Explained : SC Ruling on Paradip Port Authority Tariff

Paradip Port Authority Tariff ruling: the Supreme Court set aside an in-house award and later orders. It sent tariff issues to TAMP with a mandatory hearing, put statute over contract, and moved the method toward cost-plus. This explainer lists what changed and what parties must file now

New Delhi (ABC Live): In Paradip Port Authority v. Paradeep Phosphates, the Supreme Court resets a long?running tariff fight and returns to first principles. Moreover, it puts the tariff rules set by law ahead of custom contract pricing, sets aside the in?house award and later orders, and sends the issue to the Tariff Authority for Major Ports (TAMP) for a fresh hearing. As a result, ports and users must rebuild the tariff record on a clear, checkable cost?plus base. In short, this is the Paradip Port Authority Tariff ruling explained in plain terms.

Read Full Judgment

What the Court held

First, everything is set aside; the case goes back to TAMP. The 2002 “in?house” award and later orders fall. TAMP must re?determine tariffs after granting both sides an oral hearing.
Second, statute beats contract. Clause?based pricing cannot override tariff powers under the port law and notified rates.
Third, method matters. The Court moves tariff determination toward a cost?plus return model, not after-the-fact reimbursement.
Finally, an interim appeal route applies. Until the Adjudicatory Board exists, TAMP acts in its place; a first appeal to the Supreme Court is allowed on that reading.

Arbitration: process, validity, and review test

What mechanism did the parties choose? First, the original clause routed disputes to an in?house PSU process: an arbitrator nominated by a government secretary (BPE), with the Arbitration Act did not apply. Later, a supplementary agreement reaffirmed this non?1996 Act process and provided for a revision/setting?aside route to the Law Secretary.

How the Supreme Court treated the award. Next, because the 1996 Act was excluded, Section 34 did not apply. Therefore, the Court reviewed the 2002 award and the 2009 appellate order outside the s.34 framework and found the award contrary to law: it applied one clause of the contract while ignoring Clause 19 and the overall tariff rules set by law. As a result, the Court set aside those decisions and sent the whole period to TAMP for a fresh, hearing?based decision that follows the law.

Judicial?correctness audit (arbitration angle).

Overall, the forum logic is right. Once parties exclude the 1996 Act, review runs on public?law/writ principles rather than s.34; the Supreme Court’s approach is consistent with that view, even if the judgment does not name a single review test (for example, Wednesbury, perversity, or patent error of law).
Also, the substantive critique is sound. A private, in?house award cannot rewrite public?law tariff powers. Ignoring Clause 19 and notified rates is a basic error of law.

Practical drafting and strategy notes.

Therefore, avoid PSU?only in?house arbitration where the counterparty may disinvest mid?stream; it blurs the applicable regime and review route.
Also, if you use custom mechanisms, define the appeal/setting?aside path and its review standard to avoid uncertainty.
Above all, draft for consistency with law: any award must respect notified rates and legal tariff powers.

Judicial correctness

First, contract–statute harmony is correct. Public?law tariff powers prevail; private bargains work within, not above, statute.
Second, the review of the non?1996 “arbitration” is mostly right but understated. The award ignored the full contract and the statutory scheme; the Court could have stated the precise public?law review standard more clearly.
Third, natural justice at TAMP is correct. Complex factual disputes require a hearing; remand is the right remedy.
Finally, the appeal design is a practical bridge. The Court constructs an interim path (TAMP acting as Board ? direct SC appeal). That said, textual discomfort exists, but the approach is practical until the Adjudicatory Board is set up.

Practical implications for the Paradip Port Authority Tariff (ports, users, counsel)

First, for ports. Prepare a solid cost?plus working: WACC/return, allocation keys, depreciation lives, O&M norms, and productivity targets for the base years; then roll forward consistently.
Next, for users. Be ready to contest allocation logic, efficiency assumptions, and productivity norms; limitation/refund questions remain open on remand.
Meanwhile, for counsel. Expect direct SC appeals from TAMP decisions until the Adjudicatory Board becomes operational; frame issues as questions of law/process, not rate?setting.

Checklist: What to file at TAMP (both sides)

A. Core documents

Complete contract set (original + amendments), relevant board approvals, and correspondence on tariff applicability.
All notified rates for the disputed periods, plus evidence of charges raised and payments made.

B. Cost?plus model pack

Asset base: Asset register, capitalisation dates, useful lives, depreciation method, write?down notes.
O&M: Head?wise O&M schedules (actuals vs normative), maintenance plans, and variance notes.
Allocation keys: Berth/asset?specific allocation logic (throughput, tonne?hours, time?at?berth, power, labour hours).
Return parameters: WACC/WADR computation (risk?free, beta, debt cost, gearing, tax), with sources and a sensitivity band.
Productivity norms: Crane rates, turnaround times, dwell times—historical and proposed norms with justification.
Working capital: Inventory/receivables/payables cycle assumptions and policy notes.

C. Evidence & process

Hearing brief: Issue list, technical experts, and time estimate.
Comparators: Similar berths/ports, and cross?sector comparisons for return methodology where relevant.
Refund/limitation stance: Computation schedule, legal basis, and clear periods.

D. Outputs requested of TAMP

Speaking order requirements: Findings of fact, method used, chosen numbers, hearing record, and reasons for accepting or rejecting each point.
Roll?forward: Clear steps from base years to later years with parametric updates.

Why ABC Live is publishing this review (now)

First, regulatory clarity. The judgment affects how Indian ports price services when custom berth deals exist.
Second, a due?process signal. It backs hearing?led, expert?driven tariff setting—useful for investors, users, and regulators.
Third, market impact. Tariffs shape user charges, port revenues, and downstream sectors (fertiliser, bulk cargo, logistics).
Fourth, a litigation roadmap. Until the Adjudicatory Board is set up, appellate strategy leans on the Court’s gap?period reading.
Finally, reader utility. Our policy, legal, and infra audience needs a concise, actionable guide for the TAMP process.