Kiran Raj

The Supreme Court of India Division Bench of Justices M.M. Sundresh and Justice Rajesh Bindal set aside the arbitral award, the appellate order, and the High Court’s decision, and directed that the tariff dispute be adjudicated afresh by the Tariff Authority for Major Ports (TAMP). The Court also set aside a separate TAMP order (and the High Court’s affirmance of it) that had dealt with tariff determination for a later period, remitting that matter to TAMP as well. Additionally, the Bench directed the Registry to transmit the judgment to the Union Government’s Legislative Department for examination and appropriate steps.

The dispute concerns revision of tariff for a “captive berth” and associated facilities at a major port. The parties executed an agreement on 03 August 1985 under which berthing facilities, known as the “Fertilizer Berth,” were to be used exclusively by one party, with tariff specified in an annexed schedule. Clause 1 provided that “the rates now charged can be suitably enhanced at such intervals as would be mutually agreed upon by the parties from time to time.” Clause 19 stipulated that the user “shall be subjected to the application of all relevant laws, rules and regulations of the Paradip Port Trust … that would be framed and enforced from time to time.”

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The Supreme Court recorded that the agreement’s schedule set out charges for different facilities, including fixed and variable components, with items such as tug hire, pilotage and port dues payable as per the then applicable scale of rates. The Court observed at the threshold of its discussion that “merely because an Agreement was entered into between the parties, the same cannot override the provisions of law,” adding that if parties do not agree to a tariff revision “some authority has to resolve this issue.”

On the record placed before the Court, the appellant authority proposed a tariff revision in 1993–94. The respondent objected by letter dated 16 March 1993, but the authority proceeded to revise the tariff from October 1993 after issuing a notification on 05 October 1993. The respondent continued to pay the revised tariff “without any objection” until it filed a civil suit on 30 June 2000 seeking declaratory and injunctive relief against the 1993 notification.

During pendency of that suit, on agreed terms, the parties referred their dispute to “informal” arbitration before the Joint Secretary & Legal Adviser, Ministry of Law, Justice and Company Affairs, with a further appellate remedy to the Law Secretary, Department of Legal Affairs. The period in issue before the arbitrator covered October 1993 to 31 October 2001. The arbitrator rejected revision for October 1993 to 31 March 1999, and, since TAMP had come into existence with effect from 01 April 1999, the parties were granted liberty to approach TAMP for the period thereafter.

The appellate authority (the Law Secretary) dismissed the appeal by order dated 19 October 2009, upholding the arbitral award; the High Court later dismissed a writ petition challenging the award and appellate order. In parallel, the High Court, on 08 July 2009 in a separate writ petition concerning communications and demands raised for later years, recorded that parties had approached TAMP and left the matter of tariff determination to TAMP.

Before the Supreme Court, two appeals were heard together because both had been decided by the High Court via a common order dated 11 January 2023. One appeal (arising out of SLP(C)

No. 9751 of 2023) concerned the 1993–1999 period, in which the appellant sought to set aside the arbitral award and the appellate order, both of which had been upheld by the High Court. The second appeal (arising out of SLP(C) No. 9870 of 2023) assailed a TAMP order dated 22 November 2011 that had determined tariff for 1999–2000 to 2009–10; the High Court had also dismissed a writ petition challenging that TAMP order.

On the appellant’s case, tariff fixation is “a highly complicated arena which is the job of experts.” It contended that TAMP had failed to exercise its jurisdiction on a wrong premise and had stated—despite extensive filings and even a PowerPoint presentation—that “no opportunity of hearing was required.” The appellant argued that such complex factual issues, involving figures over a long historical span, could not be adjudicated “merely by reading the documents.”

The respondent argued that the matter had already been judged at three levels—by the arbitrator, the appellate authority, and the High Court—and that interference in such circumstances was limited. The respondent submitted that clause-based constraints in the agreement required mutual consent for any increase and that issues of tariff, particularly when within the remit of an expert body, warranted judicial restraint.

Statutorily, the Court noted that the erstwhile Major Port Trusts Act, 1963 created TAMP and that the 1963 Act has since been replaced by the Major Port Authorities Act, 2021. Section 54 of the 2021 Act contemplates an “Adjudicatory Board” to fix tariff, with a proviso that until such board is constituted, TAMP would continue to function. As of the decision date, no adjudicatory board had been constituted; therefore, jurisdiction lay with TAMP. The appellate remedy against orders of TAMP or the adjudicatory board currently lies directly to the Supreme Court under Section 60 of the 2021 Act.

The Supreme Court’s table of contents reflects the structure of its decision: two appeal segments (with factual aspects, arguments, discussion, and conclusion), followed by a section labeled “Constitution of Appellate Authority,” and a final section labeled “Relief.”

In setting up the framework for decision, the Court recorded: “We have heard learned counsel for the parties and perused the relevant referred record.”

On the interplay between contract and statute, the Court stated: “Merely because an Agreement was entered into between the parties, the same cannot override the provisions of law.” It added: “In case the parties do not agree with the revision of tariff the same will not remain in abeyance as some authority has to resolve this issue.”

Addressing institutional competence, the Court recorded: “As on today, it should be the [Adjudicatory] Board which should have adjudicated this dispute … however … no adjudicatory board has been constituted … hence, it is the TAMP which has jurisdiction to adjudicate the issue.” It further stated: “The TAMP being an independent authority consisting of experts, will be the right authority for resolution of dispute between the parties, which is pending for more than two decades.”

On TAMP’s approach in the post-1999 period, the Court observed: “It looks a little surprising that TAMP did not find any justification for revision of tariff even for a time gap of more than 10 years. The costs, overheads on many aspects must have increased manifold during the interregnum.”

On audi alteram partem, the Court recorded: “An opportunity of hearing was required to be given … where complicated issues of facts were involved … It is a clear case of violation of principles of natural justice.”

The Bench addressed the relevance of the original basis for the 1985 tariff vis-à-vis later revision, noting: “The basis for fixation of tariff at the time of entering into the initial agreement could not be deciphered … but the tariff was to be revised keeping in view the base point and not the basis for fixation thereof.”

As to methodology, the Court stated: “One of the principles on which we are unable to agree is the reimbursement of the cost principle. Even under the normal tariff fixation regime, the cost-plus return approach is the principle to be followed.”

In concluding its first appeal segment (1993–1999), the Court said: “We set aside the Award of the Arbitrator, the order of the Appellate Authority and also the order passed by the High Court. We remit the matter to TAMP for adjudication of the dispute regarding revision of tariff … from October 1993 till 31.03.1999.” It added: “Needless to add that all the issues, including limitation, shall be considered by the TAMP.”

In the second appeal segment (1999–2010), the Court ultimately concluded: “The impugned order passed by the TAMP and also the High Court are set aside. The matter is remitted to the TAMP for decision afresh along with the matter for the period prior thereto.”

Finally, in a dedicated section on systemic design, the Bench recorded: “We recommend to make the remedy of appeal more effective and meaningful without disrespect to any authority. It would be appropriate if an expert appellate body is constituted to hear appeals against the orders passed by the adjudicatory board/TAMP.”

In respect of the period October 1993 to 31 March 1999, the Court expressly directed that “we set aside the order of the Arbitrator, the order of the Appellate Authority and also the order passed by the High Court,” and further ordered that “the matter is remitted back to the TAMP for adjudication of the dispute regarding revision of tariff applicable to the respondent for the period from October 1993 till 31.03.1999.”

For the later period addressed by TAMP’s order dated 22 November 2011, the Bench recorded that the “impugned order passed by the TAMP and also the High Court are set aside,” with a further direction that “the matter is remitted to the TAMP for decision afresh along with the matter for the period prior thereto.”

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On appellate architecture in port-tariff matters, the Court stated: “In view of our above observations, we recommend to make the remedy of appeal more effective and meaningful …  would be appropriate if an expert appellate body is constituted to hear appeals against the orders passed by the adjudicatory board/TAMP.” The Court also directed institutional follow-up by ordering that “the Registry of this Court shall forthwith send a copy of this order to the Secretary, Legislative Department, Ministry of Law and Justice, Government of India to examine the issue and take appropriate steps.”

The Court clarified in an earlier conclusion that, upon remand, “all the issues, including limitation, shall be considered by the TAMP,” and, in relation to the second appeal, that “in the process of adjudication both the parties should be given due opportunity of hearing.”

Advocates Representing the Parties

For the Petitioner(s): Mr. Dipak Kumar Jena, AOR; Mr. Pramod Kumar, Adv.; Ms. Smita Kumari, Adv.; Mr. Pradeep Kumar Verma, Adv.; Mr. Sandip Munian, Adv.; Ms. Ayushi Goyal, Adv.; Mr. Ashutosh Singhdeo, Adv.; Mr. Raj Shekhar Jena, Adv.

For the Respondent(s): Mrs. Anushka Sharda, Adv.; Mrs. Raveena Rai, Adv.; For M/s Khaitan & Co., AOR

Case Title: Paradip Port Authority v. Paradeep Phosphates Ltd.; Board of Trustees of Paradip Port v. Paradeep Phosphates Ltd. and Anr.

Neutral Citation: 2025 INSC 971

Case Number: Civil Appeal Nos. 10542 of 2025 and 10543 of 2025

Bench: Justice M.M. Sundresh; Justice Rajesh Bindal