Union of India Vs. West Coast Paper
Mills Ltd. [1970] INSC 216 (14 October 1970)
14/10/1970 SHAH, J.C.
SHAH, J.C.
GROVER, A.N.
CITATION: 1971 AIR 349 1971 SCR (2) 594 1970
SCC (3) 606
ACT:
Indian Railway Act, 1890, s. 24-Railway Rates
Tribunal constituted under s, 24-Jurisdiction of Tribunal under s. 41(1)(b)-Subject
to Limitations in ss. 29 & 42-Tribunal can give relief if he rates between
two stations are unreasonable and discriminatory and thereby in contravention
of s. 28.
HEADNOTE:
The respondent company had a factory which
was situated in Dandeli at the terminus of Alnawar-Dandeli branch of the
southern Railway. It used the branch line for transporting coal, limestone etc.
required for its manufacturing activities and also its manufactured products.
Initially the Railways were levying freight on this branch line at "common
rates" for all commodities on "a weight basis". On
representations made by the users of this branch line, the Indian Railways
substituted, with effect from February 1, 1964, the "standard telescopic
class rates". In charging the goods freight, however, the actual distance
of the branch line was multiplied by three. The company filed a complaint
before the Railway Rates Tribunal and challenged as "unjust, unreasonable
and discriminatory" the method of levy of freight on goods traffic. The
company claimed that the levy of rates offended the provisions of s. 28 of the
Indian Railways Act, 1890, and that the existing rates were per se unreasonable
The company claimed a declaration that the rates between stations specified in
the complaint were unreasonable and a direction to the Railway to levy with
effect from the date of the complaint standard rates and charges for the
traffic on the branch line without "inflating the distance". The
Union of India as representing the Southern Railway defended the complaint and
contended that the rates were reasonable, that they were not discriminatory,
and since they were fixed by order of the Central Government the Tribunal was
precluded from questioning, the legality and propriety thereof. The Tribunal
held that the rates in question were in contravention of 28 of the Act being
unreasonable and discriminatory.
It further held that it had jurisdiction
under s. 41(1)(b) of the Indian Railways Act to consider the complaint. By
special leave appeal against the decision of the Tribunal was filed by the
Union of India in this Court. The Court had to consider the question of the
Tribunal's jurisdiction under s. 41 (1) (b) in the light of R. 63 of Goods
Tariff No. 28, Rule 69 of Goods Tariff No. 29 and ss. 29 and 42 of the Railways
Act.
HELD: Rules 63 of Goods Tariff No. 28 and 67
of Goods Tariff No. 29 refer to "station-to-station" rates. In s.
41(1) (b) the expression used is not 'station-to-station rates but a rate
between two stations which is unreasonable. There is nothing in the rules which
even indirectly affects the jurisdiction of the Tribunal to determine whether
the rates for carriage of certain specified commodities between the two
stations are unreasonable. [601 E] The Tribunal is invested with the authority
subject to the limitations contained in s. 29(3) and s. 42 to entertain a
complaint and to give relief n respect of rates which are found to be
unreasonable between two 595 stations. The complaint made by the company in the
present case did not seek intervention of the Tribunal in matters which may be
raised only for decision to the Central Government by s. 29 and s. 42 of the
Act, and the Tribunal had not given any relief in contravention of these provisions.
The Tribunal had merely declared that the chargeable rate of freight determined
by multiplying by three the distance over which the goods were transported, for
specific commodities, was in contravention of s. 28 of the Indian Railways Act.
The relief thus granted by the Tribunal was within its jurisdiction. [601 G]
The view expressed by one of the members of the Tribunal that even if the
Tribunal holds that the rates between two stations in respect of a specific
commodity are unreasonable, it cannot make a declaration to that effect, must
be rejected. Such a view would deprive the Tribunal of its power to give formal
shape to its view. [602 A-B]
CIVIL APPELLATE JURISDICTION :Civil Appeal
No. 1742 of 1966.
Appeal by special leave. from the judgment
and order dated April 18, 1966 of the Railway Rates Tribunal at Madras in
Complaint No. 4 of 1963.
Jagadish Swarup, Solicitor General, A. S.
Nambyar and S. P. Nayar, for the appellant.
H. R. Gokhale, M. K. Ramamurthi, Shyamala
Pappu and B. D. Sharma, for the respondent.
The Judgment of the Court was delivered by-Shah,
J.-This is an appeal with special leave against the order of the Railway Rates
Tribunal constituted under S. 34 of the Indian Railways Act 9 of 1890.
The West Coast Paper Mills Ltd.-hereinafter
called 'the Company'-is a manufacturer of paper and paper products. It has set
up a factory at Bengurnagar in Dandeli at the terminus of Alnawar-Dandeli
branch line of the Southern Railway. This branch line 32 Kilo-meters in length
was a "light railway" constructed and opened for traffic by the
Government of Bombay in 1919, principally for the purpose of transporting
forest produce collected in the surrounding region. With the reorganisation of
the States under the States Reorganization Act the ownership of the Railway
passed to the Mysore Government. The Railway was finally taken over, by the
Government of India with effect front October 1, 1962, and now forms part of
the Indian Railways.
The Company used the branch line for transporting
coal, limestone etc. required for its manufacturing activities, and also for
transporting its manufactured products.
Initially the Railways were levying freight
over this branch line at "common rates" forall commodities on "a
weight basis". On representations made by the users of this branch line,
the Indian Railways substituted, with effect from February 1, 1964, the
"standard telescopic class rates". In charging the goods freight,
however, the actual distance of the branch line was multiplied by three.
The Company filed a complaint before the
Railway Rates Tribunal and challenged as "unjust, unreasonable and
discriminatory" the method of levy of freight on goods traffic. The
Company claimed that the levy of rates offended the provisions of s. 28 of the
Indian Railways Act, 1890, and that the existing rates were per se
unreasonable.
The Company claimed a declaration that the
rate between the stations specified in the complaint were unreasonable and a
direction to the Railway to levy with effect from the date of the complaint
standard rates and charges for the traffic on the branch line without
"inflating the distance".
The Union of India as representing the
Southern Railway defended the complaint. They contended that the introduction
of "standard rates and fares" over the section "on a continuous
distance basis with three times inflation of the chargeable distance" for
goods was made on the authority of the Central Government under its directive
and the Railway Rates Tribunal is precluded from questioning its legality or
propriety. They also co tended that in any event; the levy is not unjust,
unreasonable or discriminatory; that the increased rate on the basis of
"inflated distance" was in vogue in different sections of the Indian
Railways; that such inflation was adopted either because of the higher cost of
operation of the particular section or because of unusually heavy capital costs
involved on a particular system of Railway and for similar reasonsthat the
"reason for inflation" on the branch line was due to large capital
investment for the rehabilitation of this branch line by the 'Central
Government it was taken over from the previous owners; that before the branch
line was purchased it was working at a loss for a number of years and for
effectively working the branch line it had become necessary to undertake
extensive repairs and renewal work including complete relaying of the track,
construction of crossing stations etc; that the total costs of such repairs and
renewal was Rs. 28.99 lakhs, and that even after the introduction of higher
rates and fares with "three times inflation" in distance, the users
of branch line will be paying less than what they were paying before the
introduction of the new rates. The Union denied the charge of discrimination
and undue preference and contended that the Tribunal had no jurisdiction to
hear the complaint merely because the Company had selected certain commodities
and certain sets of stations in support of its grievance under s. 41(1)(b) of
the 'Indian Railways Act, 1890.
59 7 On the pleadings before the Tribunal,
six issues were settled, four of which are material:
"(1) Is the complaint not maintainable
against the respondent (Union of India) under s.41(1)(b) of the Indian Railways
Act, 1890 (Act 9 of 1890) ? (2) Whether rates for the carriage of complainant's
traffic have become unreasonable as a result of inflating the chargeable
distance over the Alnawar-Dandeli Section ? (3) Whether the impugned method of
charging on inflated distance (at three times the actual distance over the
Alnawar Dandeli Section to arrive at the distance for charge) is governed by
any order of the Central Government, and, if so,. whether the complaint is not
maintainable for the same reason ? (4) Whether the respondent (Union of India)
in charging the complainant's traffic over the Alnawar Dandeli Section at
tariff rate on continuous distance basis, but with three times the, inflation
in the chargeable distance over the Section, is subjecting the complainant's
traffic to the undue prejudice in contravention of s. 28 of the Indian Railways
Act ?" The Tribunal decided the case against the Railway Administration.
In the view of the Chairman and Mr. Munshi (one of the members of the Tribunal)
on issue No. (1) the complaint was maintainable against the Union of India
under S. 41(1)(b) of the Indian Railways Act. They observed that though a
class' rate between two stations for a commodity would fall outside the scope
of s. 41(1)(b), it was still open to the Company to make a grievance in respect
of the selected few items for the purpose of attack. On Issue No. (2) they
held that the Railway had not made out any "justification for inflating
the chargeable distance over the Alnawar-Dandeli Section". On Issue No.
(3) they held that the jurisdiction of the Tribunal to examine the validity of
the impugned method of charging the distance by a multiple of three of the
actual distance over the Section to arrive at the distance for determining
freight, though governed by the order of the Central Government, was not
excluded. On Issue No. (4) the Chairman observed:
"There is . . . no doubt that the order
in question (Ext. B-4) is one issued under Section 29(1) or the Act. If the
Tribunal were to give any relief which might have even indirectly the effect of
cancelling the said L436 Sup Cl/71 598 order, it would amount to changing the
maxima and minima rates and the level of class rates applicable to
Alnawar-Dandeli Section which would not be within its power or jurisdiction.
However, if it declared only certain rates
for specific commodities between specific pairs of stations to be unreasonable
and fixed new rates in lieu thereof, the level of class.
rates as such would not be affected. If such
rates are based on the actual distance they would also fall within the maxima
and minima under the inflated distance sanctioned by Ext. R-4. 1, therefore,
find that though the method of charging on inflated distance over the
Alnawar-Dandeli Section is governed by the order of the Central Government (Ext.
R-4) this Tribunal does not lose jurisdiction to decide on the unreasonableness
of rates arrived thereby and the complaint cannot be said to be not
maintainable for that reason." Mr. Munshi agreed with that view. In his
view charging the company's traffic over the branch line at tariff rates on
continuous distance basis but at three times the chargeable distance over the
branch line was "unwarranted, unjustified and therefore unreasonable.
Mr. V. K. Rangaswami the third member of the
Tribunal agreed with the Chairman and Mr. Munshi on the issue of unreasonableness
of the rate charged by multiplying the distance by three. He also agreed that
the jurisdiction of the Tribunal to entertain a complaint relating to levy of
unreasonable charges between specific stations was not excluded. But he
differed with the other members on the competence of the Tribunal to declare
invalid the method of levy of freight and to fix new rates in lieu of rates
declared unreasonable. In the opinion of the majority it was competent to the
Tribunal to do so. Mr. Rangaswami held that it was for the Railway
Administration to consider the matter and to take action to cancel the inflated
distance over the branch line generally, and to fix new rates.
The Tribunal by a unanimous order made the
following ,directions :
applicable to the Alnawar-Dandeli Branch,
subject the complainant to an undue disadvantage in contravention of Section 28
of the Indian Railways Act, and also render unreasonable per se the rates for
the complainant's traffic to and from Dandeli." Against that order, this
appeal has been filed with special leave.
599 The relevant provisions of the Indian
Railways Act 9 of 1890, may be briefly set out :
S. 28-"A railway administration shall
not make or give any undue or unreasonable preference or advantage to, or in
favour of, any particular person or railway administration, or any particular
description of traffic, in any respect whatsoever, or subject any particular
person or railway administration or any particular description of traffic to
any undue or unreasonable prejudice or disadvantage in any respect
whatsoever." S. 29-"(1) The Central Government may by general or
special order fix maximum and minimum rates for the whole or any part of a
railway, and prescribe the conditions in which such rates will apply.
(2) (3) Any complaint that a railway
administration is contravening any order issued by the Central Government under
subsection (1) shall be determined by the Central Government." S.
41-"(1) Any complaint that a railway administration(a) is contravening the
provisions of section 28, or (b) is charging for the carriage of any commodity
between two stations a rate which is unreasonable, or (c) . . . . ." may
be made to the Tribunal, and the Tribunal shall hear and decide any such
complaint in accordance with the provisions of this Chapter.
. . . . . ." S. 42-"The Central
Government alone shall have power(a) to classify or reclassify any commodity;
(b) to increase or reduce the level of class
rates and other charges." The jurisdiction conferred upon the Tribunal by
S. 41 and relating to matters set out in clauses (a) to (c) thereof is
restricted by the terms of S. 29(3) and S. 42. Section 28 prohibits a railway
administration from making undue preference or subjecting any particular person
or railway administration or any particular description of traffic to any undue
or unreasonable prejudice or disadvantage,. But even in a dispute relating to
the matters set out in 600 s. 41(1)(a), (b) and (c), where the Central
Government has fixed by general or special order maximum and minimum range of
rates for the whole or any part of a railway the complaint that the railway
administration has contravened any order issued by the Central Government may
be determined by the Central Government and not by the Tribunal.
Similarly the Central Government has and the
Tribunal has not the power to classify or reclassify any commodity and to
increase or reduce the level of class rates and other charges. Subject to these
restrictions, the Tribunal has the power to determine whether the Railway
Administration has acted in contravention of the provisions of S. 28, i.e. it
has granted any undue or unreasonable preference or advantage to, or in favour
of any particular person, or shown any undue or unreasonable prejudice or
disadvantage to any person or railway administration or any particular
description of traffic, and was charging for the carriage of any commodity
between two stations a rate which was unreasonable or was levying any other
charge which was unreasonable.
In the present case the maximum and minimum
range of rates have been fixed by the Central Government. A complaint that the
railway administration has acted in contravention of the order issued by the
Central Government may be determined by the Central Government and not by the
Tribunal. Again the Central Government alone has the power to classify or
reclassify any commodity or to increase or reduce the level of class rates and
other charges. 'the Tribunal accepted these limitations upon the exercise of
its powers. The Tribunal however found that the charge made by the railway
administration under the order of the Railway Board levying tariff at the
standard rates but on the footing that for each kilo meter the goods are transported
the charge will be levied at three times the standard rate is unreasonable and
discriminatory. The finding proceeds upon appreciation of evidence which has
been examined in great detail. The finding of the Tribunal cannot be challenged
in this appeal with special leave under Art. 136 of the Constitution, and no
attempt has been made to challenge before us that finding.
On behalf of the Union it was urged by the
Solicitor General, that the impugned rates were "station to station
rates", and relying upon certain rules framed by the Railway Board,
Counsel contended in respect of station-to-station rates the Tribunal had no
jurisdiction to give relief. Rule 63 of Goods Tariff No. 28 in force from
August 1, 1950, provided for the station-to-station rates as one of the types
of rates chargeable. Clause (7) provided that a " station-to-station
rate" is a special rate for the total distance between two specific points
(stations only): and cl. (8) provided that 601 "Station-to-station rates
are as follows(i) those between two stations on the same Railway, that is,
local station-to-station rates,, (ii) those between a station on one railway
and a station on another railway." Similarly in Rule 67 of Goods Tariff
No. 29 in force from June 1, 1954, similar definition of station-to-station
rates was given. In Rule 67 of Goods Tariff No. 29 effective from October 1,
1958, rates were divided into two types-(i) Class rates; and (ii) station
to-station rates. By cl. (3) it was provided :
"(i) 'Station-to-station rate means a
special reduced rate applicable to a specific commodity booked from one
specified station to another specified station.
(ii) Station-to-station rates may be quoted
from and to stations on the same railway or from a station on one railway to a
station on another railway." These rules have, in our judgment, no
relevance in determining the matter in dispute in this appeal, for in S. 41 (1
) (b) the expression used is not "station-to-station rates", but a
rate between two stations which is unreasonable. There is nothing in the rules
which even indirectly affects the jurisdiction of Tribunal to determine whether
the rates for carriage of certain specified commodities between two stations
are unreasonable. The Tribunal has expressly observed that the relief granted
to the Company must be within the range of rates prescribed by the Central
Government. The Tribunal has expressly observed, that it is incompetent to
grant relief which might even indirectly cancel the order of the Central
Government under S. 19(1), for, it would amount to changing the range and level
of class rates applicable to the branch line. But if the Tribunal declared that
only certain rates for specific commodities, between specified pairs of
stations, are unreasonable, the level of class rates is not affected.
The Tribunal is invested with the authority
subject to the limitations contained in s. 29(3) and S. 42 to entertain a
complaint and to give relief in respect of rates which are found to be
unreasonable between two stations. The complaint made by the Company did not
seek intervention of the Tribunal in matters which may be raised only for
decision to the Central Government by s. 29 and s. 42 of the Act, and the
Tribunal has not given any relief in contravention of those provisions. The
Tribunal has merely declared that the charging rate of freight determined by
multiplying by three the distance over which the goods are transported for
specific commodities is in contravention of s. 28 of the Indian Railways Act,
1890.
602 We do not see force in the opinion
expressed by Mr. V. K. Rangaswami and even if the Tribunal holds that the
rates between two stations in respect of a specific commodity are unreasonable,
it cannot make a declaration to that effect.
Such a view would deprive the Tribunal of its
power to give formal shape to its view. We are not called upon to decide
whether the Tribunal has power to fix rates in substitution of rates declared
unreasonable in exercise of the jurisdiction under s. 41(1)(b), because no such
rates are fixed by order of the Tribunal.
The relief granted by the Tribunal is, in our
judgment, within its jurisdiction.
The appeal fails and is dismissed with costs.
G.C.
Appeal dismissed.
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