Union of India Vs. M/S. Modi
Industries Ltd.  INSC 64 (30 March 1973)
MATHEW, KUTTYIL KURIEN
CITATION: 1973 AIR 1281 1973 SCR (3) 835 1973
SCC (1) 781
Indian Railways Act, 1890 Ss. 26 and
41-Complaint in respect of past dues cannot be made under s. 41 before Railway
Rates Tribunal--In such cages. v. 26 of Act is not a bar to a suit in civil
court and question of reasonableness of charges can be gone into by civil
By agreement dated July 4, 1933 the respondent
company was liable to pay charges for a railway siding at agreed rates.
Clause 23 of the agreement laid down that it
shall be open to the Railway Administration on giving six months notice of sum
intent, to revise the said charges.. Clause 24 related to termination of the
agreement in the event of nonpayment of dues within one month of demand., On
March 26, 1949 therailway authorities informed the respondent that the rates
were proposed to be increased with effect from April 1, 1949. The respondent
objected" to the increase as being against clause 23 of the agreement. By
a subsequent letter in September 1951 the Divisional Superintendent of the Railway
asked the respondent to pay the charges at much higher rates. There was
prolonged correspondence between the parties without the respondent agreeing to
pay the higher rates demanded. On September 29, 1955 the. Divisional Engineer
addressed a letter to the respondent proposing revision of the siding charges
with effect from April 1, 1956 after the expiry of six months according to
clause 23 of the agreement. These proposed'. charges were much lower than the
charges demanded by the earlier letters.. On May 17, 1957 the General Manager
of the Railway sent a letter to the plaintiff for payment of Rs. 93,981-8-0 in
respect of the period December 1 1949 to March 31, 1956. it was intimated that
on failure to make the said payment within one month the supply of wagons would
be stopped' and steps to determine the agreement would be taken., In May 1957
the respondent served a notice under s. 80 of the Code of Civil Procedure and'
thereafter filed a suit. The trial court partly decreed the suit. The High,
Court decreed it in to. In the appeal by certificate to this Court, filed' on
behalf of the Union of India, the questions that fell for consideration were :
(i) whether the civil court had jurisdiction in view of Ss. 26 and' 41 of the
Indian Railways Act, 1890, to determine the reasonableness; of the charges-,
(ii) whether the courts below if they had jurisdiction were justified in
holding the charges to be unreasonable.
Dismissing the appeal,
HELD : (i) From the facts it appeared that
the rates are being revised and actually enhanced, but then the matter was kept
pending and there was exchange of correspondence and discussion between the
parties from time to time. No effort was made to enforce the demand made in the
various letters and the plaintiff was allowed to make payments according to the
rates originally agreed. It was only in May 1957 that the respondent was really
threatened to make payment of the outstanding amount calculated at the revised
rates on pain of the supply of wagons being stopped and the agreement being
According to the decisions of this Court it
was hardly open to the respondent to file a complaint under s. 41 of the Act
with regard to the.
836 Reasonableness or otherwise of the rates
and charges which had already 'become due and payable. The plaintiff had no
grievance whatsoever with :regard to the charges which had been fixed with
effect from April 1, 1956. By means of the letter dated September 29, 1955, and
therefore there was no question of its filings, a complaint with regard to
those charges. Its grievance was confined only to the amount which was being
demanded on the basis of the revised enhanced rates between the period December
1, 1949 and March 1, 1956. If that amount bad actually been realised by the
railway authorities the plaintiff could only file a suit for its refund and
could not have laid a complaint under s. 41 of the Act before the Railway
Tribunal. By analogy the plaintiff could not have filed a complaint with regard
to the past dues as the Railway Tribunal could not have given any relief in
respect thereof 'following the law laid down by this ,Court. In this view of
the matter apart from other questions involving the validity of clause 23 of
the agreement as also of the notice or intimation of rates on the ground on
noncompliance with its terms the suit ,could not be held barred under s. 26 of
the Act and the civil court could grant the relief claimed. [842H-843P] Union
of India v. The Indian Sugar Mills Association, Calcutta,  3 S.C.R. 219,
Raichand Amulakh Shah v.Union of India,  5 S.C.R. 148 and Upper Doab
Sugar Mills Ltd. v. Shahdara (Delhi) Saharanpur Light Railway Company Ltd.,
 2 S.C.R. 333 at p. 342, referred to.
(ii) There was no serious infirmity in the
reasoning of the High Court by which it arrived at the conclusion that the
question of reasonableness of the charges, keeping in mind the 'facts of this
case, was justiciable. Nor bad any justification been shown 'for reopening the
concurrent finding of the two Courts below that the rates which were demanded
for the period in question were unreasonable. The suit was thus rightly decreed.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1616 of 1967.
Appeal by certificate from the judgment and
order dated 'September 30, 1966 of the Allahabad High Court in First Appeal
-No. 198 of 1960.
Gobind Das and B. D. Sharma, for the appellant.
C. B. Agarwala, Uma Mehta, S. K. Bagga,
Swreshta Bagga and Ram Arora, for the respondent.
The Judgment of the Court was delivered by
GROVER, J.---This is an appeal by certificate from a judgment ,of the Allahabad
High Court in a suit filed by the plaintiff-respondent for an injunction
against the defendant-appellant restraining it from realizing the sum, of Rs.
93,981-8-0 on account of the alleged siding charges for the period December 1,
1949 to March 31, 1956 and from stopping the supply of wagons in the railway
siding of the plaintiff and further from cancelling the agreement ,dated July
4, 1933 for the aforementioned reason.
The facts necessary for deciding the appeal
may be stated.
By means of an agreement dated July 4, 1933
the plaintiff entered into an agreement with the Secretary of State for
India-in-Council through the agent of the North Western Railway (now
represented 837 by the Union of India) whereby it was agreed that the former
shall Jay a railway siding from Begamabad Station Yard of that railway for
enabling the plaintiff to carry on its business at its, premises. Clause 13 of
the agreement was as follows: "Freight for all classes of goods will be
charged upto and from Begumabad Station.
Railway Receipts and invoices shall be issued
to and from the station only and in accordance with the rates from time to time
published in the Goods Traffic Books of this Railway Administration will make
the following charges in each direction from every wagon loaded or empty in or
removed from the lines A and B mentioned in clause 15 below (1) Per 4 wheeled
wagon Re. One.
(2) Per 6 wheeled wagon Re. One and annas
eight (3) Per 8 wheeled wagon Re. two." Clause 23 of the agreement
provided "Notwithstanding anything laid down in the foregoing clauses of this
Agreement, it shall be open to the Railway Administration on giving six months
notice of such intent, to revise the charges laid down in clauses 8, 12, 13 and
19 of this Agreement".
Clause 24 related to termination of the
agreement in the event of nonpayment of dues within one month of demand. On
March 26, 1949 the Divisional Superintendent of the E.P.
Railway (successor in interest of the North
Western Railway) informed the plaintiff that the rates were proposed to be
increased with effect from April 1, 1949, the increased charges being mentioned
in that letter. As this intimation was not in accordance with clause 23 of the
agreement the plaintiff refused to agree to the increase. Other objections were
'also raised, one of the objections being that the charges were excessive. The
Divisional Superintendent addressed another letter on May 18, 1949 informing
the plaintiff that with effect from December 1, 1949 the charges mentioned
therein would be made. A good deal of correspondence and discussions between
the representatives of the plaintiff and the railway authorities took place and
by a letter dated July 20, 1951 the Divisional Superintendent intimated that
the revised siding charges in force from December 1, 1949 were purely provisional
and were subject to revision. Meanwhile and subsequent to the above date the
required tests were made to determine the charges. In September 1951 the
Divisional Superintendent wrote to the plaintiff that the siding charges should
be, paid with effect 838 from December 1, 1949 to September 30, 1951 at the
following rates :(i) Per 4 wheeled wagon Rs. 51(ii) Per 6 wheeled wagon Rs.
7/8/(iii) Per 8 wheeled wagon Rs. 10/The plaintiff protested against what was
called the exorbitant nature of the charges and made it clear that the letter
of September 1951 did not comply with clause 23 of the agreement and that the
charges were unreasonable and could not be legitimately made. Another letter
dated October 26/November 6, 1951 was sent by the Divisional Superintendent saying
that the siding charges to be levied with effect from first October 1951 were
being assessed and would be intimated to the plaintiff and meanwhile it should
,continue to pay the charges demanded in the letter of September 1951
provisionally. The Divisional Superintendent addressed another letter dated
November 27, 1951 explaining the result of the test and the actual cost of the
shunting etc. A demand was made' that the revised siding charges should be paid
from December 1949 to September 30, 1951 at Rs. 4/per 4 wheeler, Rs. 6/per 6
wheeler and Rs. 8/per 8 wheeler. The plaintiff, however. did not pay the
increased rates demanded. On September 29, 1955 the Divisional Superintendent
addressed a letter to the plaintiff proposing revision of the siding charges
with effect from April 1, 1956 after the expiry of six months according to
clause 23 of the ,agreement. The charges as demanded were as follows:-(i) 4
wheeled wagon Rs. 1 20/(ii) 6 wheeled wagon Rs. 2 -10/(iii) 8 wheeled wagon Rs
3 501On May 17, 1957 the General Manager of the Railway sent a letter to the
plaintiff for payment of the, amount of Rs. 93,981-8-0 representing the
difference between the amounts due from December 1, 1949 to March 31, 1956. It
was intimated that on failure to make the said payment within one month the
supply of wagons would be stopped and steps to determine the agreement would be
taken. In May 1957 the plaintiff served a notice under s. 80 of the Civil
Procedure Code to be defendant and ,.hereafter in October 1958 the suit out of
which the appeal has arisen was filed.
Out of the issues framed by the trial court
on the pleadings of the parties the following need be mentioned (1)
"Whether the enhancement of the siding charges by the defendant is
unjustified, exorbitant and illegal? 8 39 (2) Whether the demand of Rs.
93,981-8-0 by the defendant is illegal ? (3) Whether the court has no
jurisdiction to try the suit ?" On issue. No. 1 the trial court held that
the charges demanded were unjustified and exorbitant. It was held that out of
the demand of Rs. 93,981-8-0 the demand for Rs.
22,111-3-0 was illegal. On issue No. 4 the
trial court expressed the view that it had jurisdiction to try the suit in
respect of that portion of the claim whereby the legality of the enhanced siding
charges had been challenged on account of being in violation of clause 23 of
the agreement but it had no jurisdiction to try the suit in respect of the
second ground whereby the enhanced siding charges had been challenged as
unjustified and exorbitant.
The plaintiff appealed to the High Court and
the defendant filed cross objections. The High Court affirmed the finding of
the courts below that the enhancement made by the Railway Administration was
highly unjustified and exorbitant. But it did not accept its finding about the
legality of the enhancement and also on the question of the jurisdiction of the
civil court. The appeal was consequently allowed in to and the cross objections
The principal question which has been
agitated before us relates to the jurisdiction of the civil court to determine
the reasonableness of the charges. A subsidiary question has been raised that
assuming the civil court had the jurisdiction, whether the courts below were
justified in holding that to be unreasonable. For the purpose of determining
the question of jurisdiction we shall have to examine the relevant provisions
of the Indian Railways, Act, 1890, hereinafter called the 'Act'. Section 3
contains the definitions. Clauses 11 and 13 defining the words "traffic"
and rates" are as follows "(11) "traffic" includes rolling
stock of every description as well as passengers, animals and goods;
(13) "rate" includes any fare,
charge or other payment for the carriage of any passenger, animal or
Chapter V headed "traffic
facilities" commences with S. 26.
According to that section except as provided
in the Act no suit shall be instituted or proceedings taken for anything done
or any omission made by the Railway Administration in violation or
contravention of any provision of that Chapter.
Section 27 (1 ) places a duty on every
Railway Administration to afford all reasonable facilities for the receiving,
forwarding and delivering of traffic upon and from the several railways
belonging to or worked 840 by it and for the return of the rolling stock.
Section 29 is as follows :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) The Central Government, may, by a like
order, fix the rates of any other charges for the whole or any part of a
railway and prescribe the conditions in which such rates of charges shall
(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"..
Section 34 relates to the constitution of the
Railway Rates Tribunal for the purpose of discharging functions specified in
Chapter V. Sections 39 and 40 give the jurisdiction and powers of the Tribunal,
Section 41 to the extent it is material may be reproduced :S.41 (1) "Any
complaint that a railway administration(a) is contravening the provisions of s.
28 or (b) is charging for the carriage of any commodity between two stations a
rate which is unreasonable or (c) is levying any other charge which is
unreasonable, may be, made to the Tribunal, and the Tribunal shall hear and
decide any such complaint in accordance with the provisions of this
( 2 )
(3) In the case of a complaint under clause
(b) or clause (c) of subsection (1), the Tribunal may fix such rate or chargeas
it considers reasonable :
Provided that .........................................
(4)........................ " on behalf
of the appellant the bar created by the s. 26 to the jurisdiction of ordinary
courts has been invoked. It has been argued that s. 29(2) postulates the
fixation of rates of charges other than those contemplated by sub-s. (1). If
there is any grievance that the railway administration is levying a charge
which is unreasonable it will be covered by S. 41 (1) (c) and there841 fore,
only a complaint can be made to the railway administration in that matter. The
jurisdiction of the civil court will be barred because exclusive jurisdiction
has been conferred on the Railway Rates Tribunal for determining whether the
charge being levied is unreasonable.
According to the High Court Chapter V has
nothing to do with charges which are payable under a contract. The validity and
interpretation of clause 23 of the agreement between the parties was a matter
for the interpretation of the civil court and could not possibly be barred by
s. 26 of the Act.
Section 41 (1) (c) has no application to an
enhancement already made in the purported exercise of the right under a
Now section 26 only bars the institution of a
suit or proceedings for anything done or any omission made in violation or
contravention of any provision of Chapter V. Section 29(2) empowers the Central
Government to fix the rates of any other charges by a general or special order.
In view of the language of s. 41 (1) (c) if
it is assumed that the rates cannot be unreasonable and if the Central
Government fixes unreasonable rates it may be possible to say that there has
been a contravention or violation of s.29(2). But such fixation of rates under
that provision has to be by a general or special order. It has been suggested
that a communication made under a contract cannot fall within the meaning of
the word "order" as contemplated by s.29. Prima facie, there may be
some difficulty in acceding to the contention of the learned counsel for the
appellant that any part of s. 29 will cover a revision of rates made by the
railway authority in terms of a contract but the matter seems to stand
concluded by the decision of this Court in Union of India v. The Indian Sugar
MillsAssociation, Calcutta() according to which it is immaterial that the
charges being levied by the railway administration arise as a result of a
voluntary agreement. The real difficulties in the way of the appellant are twofold;
firstly, if any question arises about the validity of a clause of a contract
that will be entertainable by a civil court. As laid down in Raichand Amulakh
Shah v. Union of India (2) the Railways Tribunal has no jurisdiction to decide
whether the rules empowering the railway administration to levy a particular
charge are ultra vires or whether the railway administration collected amounts
in excess of the charges which it can legally levy under a rule. In Upper Doab
Sugar Mills Ltd. v. Shahadara (Delhi) Saharanpur Light Railway Company Ltd.(,')
two main points arose; one was whether the Railway ,Tribunal had jurisdiction
to entertain the complaint as regards the reasonableness of the rates prior to
the institution of the complaint (1)  3 S. C. R. 219. (2)  5 S. C.
(3)  2 S. C. R. 333 at p. 342.
6-L797SupCT/73 842 and the other was whether
it had jurisdiction to grant refund for the aforesaid period. This is what was
said by Das Gupta J.
"The words "charging" in cl.
(b) and "levying" in cl. (c) were used in the one and the same sense.
We find it impossible to agree however that they were used to include
It appears to be clear that if the intention
of the legislature was to give the Tribunal jurisdiction over complaints in
connection with charges ,already made the legislature would have used the words
"has charged and is charging" and would not merely say "is
charging". Special jurisdiction of such a nature would be given clearly
and the very fact that the words "has charged" have not been used is
sufficient ground for ,thinking that it was not the legislature's intention to
give the Tribunal jurisdiction over complaints in connection with charges made
in the past.
In our opinion, the words "is
charging" in cl. (b) and "is levying" in cl. (c) must be
construed to mean "is demanding a price at the present time for services
to be rendered".
Coming to the facts of the present case it is
apparent that one of the main questions involved was whether clause 23 of the
contract between the parties was not void because it contravened s. 29 of the
Indian Contract Act. Another question which had to be investigated was whether
a proper notice regarding the enhancement of rates had been given in accordance
with the terms of the said agreement. From the facts which have been stated it
appears that the rates were being revised and actually enhanced, but then the
matter was kept pending and there Was exchange of correspondence and discussion
between the parties from time to time. No effort was made to enforce the demand
made in the various letters and the plaintiff was allowed to make payments
according to the rates originally agreed. It was only in May 1.957 that the
plaintiff was really threatened to make payment of the outstanding amount
calculated at the revised rates on pain of the supply of wagons being stopped
and the agreement being determined. It is somewhat surprising that in September
1955 the rates which were revised were very much less-than those which were
demanded for the prior period. The position thus remained in a flexible state
and there is a good deal of substance in the submission on behalf of the
plaintiff-respondent that a complaint was not filed under S. 41 of the Act
because the rates which ",were being paid and actually accepted were the
same as the contractual rates and not the revised or enhanced rates.
According to the decisions of this Court
referred to before, it was hardly open to the plaintiff to file a complaint
with regard to the reasonableness or otherwise of the rates and charges which
had already become due 843 and payable. The plaintiff had no grievance whatsoever
with regard to the charges which had been fixed with effect from April 1, 1956 by means of the letter dated September 29, 1955 and therefore there was no
question of its filing a complaint with regard to those charges. Its grievance
was confined only to the amount which was being demanded on the basis of the
revised ,enhanced rates between the period December 1, 1949 and March 1, 1956. If that amount had actually been realised by the railway authorities the
plaintiff could only file a suit for its refund and could not have laid a
complaint under s. 41 of the Act before the Railway Tribunal. By analogy the
plaintiff could not have filed a complaint with regard to past dues as the
Railway Tribunal could not have given any relief in respect thereof following
the law laid down by this Court. In this view of the matter appart from other
questions involving the validity of clause 23 of the agreement ,as also of the
notice or intimation of enhancement of rates on the ground of non-compliance
with its terms the suit could not be held barred under S. 26 of the Act and the
civil court could grant the relief claimed.
We have not been shown any serious infirmity
in the reasoning of the High Court by which it arrived at the conclusion that
the question of reasonableness of the charges, keeping in mind the facts of
this case, was justiciable. Nor has any justification been shown for reopening
the concurrent finding of the two courts below that the rates which were
demanded for the period in question were unreasonable. The suit was thus
The appeal fails and it is dismissed; but we
make no order as to costs.
G.C. Appeal dismissed.