Bangalore: The inability of Jawaharlal Nehru port, or JN port, and a group led by PSA International Pte Ltd to reach agreement on whether an accord between them needs to be registered is reflected in the divided opinions of experts and the lack of a definite precedent.
The concession agreement signed in 1997 for India’s first private container terminal contract at JN port near Mumbai was not registered whereas the agreement for another facility subsequently in 2004 at the same port was.
Private cargo-handling terminals operating at Union government-controlled ports located in Chennai, Tuticorin, Ennore, Cochin, New Mangalore, Kandla, Kolkata, Paradip and Mormugao have not registered their respective concession agreements, according to port officials. The concession agreement for the container terminal at Mundra port run by DP World Pvt. Ltd was also not registered. Mundra is owned by the Gujarat government.
JN port says that registering the concession agreement is a customary practice while PSA says it isn’t mandatory. Registration entails payment of stamp duty and PSA is not willing to bear this cost, which could range between Rs 50 crore and Rs 335 crore, depending on how it is calculated.
“If the concession agreement has the affect of a transfer of an asset or lease of an immovable property then registration is compulsory, otherwise it is not,” said V. Subramanian, a Mumbai-based lawyer specializing in maritime issues.
The registration issue had cropped up in 2004 when JN port was signing a concession agreement with a consortium led by APM Terminals Management BV that won the auction for building the third container terminal at the port. Registering the concession agreement “is a grey area”, said Ravi B. Budhiraja, chairman of JN port between 2003 and 2006.
“At that time, the APM Terminals consortium was willing to pay the stamp duty and register the document,” said Budhiraja, a retired Indian Administrative Services officer, who is now the director general of the Maharashtra Economic Development Council.
“We were advised by our lawyers that it was a legal requirement and we abided by the law of the land,” said Dinesh Lal, chairman of Gateway Terminals India Pvt. Ltd, the company formed by APM Terminals to run the third container terminal at JN port. Lal said Gateway Terminals paid Rs 25.9 crore as stamp duty for registering the concession agreement.
However, the concession agreement signed between JN port and Nhava Sheva International Container Terminal Pvt. Ltd, or NSICT, (a company formed by P&O Ports Australia Pty Ltd) in July 1997 to run India’s first private container terminal was not registered. In 2005, NSICT was taken over by DP World after the Dubai firm acquired P&O Ports in a global deal.
“For NSICT, given that the concession agreement was signed in 1997, there was no need to stamp the document or register the document as per the legal requirements of the Stamps Act, Bombay 1958,” a spokesperson for DP World said.
“In my view, a concession agreement signed by a port trust and a private firm for a container-handling contract need not be registered because the counter party in this case is a port trust which is a sovereign entity created by an act of Parliament,” said Jimmy Sarbh, the chairman of consultancy firm Sarbh Maritime Pvt. Ltd.
Sarbh was the regional director of P&O Ports, South Asia and Middle East region, and managing director of NSICT when the concession agreement was signed.
The issue of stamp duty and registration could be unique to Maharashtra where the state government has made it mandatory from 2002 onwards for all transactions to be registered and stamp duty paid on it. This is not the case in other states, said an official at Chennai port on condition of anonymity. The model concession agreement finalized by the?Union government in 2007 merely says that the private firm operating the cargo terminal should “comply with all applicable laws”, though it does not specifically talk about registration of the agreement, the official said.
JN port’s former chairman Budhiraja said that it was better to get the concession agreement registered because the one that is registered with the registrar is considered the final document whose validity or authenticity cannot be challenged in a court over disputed clauses.
p.manoj@livemint.com
