Madras High Court Directs Chennai Port Trust To Pay ₹1.21 Crore To X-Press Container Lines In Arbitration Dispute

The Madras High Court recently restored an arbitral award directing the Board of Trustees of the Port of Chennai to refund Rs.1,21,91,869 to X-Press Container Lines (UK) Ltd. in a dispute arising out of a berth reservation agreement and recovery of berth hire charges and penal levy, holding that the claim was within limitation in view of repeated acknowledgments of liability by the Port authorities.

A Division Bench comprising Justices C.V. Karthikeyan and K. Kumaresh Babu allowed an appeal filed by X-Press Container Lines challenging an order dated September 17, 2020 that had set aside the arbitral award dated January 17, 2009.

“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 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 bench observed.

The dispute arose from a Berth Reservation Agreement dated January 18, 1995, under which the shipping company was permitted to use berth facilities at the Chennai Port for container handling operations until September 24, 1997.

Differences emerged in February 1997 when the Port alleged breach of the agreement and demanded various charges, including berth hire charges and penal levy for shortfall in throughput. The company disputed the penal levy, paid the demanded amount under protest, and by letter dated March 27, 1997, invoked the arbitration clause seeking appointment of an arbitrator.

Subsequently, the company claimed that excess amounts had been collected by the port. Correspondence between the parties and discussions with port officials indicated that the excess recovery had been acknowledged and assurances were given that the amount would be refunded. Communications in January 1999 and August 1999 referred to such assurances, while minutes of an Advisory Committee meeting held on April 4, 2000, recorded that the refund had been worked out and that settlement would be made shortly.

The court held that these communications constituted acknowledgment of liability under Section 18 of the Limitation Act, thereby extending the limitation period. It further observed that the arbitral tribunal's findings were supported by documentary and oral evidence and did not suffer from patent illegality.

The court said,

“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.”

Accordingly, the High Court set aside the order dated September 17, 2020, and restored the arbitral award in favour of the shipping company.

Click Here To Read/Download Single Judge Order