Authority: Calcutta High Court (Division Bench)

Order Date: 25 June 2026

Case Overview

  • Parties: Vizag Seaport Private Limited (appellant) vs. Steel Authority of India Limited (respondent).
  • Nature of Proceeding: Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against a judgment dated 10 August 2022 where the Single Judge allowed the respondent’s Section 34 application and set aside the majority arbitral award dated 30 August 2015.
  • Background: The parties entered into a Short‑Term Agreement (STA) on 6 May 2008 for three years (extendable by one year at the respondent’s option). VSPL was to handle coal‑cargo imported by SAIL through berths EQ‑8 and EQ‑9 at Visakhapatnam Port, with an assured volume of 1.5 million metric tonnes per annum.
  • Key Contractual Clauses:
  • Clause 5.12 limited storage to 60,000 MT (with an additional 30,000 MT for up to 15 days on 30‑day notice) and, if the cargo commitment exceeded 2 million MT per year, allowed storage up to 90,000 MT plus 30,000 MT for 15 days without notice.
  • Clause 5.5 linked discharge of cargo to the rules and regulations of the Visakhapatnam Port Trust (VPT) and the Major Port Trusts Act, 1963 (MPT Act).
  • Annexure‑1 set Integrated Terminal Service Charges (ITSC) at Rs 167 per metric tonne, with royalty and lease rentals governed by VPT/TAMP notifications.
  • Dispute: VSPL issued a notice on 20 December 2010 demanding demurrage for cargo exceeding the contractual period (May 2009‑Nov 2010). SAIL refused, claiming demurrage was not provided for in the STA.
  • Arbitration: VSPL claimed Rs 30,83,07,496 (≈ Rs 30.83 crore) plus interest at 8 % p.a.; SAIL filed a counter‑statement. The three‑member Tribunal gave a split award on 30 August 2015:
  • Majority award: Directed payment of Rs 19,68,46,018 (≈ Rs 19.68 crore) with interest at 8 % p.a. from reference date to award date and 6 % thereafter.
  • Minority award: Rejected VSPL’s claim.
  • Section 34 Application: SAIL appealed the majority award; the Single Judge set aside the majority award and affirmed the minority view, holding that the Tribunal had erred in re‑appreciating evidence and in interpreting the contract.
  • Appellant Submissions: Argued that the Single Judge exceeded the limited scope of Section 34, re‑interpreted the contract, and substituted its own view, which is impermissible. Cited Supreme Court precedents (e.g., Oil & Natural Gas Corp. Ltd.; Associate Builders; Ssangyong Engineering). Emphasised that the STA incorporated the MPT Act and TAMP provisions, and that demurrage charges were not contractually provided.
  • Respondent Submissions: Contended the majority award was wrong, that the STA was a private contract not governed by the 1963 Act or TAMP, and that the Tribunal had ignored vital evidence (charts showing cargo handling). Relied on similar Supreme Court cases to argue patent illegality and public‑policy violation.
  • Court’s Analysis:

1. Re‑iterated the limited scope of Section 34 – interference is permissible only on grounds of patent illegality, violation of public policy, or where the award is perverse on its face.

2. Noted that the Single Judge’s order correctly applied this limited scope; the Tribunal’s reasoning involved re‑appraisal of evidence and contract interpretation, which is barred under Section 34.

3. Observed that the majority award was not perverse on its face; the Tribunal had applied the TAMP rates and the MPT Act appropriately to the STA, and there was no evidence of fraud, corruption, or violation of fundamental policy.

4. Cited Supreme Court pronouncements (e.g., Punjab State Civil Supplies Corp. Ltd. vs. Sanman Rice Mills; Dyna Technology (P) Ltd. vs. Crompton Greaves Ltd.) confirming that courts must not interfere with arbitral awards merely because an alternative view is possible.

  • Final Outcome:
  • The Division Bench dismissed the appeal (APO 112 of 2022 together with IA No GA 1 of 2022), upheld the Single Judge’s order, and ordered that there be no order as to costs.
  • An urgent certified copy of the judgment may be supplied to the parties upon compliance with formalities.

Topics: Arbitration Law, Public Policy