by the respondent, by a
responsible official of the respondent. Again, there has been no denial of this
admission and there has been no statement made by the respondent that the said
official who was holding the post of FA & CAO was not competent to so admit
the liability or was not authorised to admit the said liability.
67.By a further communication dated 05.01.2000, the appellant pointed
out that the Chairman of the respondent/Chennai Port Trust had informed that
orders have already been passed for refund of the amount due and payable to
them. This statement by the appellant referring to a commitment to pay the
appellant the amount due and that orders have already been passed had again
not been either replied denying the same specifically or stating that the appellant
had stated an incorrect fact.
68.The respondent then convened an Advisory Committee meeting on
04.04.2000 and had forwarded the minutes recorded therein on 25.04.2000 to
the Chennai Steamer Agents’ Association which forwarded the same to all
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members. The appellant was also a member of the said Association and a
representative was present in the said meeting. In the said meeting, it had been
recorded that the FA & CAO of the respondent informed that the amounts
payable to the appellant had been worked out and Legal Advisor’s opinion had
also been obtained and that settlement would be made shortly. This is a specific
admission of liability.
69.Section 18 of the Limitation Act, 1963, provides for an effect of
acknowledgment in writing and in Explanation (a) of the said provision, it had
been very specifically stated that an acknowledgment may be sufficient if it is
addressed to any person, other than a person entitled to the property or right.
70.Section 18 in entirety is given below for better appreciation:
18. Effect of acknowledgment in writing.—
(1)Where, before the expiration of the
prescribed period for a suit of application in
respect of any property or right, an
acknowledgment of liability in respect of such
property or right has been made in writing signed
by the party against whom such property or right
is claimed, or by any person through whom he
derives his title or liability, a fresh period of
limitation shall be computed from the time when
the acknowledgment was so signed.
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(2)Where the writing containing the
acknowledgment is undated, oral evidence may be
given of the time when it was signed; but subject to the
provisions of the Indian Evidence Act, 1872 (1 of
1872), oral evidence of its contents shall not be
received.
Explanation.—For the purposes of this section,—
(a)an acknowledgment may be sufficient though
it omits to specify the exact nature of the property or
right, or avers that the time for payment, delivery,
performance or enjoyment has not yet come or is
accompanied by a refusal to pay, deliver, perform or
permit to enjoy, or is coupled with a claim to set-off,
or is addressed to a person other than a person
entitled to the property or right;
(b)the word “signed” means signed either
personally or by an agent duly authorised in this
behalf; and
(c)an application for the execution of a decree
or order shall not be deemed to be an application in
respect of any property or right.
71.It is thus seen that the appellant had issued their notice calling upon
the disputes to be referred to arbitration by their communication dated
27.03.1997. They further reiterated this demand by their communication dated
25.04.1997. The respondent had stated that there were no issues to be referred
to arbitration in their communication dated 19.07.1997. The appellant had
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specifically nominated an Arbitrator by their communication dated 01.08.1997
and reiterated this fact in their communication dated 25.04.1998. The appellant
by their communication dated 06.01.1999 specifically referred to an admission
of liability by the Traffic Manager which had not been denied by the
respondent. The further admission of liability by the FA & CAO was pointed
out on 27.08.1999 and again not denied by the respondent. Thus, though the
arbitration proceedings had commenced by a communication dated 27.03.1997,
raising a demand to refer the disputes to arbitration, there has been an
acknowledgments of debt, referred in the letters dated 06.01.1999 and
27.08.1999 by the appellant. The cause to refer the dispute now stood extended.
The appellant then, by their communication dated 05.01.2000 specifically stated
that the Chairman of the respondent had passed orders for the refund of the
amounts payable to the appellant. Thus the respondent had extended the period
of limitation by not denying this statement made by the appellant. It has to be
therefore construed that the respondent admitted liability. Finally, by minutes
dated 25.04.2000, the respondent had acknowledged in writing that they were
liable to pay amounts to the appellant and that the same would be paid shortly.
This admission was not only communicated in writing, but also stated in the
presence of the representative of the appellant, namely, a member of the
Chennai Steamer Agents’ Association.
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72.The learned counsel for the respondent placed reliance on the
judgment of the Hon’ble Supreme Court in OPG Power Generation Private
Limited Vs. Enexio Power Cooling Solutions India Private Limited and another
reported in (2025) 2 SCC 417, wherein, the scope of the recording of liability in
the minutes of a meeting had been discussed with reference to a counter claim.
In the instant case, the respondent had never denied that there was no such
meeting on 04.04.2000 and that in the said meeting acknowledgment of liability
was not expressed, and that in the said meeting there was never an assurance
held that the liability would be settled shortly and that in the meeting there was
no representative of the Association present and that the said minutes were not
communicated to the Association. The respondent is thus bound by the minutes,
particularly since, the meeting was conducted in the presence of the
representative of the appellant’s Association and the minutes were
communicated to the Association. We therefore hold that the minutes of the
meeting dated 04.04.2000 would be binding on the respondent.
73.The appellant made a further demand, by communication dated
29.05.2000, wherein, they again stated that the FA & CAO had assured that
settlement would be made shortly. The agent of the appellant issued a notice on
13.07.2000 that if the respondent did not honour their liability, legal
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proceedings would be initiated. An application under Section 11 of the
Arbitration and Conciliation Act was then filed in October 2000. The last
acknowledgment of the liability by the respondent was in their meeting held on
04.04.2000, communicated to the agent of the appellant and by not replying to
the further communication of the appellant dated 29.05.2000, the filing of the
petition under Section 11 of the Act in October 2000 can never be stated to be
barred by law of limitation. We hold that the appellant had initiated necessary
proceedings within the period of limitation and the reasonings of the learned
Single Judge without examining any of the communications between the parties
in their proper perspective will have to be interfered with and are set aside.
74.The appellant then filed O.P.No.292 of 2001 under Sections 11 (3) &
11 (4) of the Arbitration and Conciliation Act, 1996, seeking appointment of a
second Arbitrator in accordance with the terms of the Berth Reservation
Agreement dated 18.01.1995. It had been contended in the said petition that the
appellant had appointed an Arbitrator by its letter dated 01.08.1997 and that the
respondent had failed to appoint their Arbitrator within 30 days from the date of
the receipt of the notice. In the said petition, the respondent filed a counter
affidavit contending that no dispute had arisen between the appellant and the
respondent and that therefore, the issue of invoking the clause to refer disputes
to arbitration did not arise. This petition filed by the appellant had been filed in
October 2000. The matter then came up before the then Chief Justice, who by
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an order dated 28.09.2004, had appointed a former Judge of this Court as an
Arbitrator to decide the disputes in accordance with the provisions of the Act
within a period of six months.
75.It must be mentioned that the law which prevailed at that point of time
was that an order appointing an Arbitrator under Section 11 of the Act was an
administrative order, subject to judicial review. The respondent filed
W.P.No.7692 of 2005 challenging the appointment of an Arbitrator. The matter
then proceeded before the Writ Appellate Court, wherein, W.A.No.1459 of 2005
was filed and by an order dated 23.09.2005, a Division Bench of this Court
stated that a third Arbitrator would be appointed by the two Arbitrators, one
appointed by the Contractor and the other appointed by the Court. It was
further ordered that the issue of limitation or any other question can be raised
before the Arbitrators. It is thus seen that the matter had been pending judicial
consideration from October 2000 when the petitioner filed a petition under
Section 11 of the Act seeking appointment of an Arbitrator till September 2005
when the Division Bench had formulated a procedure for appointment of a third
Arbitrator. This period will naturally have to be excluded when the issue of
limitation is examined.
76.Quite apart from the above, it is to be noted that for the
communications issued by the appellant, the respondent had not issued any
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reply, particularly, with respect to the demand for appointment of a second
Arbitrator and with respect to the specific averments that initially the Traffic
Manager and later the FA & CAO of the respondent Port Trust and finally the
Chairman had admitted to the claim of the appellant. Thereafter, the claim was
presented before the Arbitral Tribunal by the appellant on 11.11.2005 less than
two months from the date of order by the Division Bench formulating the
procedure to form an Arbitral Tribunal. The respondent then raised the issue of
limitation. The Arbitral Tribunal framed the issue of limitation as a preliminary
issue and held that the claim petition was filed within the period of limitation.
Challenging that order, the respondent herein filed CMA No.134 of 2007 under
Section 37 of the Arbitration and Conciliation Act, 1996. A learned Single
Judge of this Court by order dated 09.10.2007 observed that the appeal had been
admitted and interim stay had been granted and that the appellant herein had
filed an application to vacate the stay which was dismissed and the stay was
made absolute. It was further observed that the appellant had filed a Special
Leave Petition before the Hon’ble Supreme Court, wherein, the petition was
disposed of by requesting the High Court to decide the issue of maintainability
of the appeal and that in the mean time, the arbitration may proceed and Award
may also be pronounced, but shall not be put into execution till the
maintainability of the appeal is decided. The learned Single Judge finally held
that CMA No.134 of 2007 was not maintainable and dismissed the same.
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77.The Arbitral Tribunal then proceeded to pass an Award on 17.09.2007,
challenging which the respondent had filed O.P.No.511 of 2009 under Section
34 of the Act. The learned Single Judge had held the issue of limitation in
favour the respondent herein. We hold that while deciding the issue of
limitation, due regard should have been given to the admissions made by the
respondent and to the further facts that the respondent had protracted the issue
by first refusing to appoint an Arbitrator, second by denying that there was any
dispute to be referred to arbitration, third by contesting the petition filed under
Section 11 of the Act filed by the appellant herein, fourth by challenging the
order by filing a writ petition, fifth by raising the issue of limitation before the
Arbitral Tribunal and sixth by challenging the order passed on the issue of
limitation again in appeal before this Court. The period taken in all these
proceedings should be excluded as they were not under the control of the
appellant and could only be termed as frivolous steps taken by the respondent to
delay the payment of the admitted claim by them.
78.It had been held by the learned Single Judge that the Arbitral Tribunal
had allowed the claims without evidence being available. During the Arbitral
proceedings, the appellant, as claimant had examined their Regional
Representative and the correspondences referred supra had been marked which
clearly indicate that the respondent had initially made demands for the Berth
Hire Charges, Berth Reservation Charges and Penalty for shortfall in throughput
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and had threatened termination of the agreement, to avert which the appellant
had paid the amount demanded and later it was found that the amounts
demanded and paid were far in excess of the actual amount payable by the
appellant. It was the respondent who had to refund the excess amount payable.
This liability was acknowledged by the Traffic Manager of the respondent, by
the FA & CAO of the respondent, by the Chairman of the respondent and further
in the presence of the representative of the Association of the appellant in a
meeting convened by the Chairman, attended by the FA & CAO of the
respondent. This acknowledgment is more than sufficient to hold that the
respondent was due and payable the amount to the appellant.
79.It is beyond the scope of the Court under Section 34 or Section 37 of
the Act to go into the intricacies of the calculations made and presented before
the Arbitral Tribunal to find whether they were arithmetically correct or not,
particularly when there was no denial of the correctness of the demand of the
appellant and more particularly since there was an admission of liability by the
respondent. Even otherwise, the witness for the appellant very specifically
stated during cross examination that he came to know what exactly transpired in
the Advisory Committee meeting held on 04.04.2000 from the minutes of the
meeting. He further asserted that an assurance was given that the amounts
would be settled. He denied that such an assurance was not given. He
specifically stated as follows:
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41/44 OSA(CAD) No. 39 of 2021Q.175 Sir, Read that part of the minutes which you
refer that is in your favour, who according to you
assured XCL. whether Chairman or F.A & CẢO ?
Ans: On Chairman’s enquiry the F.A & CAO
confirmed in presence of our Agent’s Association
representative.
80.The next question was not that this statement by the witness was not
correct. Rather a question was put as to what was the name of the Chairman of
the respondent. The said question and answer are as follows:
Q. 176. Who was the Chairman of the advisory
committee meeting held on 04/04/2000?
Ans. Shri. Baskara Doss, IAS chaired the meeting.
81.It is thus seen that the respondent has not specifically challenged the
statement made by the witness that the admission of liability was made in the
presence of the representative of the Agents’ Association. It would only be
proper to once again reiterate that the effect of acknowledgment of liability in
the presence of a person other than to whom the right had accrued is more than
sufficient in accordance with the Explanation (a) of Section 18 of the Limitation
Act, 1963. The documentary evidence produced and referred above and the oral
evidence adduced would only indicate that the Tribunal had come to a proper
decision in the claim petition preferred by the appellant and there is no patent
illegality. It can never be stated that it was perverse or that extraneous reasons
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had been given to justify the claim being granted by the Tribunal. We would set
aside the reasoning of the learned Single Judge on this aspect.
82.The learned counsel for the respondent had placed reliance on the
judgment of the Hon’ble Supreme Court in SSANGYONG Engineering and
Construction Company Limited Vs. National Highways Authority of India,
reported in (2019) 15 SCC 131, wherein, the Hon’ble Supreme Court had held
that when a party was not able to present his case, it could be construed as
patent illegality. It was also held that if a conclusion is reached on no evidence,
then it would indicate patent illegality. In the instant case, there was more than
sufficient evidence available, there was more than one acknowledgment of
liability and there was no denial of such acknowledgment of liability and there
was no denial that the documents presented by the appellant were never
communicated to the respondent.
83.We hold that the Award granted by the Tribunal had been granted on
the basis of sufficient evidence produced and can never be categorised as
suffering from patent illegality.
84.In view of all these reasons, we set aside the order of the learned
Single Judge and restore the award of the Arbitral Tribunal on the same terms
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granted by the Tribunal. The judgment of the learned Single Judge in
O.P.No.511 of 2009 dated 17.09.2020 is set aside. The Appeal stands allowed
with costs. Consequently, connected miscellaneous petition is also closed.
(C.V.K.J., ) (K.B.J., )
13-03-2026
Index:Yes/No
Speaking/Non-speaking order
Internet:Yes
Neutral Citation:Yes/No
sli
To
The Board of Trustees of the Port of
Chennai,
Rajaji Salai, Chennai 600001.
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44/44 OSA(CAD) No. 39 of 2021
C.V.KARTHIKEYAN, J.
AND
K.KUMARESH BABU, J.
sli
Pre-delivery Judgment in
OSA(CAD) No. 39 of 2021
13-03-2026
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