A nearly 10-year-long legal wrangle over the development of Puducherry port has reached a denouement in favour of the Government.
In its ruling, an arbitration tribunal constituted under the Supreme Court Judges-D.P. Wadhwa and Doraiswamy Raju and former judge Allahabad High Court, I.P. Vasishth, spared the Government of paying over Rs.1,700 crore as compensation to the private company following the annulment of agreement in controversial circumstances.
History
The history of the Puducherry Port, which is a minor port, dates back to 10{+t}{+h}century. Situated at Ariyankuppam river mouth on the east coast of Bay of Bengal, the port was once a centre of international trade of commerce and lost it prominence at the end of French rule and for want of upgradation of facilities and infrastructure, compared to Chennai and Tuticorin Ports.
The Union Territory government represented by its Department of Ports entered into a concession agreement dated January 21, 2006 with Subhash Projects and Marketing Limited and Om Metals Limited, the consortium partners of Pondicherry Port Limited, a special purpose vehicle for the development of the Puducherry Port on BOT basis (Build, Operate, Transfer). The lease was executed and possession agreements were obtained on February 4 of the year.
Public interest litigations
Immediately, two public interest litigations were filed in the High Court by C.H. Balamohanan and Villianur Iyarkai Padukappu Maiyam represented by its secretary C. Sactivel seeking to quash the agreement and lease. They contended that it was only a real estate project in the name of port developer and the entire project was without any environmental clearance.
A Division Bench of Madras High Court, while disposing the writ petition, ordered that further development of the port by the private developer should be based upon the environmental clearance (EC) to be given by Ministry of Environment and Forests (MOEF). It also said the consortium should not indulge any real estate activity.
Leave petitions
Subsequently the petitioners filed special leave petitions in the Supreme Court in March 2007 challenging the verdict of Madras High Court. The apex court upheld the judgement of the Madras High Court in 2010. On April 16, 2012, the consortium issued a notice to the Government and also demanded compensation of Rs.1,511 crore for the delay already said to occurred in the project.
The dispute among the parties hereto arose in respect of implementation and execution of the project envisaged under a concession agreement.
Agreement cancelled
On the advice of Union Ministry of Home Affairs, the Government cancelled the agreement with the consortium in June 2013. Later the matter was referred to arbitration. Pondicherry Port Limited made seven claims — Reimbursement of entire expenditure said to have been incurred from 2006 up to 2012 and reimbursement of revenue loss on account of operation of the port from February 2006 up to March 2012.
It also claimed compensation for the loss of opportunity on account of non-implementation of the proposed port project from April 2012 onwards; loss on account of shareholders wealth and reputation; loss due to non –acquisition of land and consequent reduction in size of operation; loss of profit due to termination and interest in all of claims for Rs.1741.41 crore.
Counter claim
The government also filed a counter claim for compensation towards loss of revenue on account of port operation from May 2009 and expenditure incurred by the department on the port project and for interest at 18 per cent from the date of counter claim till date of actual payment.
Awarding nil compensation to both sides, the arbitration tribunal said, “The Pondicherry Port Limited’s claim appears to be purely speculative, astronomical and imaginary and consequently rejected.”
Rejecting the plea for compensation, the arbitration tribunal also said the claimant (Pondicherry Port Limited) could not undertake any port related activities without obtaining necessary clearance and approvals including environmental clearance from MOEF.
MOEF clearance
It also pointed that the Supreme Court of India has observed that mere submission of DPR (Detailed Project Report) is not the end of any decision making process, that the implementation of the project as per DPR is dependent on the clearance to be given by MOEF and that there is no manner of doubt that government has every power to stop the project if it violates the environmental safeguards.
After considering in depth of the whole aspect of the matter, the tribunal concluded that neither the claim made by Pondicherry Port Limited, the claimant nor the counter claim made by Government of Puducherry have any substance.
With decks cleared, now the Department of Ports has been preparing to sign an agreement with Chennai Port Trust.
The Department of Ports has been preparing to sign an agreement with the Chennai Port Trust
