High Court Restores Arbitral Award, Holds Admissions by Port Tolled Limitation and Arbitration Commenced on Notice

A Division Bench of Justice C.V. Karthikeyan and Justice K. Kumaresh Babu heard an appeal by M/s X‑Press Container Lines (UK) Ltd. challenging a Single Judge’s order dated 17.09.2020 that had set aside an arbitral award in favour of the company. The appeal arose from an Award dated 17.01.2009 by an Arbitral Tribunal that had directed refund to the claimant together with interest; the Board of Trustees of the Port of Chennai impugned that Award under Section 34 of the Arbitration and Conciliation Act, 1996.

The Court allowed the appeal, set aside the Single Judge’s order and restored the Arbitral Award. It held that arbitral proceedings commenced on 27.03.1997 when the claimant’s request to refer disputes to arbitration was received by the Port under Section 21 of the Act, and that written acknowledgments and admissions by the Port’s officials tolled and extended the period of limitation under Section 18 of the Limitation Act. The Bench found no “patent illegality” in the Tribunal’s decision and declined to re‑examine the detailed arithmetical calculations under Section 34/37. The Court, in its reasoning, observed: “Thus, though the arbitration proceedings had commenced by a communication dated 27.03.1997, raising a demand to refer the disputes to arbitration, there has been an acknowledgments of debt, referred in the letters dated 06.01.1999 and 27.08.1999 by the appellant. The cause to refer the dispute now stood extended. 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. It has to be therefore construed that the respondent admitted liability. Finally, by minutes dated 25.04.2000, the respondent had acknowledged in writing that they were liable to pay amounts to the appellant and that the same would be paid shortly. This admission was not only communicated in writing, but also stated in the presence of the representative of the appellant, namely, a member of the Chennai Steamer Agents’ Association.” The Court also relied on oral evidence, noting the witness’s answer that “On Chairman's enquiry the F.A. & C.A.O. confirmed in presence of our Agent's Association representative.”

Background The dispute arose from a Berth Reservation Agreement dated 18.01.1995 under which X‑Press reserved berth facilities at Chennai Port. In 1997 the Port claimed unpaid berth hire, reservation charges and a penal levy for throughput shortfall, quantified initially at over Rs.1 crore; X‑Press disputed parts of the calculation, paid sums under protest and repeatedly requested appointment of an arbitrator. The claimant issued a formal request to refer disputes to arbitration on 27.03.1997 and nominated an arbitrator thereafter. Correspondence and meetings followed, including a 04.04.2000 Advisory Committee meeting whose minutes recorded that refund of excess berth hire and excess penal levy “has been decided as approved by CPT” and that “settlement will be made shortly.”

X‑Press filed proceedings under Section 11 in 2000 for appointment of a second arbitrator; judicial intervention and challenges to appointment led to delays and further litigation including a writ, a writ appeal and an SLP to the Supreme Court, which permitted the arbitration to proceed but stayed execution. The Arbitral Tribunal ultimately awarded relief to X‑Press on 17.01.2009. The Port challenged the Award under Section 34; the Single Judge set aside the Award on grounds that the claim was time‑barred and that the Award suffered from patent illegality in computation and evidentiary basis.

On appeal, the Division Bench examined the correspondence, minutes and oral testimony and applied Section 21 (commencement of arbitral proceedings), Section 18 of the Limitation Act (effect of written acknowledgment) and Section 85 (saving of provisions of Arbitration Act, 1940 in respect of pre‑1996 agreements). The Court found multiple written acknowledgments and admissions by Port officials, absence of denial, and periods of litigation and procedural steps initiated by the respondent that ought to be excluded when computing limitation. It held that the Tribunal had sufficient evidence and that the High Court erred in re‑weighing evidence to declare patent illegality.

The Bench set aside the Single Judge’s order dated 17.09.2020, restored the Arbitral Award, allowed the appeal with costs and closed the connected miscellaneous petition. Earlier interim directions — including the Supreme Court’s direction that an Award, once pronounced, should not be executed pending adjudication of interlocutory proceedings — were noted in the factual history.

Case Details: Case No.: OSA(CAD) No. 39 of 2021 NeutralCitation: 2026:MHC:1055 Case Title: M/s. X‑Press Container Lines (UK) Ltd. v. The Board of Trustees of the Port of Chennai Appearances: For the Appellant(s): Mr. J. Sivanandharaaj, Senior Counsel for Mr. V. Sankara Narayanan For the Respondent(s): Mr. Niranjan Rajagopalan