Calcutta High Court (Appellete Side)
M/S. Bagadiya Brothers Private Limited ... vs The Union Of India & Others on 27 July, 2016
Author: Samapti Chatterjee
Bench: Samapti Chatterjee
1
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE
Present: The Hon'ble Justice Samapti Chatterjee
WP 35296 (W) of 2013
M/s. Bagadiya Brothers Private Limited & Another
Vs
The Union of India & Others
For the Petitioners : Mr. Shyamal Sarkar, Learned Senior Advocate
Mr. R.A. Agarwala, Learned Advocate
Mr. Kumar Gupta, Learned Advocate
Mr. R. Gupta, Learned Advocate
Ms. Nibedita Pal, Learned Advocate
Mr. Ramesh Dhara, Learned Advocate
Mr. A.G. Mukherjee, Learned Advocate
For the Respondents : Mr. Saptarshi Roy, Learned Advocate
Heard on : 20.04.2016, 29.04.2016, 11.05.2016,
& 23.06.2016
Judgment on : July 27, 2016.
Samapti Chatterjee, J.
1. Issue involved in this case to be determined-Whether the railway authority can cancel the indent on the basis of railway amending note II under Rule 201 (15) (e) of Goods Tariff thereby ignoring the provision of Wagon Investment Scheme (in short, WIS Policy) entered into by and between the petitioners and the railway authority ? 2
2. The petitioners' filed the present writ petition assailing the cancellation of the petitioners' indent on the basis of the Rate Circulation No.12/2011 dated 20th March, 2011 issued by the railway amending note II under Rule 201 (15) (e) of the Goods Tariff thereby empowering the railway to cancel a future indent.
3. The petitioners' case in a nutshell is as follows :-
That the petitioner no.1 carries on business interalia, as exporter of different types of materials in bulk including iron ore and other mineral products.
The railways have shortage of rolling stock i.e. railway wagons but railways did not have funds to purchase railway wagons. Therefore, the Central Government published a private public partnership policy called "Wagon Investment Scheme" whereby an investor was entitled to purchase railway rake comprising of 64 wagons at his cost and give it to the common pool of the railways. In doing so the investor was assured to get guaranteed allotment of wagons from the railways in a particular route at discounted rates.
It is submitted that in exercise of powers conferred by Section 71 of the Railways Act, 1989, the Central Government made and published the 3 "Wagon Investment Scheme" (hereinafter referred to as 'WIS policy') . The object of the said policy is quoted below :
"In order to encourage public-private partnership in procurement of wagons to meet with the anticipated incremental freight traffic in the coming years, Hon'ble Minister for Railways, while presenting the Railway Budget 2005-06 on 26th February, 2005, announced introduction of a new scheme called "Wagon Investment Scheme"
(WIS). Customers investing in Railways wagons will be assured of supply of a guaranteed number of rakes every month based on the number of rakes procured and the turn round of the type of wagons with 10 % concession in freight. In addition, two bonus rakes per month will be supplied without freight concession for the types of wagons indicated under para7.9. Investors opting for Engine on Load (EOL) Scheme will get additional bonus supply of two BG rakes per month without concession in freight. This guaranteed supply will be in addition to normal supply of rakes to such customer (supplies during the previous financial years shall be reckoned as normal supply)".
Pursuant to the said WIS policy the petitioner entered into an agreement with the railways and purchased five rakes by investing about Rs. 80 crores and inducted the same to the general pools of the railways. Pursuant to the WIS policy the petitioners were entitled to guaranteed 4 number of rakes along with discounted freight by placing indents with railways therefor.
Under the said policy the railways have assured to allot six rakes per month with freight rebate of 10 per cent and two rakes per month without freight rebate in respect of each rake. Therefore, the petitioner no.1 became entitled to a guaranteed allotment of 30 rakes with freight rebate of 10 per cent and 12 rakes with rebate in freight per month. In the month of November, 2013 on occasions upon some rakes being placed the petitioners could not load the said rakes within the free time allowed due to various factors beyond its control and the loading took inordinate long delay.
In such circumstances normally railway charged demurrage. But since 16th November, 2013 the railways not only charged demurrage but also cancelled subsequent indents placed by the petitioner no. 1 and forfeited the indent registration fee in respect of those indents. Such illegal act was committed by the authority in a very cryptic manner thereby endorsing on the indents that the same is being done in terms of Rate Circular No.12 of 2011.
A chart showing the details of cancelled indents is quoted below :- 5
STATEMENT OF D.C PAID SL. Ind. Registered DSTN Empty supplied Loading Completed Loadin R.R R.R M.R M.R MR g No. No. Date STN Date Time Date Time Hrs No. Date No. Date Paid 1 1 8/11/2013 JRLI DPCB 16/11/2013 3.10 16/11 14.10 11.00 262000697 16/11/2013 226335 17.11.2013 440,551.00 /2013 2 2 13/11/2013 JRLI DPCB 20/11/2013 8.50 20/11 17.45 8.55 262000704 21/11/2013 226456 21.11.2013 220,276.00 /2013 3 2 16/11/2013 JRLI DPCB 23/11/2013 2.25 23/11 17.20 15.00 262000710 24.11.2013 226478 26.11.2013 649,627.00 /2013 Total 1,310,454.00 6 Subsequently after obtaining the copy of the Rate Circular No.12 of 2011 it was found that the same was applicable only to congested goods shade and the same is not applicable to Jaruli Station for which the petitioner no.1 placed indents. On enquiry subsequently it was found by the petitioner that on 14th November, 2013 the Chief Commercial Manager announced that from 16th November, 2013 to 30th November, 2013 the Station Jaruli was considered to be a congested goods shade and for that period Rate Circular No.12 of 2011 will be applicable.
It is submitted that no notes was given to the petitioner pertaining to that memo dated 14th November, 2013.
4. Mr. Shyamal Sarkar, learned senior Advocate appearing for the petitioners vehemently urged that goods tariff is merely a guide line for internal functioning of the railways who are signatories to the IRCA (Indian Railway Conference Association).
5. Mr. Sarkar further contended that chapter II Rule 201 of goods tariff provides for registration of indent i.e. requisition for rake of wagons allotment and supply of wagons.
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6. Mr. Sarkar further drew my attention to Rule 201 (15) . Some extract of Rule 201 (15) upto Note 2 as also the relevant portion of the amendment of Note 2 of Rule 201 (15) (2) are quoted below :-
"15-Forfeiture of registration fee-Registration fee will be forfeited under any of the following circumstances-
(a) When the wagon indent is cancelled after physical supply of the wagons.
(b) When the consignor does not agree to pay charges as per tariff rules
(c) When a wagon indent is cancelled by the indentor within 10 days from the date of registration.
Note: When restriction is imposed without any time-limit the consignor shall be allowed either to retain his indent or to cancel it before removal of the restriction without forfeiture of the wagon registration fee.
(d) When a wagon is supplied to the indentor but he does not commence loading it before the expiry of the free time allowed for loading.
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(e) When a wagon is supplied to an indentor and the wagon is detained at his request for loading beyond the free time after which he cancels his indent.
Note: (1) Whenever the registration fee is forfeited, the corresponding indent will also be treated as cancelled.
(2) When a wagon is supplied to an indentor which he commences loading within the free time but takes more than the free time permitted the wagon registration fee will not be forfeited but demurrage will be recovered in accordance with the rule..................."
"Note-2(i) : When a wagon/rake supplied to an indentor which he commences loading within the free time but takes more than the free time permitted the wagon registration fee will not be forfeited but Demurrage will be recovered in accordance with the rule. 2(ii) When a rake is supplied to an indentor at a congested goods shed and he commences loading within the free time but does not complete the loading within twice the permissible free time one subsequent pending indent o the said consignor will be cancelled along with forfeiture of wagon registration fee. Similarly, if he does not complete the loading within three time the permissible free time another parking indent will be canceled along with forfeiture of wagon registration fee and so on. Congested goods shed will be 9 notified by the Zonal Railway with the personal approval of General manager."
7. Mr. Sarkar further vehemently urged that amended Note 2 under Rule 201 (15) (e) of the Goods Tariff has no manner of application to the WIS policy.
8. Mr. Sarkar further contended that Clause 13 of the WIS policy mandates that the terms of the WIS policy can be altered only by mutual consent of both parties. Hence the cancellation of indent unilaterally was without jurisdiction and beyond the scope of WIS policy. The Clause 13 of the WIS policy is quoted below :-
"CHANGES IN THE SCHEME:
Terms of the scheme (WIS) may be altered by mutual consent of both parties."
9. Mr. Sarkar further vehemently urged that by amending the Note 2 of Rule 201 (15) (e) to cancel a future indent is beyond the original rule even.
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10. Mr. Sarkar further contended that notes are merely administrative instructions. Therefore, administrative instructions cannot override or transgress the rules.
11. Mr. Sarkar further argued that Note 2 attached to the rule is not referable to any statutory authority and the amended note attached to the main rule cannot takeaway the rights vested by the rule itself. In support of his contention Mr. Sarkar relied on a Supreme Court decision reported in (2000) 5 Supreme Court Cases Page-742 Paragraph-25 (Union Of India And Another vs Charanjit S. Gill And Others) . Some extract of the Paragraph-25 is quoted below :
"Para-25-No power is conferred upon the Central Government of issuing notes or issuing orders which could have the effect of the rules made under the Act. Rules and regulations or administrative instructions can neither be supplemented nor substituted under any provision of the Act or the rules and regulations framed thereunder. The administrative instructions issued or the notes attached to the rules which are not referable to any statutory authority cannot be permitted to bring about a result which may take away the rights vested in a person governed by the Act."11
12. Mr. Sarkar further vehemently urged that cancellation of indent of a WIS investor amounts to double jeopardy and discrimination.
13. Mr. Sarkar explained that for an ordinary investor if an indent is cancelled only registration fees of Rs.15,000/- is forfeited but for a WIS investor his quota under WIS policy is also cancelled in addition to forfeiture of registration fees which amount to double jeopardy.
14. Mr. Sarkar further contended that there is no provision of cancellation of any pending indent under the Railways Act 1989 or the Goods Tariff. Therefore cancellation of indent of the petitioner no.1 by the authority is beyond the scope of WIS policy.
15. Mr. Sarkar also pointed out that no opportunity of hearing was afforded to the petitioners before cancellation of their indents. Therefore, the cancellation of indent is in violation of the principle of natural justice as well as violative of Article 14, 16, 19 (I) (g) of the Constitution of India.
16. Mr. Sarkar further vehemently urged that cancellation of indents as also the quota under the WIS policy was not communicated to the petitioners which is unfair, unjust and unwarranted. 12
17. Before parting with the argument Mr. Sarkar submitted that the writ petition should be allowed by directing the respondent authority to restore the indent which has been assured in WIS policy but arbitrarily cancelled by Railways on the basis of note 2 of Rule 201 (15)
(e).
18. Per contra, Mr. Saptarshi Roy, learned Advocate appearing for the respondent authority strongly contended that under Rule 201 (15) (e) indents can be cancelled and cancellation of indent does not amount to alteration of any terms of agreement.
19. Mr. Roy further drew my attention under Section 30 of Indian Railway Act, 1989 and 6.1 ( c ) of WIS agreement and also Section 71 of the Railway Act, 1989 and he emphasized that the conditions of the agreement could change especially in commodities like iron ore which is governed and regulated by various statutes of the State Government. The guaranteed clearance is subject to conditions of booking of goods traffic. The Central Government (Ministry of Railways) by invoking RC 12/2011 altered the conditions of goods booking and therefore it is not contrary to WIS policy.
20. Mr. Roy also particularly pointed out that in the month of November, 2013 some rakes were placed by the railway against demand 13 of the petitioners but they could not load the rakes within the stipulated time allowed due to various reasons. Therefore, on 16th November, 2013 the railways not only charged demurrage but also cancelled subsequent indent placed by the petitioners and forfeited the indent registration fees in respect of those indents. The details of the cancellation of indents at Jaruli during the period from 16th November, 2013 up to 30th November, 2013 under provision of RC 12/2011 are set out below :-
"Details of cancellation of indents at Jaruli during the period 16th November, 2013 uptill 30th November, 2013 under provisions of RC-12 is as under
Bagadiya Bros. Neelachal Ispat Jai Balaji Rungta Mines Pvt. Ltd. Nigam Ltd. Industries Ltd. Ltd.
6 3 1 1 14 Details of 6 indents that of M/s. Bagadiya Bros. Are as under: (Free Time-
3 Hrs
Sl. No. Dem and Date Rake Loading Loading Indent Details of the
No. Placement Completio Time Cancelled Consignments
time & n Time as Demand
Date and Date No. Date and
destinations
1. 01 08/11 3:10 14:10 11Hrs 02 No.2
(16/11) (16/11) (08/11/13)
DPCB No.2
(09/11/13)
DPCB
2. 02 13/11 08:50 17:45 08:55 01 No.03
(20/11) (20/11) (13/11/2013)
DPCB
3 02 16/11 2:25 17:20 14:55 Hrs 03 No.02
(23/11) (23/11) (17/11/13)
14:55 Hrs DPCB
No.3
(17/11/13)
DPCB
No.01
(19/1/13)
DPCB
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21. Mr. Roy further vehemently urged that cancellation of indent along with forfeiture of wagon registration fees is very much applicable after charging of demurrage only in a congested good shade, when a rake is supplied to an indentor and after commencing loading within the permissible free time and the petitioners failed to complete loading twice within the permissible free time and the process continued so long as the loading does not complete.
22. Mr. Roy further contended that since the petitioners failed to carry out the loading process within the permissible free time, therefore the indents placed by the petitioners were automatically cancelled.
23. Mr. Roy further contended that the provisions of RC 12/2011 is uniformly applicable to all the consumers irrespective of WIS/non-WIS consumers. Since the petitioners failed to complete loading within permissible free time, therefore the cancellation of the indents with forfeiture of wagon registration fees as well as charging of demurrage is very much applicable. In support of his contention Mr. Roy relied on an unreported decision of the Hon'ble Single Bench of this Court delivered on 12th May, 2015 in W.P No.336 of 2009 with W.P No.1070 of 2009, W.P No.343 of 2009 , W.P No.965 of 2008 (Bagadiya Brothers Pvt.
Ltd. & Anr. Vs Union of India & Ors) .
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24. Considering the submissions advanced by the learned Advocates appearing for the parties and after perusing the records I find that under heading "CHANGES IN THE SCHEME" of the WIS policy if any alteration of the said scheme/policy is required by either of the parties that may be altered by mutual consent of both parties. Unfortunately, in the instant case it is evident that no such consent has been obtained from the petitioners which amounts to a clear violation of the terms of WIS policy by the authority.
25. It is not out of place to mention that guaranteed allotment under WIS policy would only be cancelled according to the WIS policy under Clause 10.2 thereof, to the extent, if the investor fails to place indent and not otherwise. But in the present case the petitioners did not cancel their indents, therefore under any circumstances the quota under the WIS policy cannot be cancelled by the authority. Further, the cancellation of the guaranteed allotment under WIS policy without consent and knowledge of the petitioner on the basis of the Note 2 of Rule 201 (15) (e) is bad , arbitrary and very much contrary to the WIS policy.
26. In my considered view without altering terms of the WIS policy the authority cannot arbitrarily and whimsically cancelled the 17 petitioners' indents forfeit wagon registration fees and charge demurrage on the basis of amendment of Note 2 of the Rule 201 (15) (e).
Court cannot also shut its eyes to the fact that the petitioners were not informed regarding the cancellation of allotted indent by virtue of WIS policy and also no opportunity was provided to the petitioners to explain the same. Thus the impugned action of the authority is very much unfair, unjust and unwarranted as well as violative of Articles 14, 16 and 19 (1) (g) of the Constitution of India.
27. In my considered view the authority is bound to follow the terms of the WIS policy and if any alteration is required the parties are at liberty to take aid of the terms of Clause under heading "CHANGES IN THE SCHEME Terms of the scheme (WIS) may be altered by mutual consent of both parties" of the WIS policy which was admittedly not adverted to in the present case.
28. The decision relied on by Mr. Roy in Bagadiya Brothers Pvt. Ltd. & Anr case (supra) though a good law but is not applicable in the case in hand as in the present case there exists WIS policy.
29. In view of the above discussions, in my opinion, since the cancellation of the petitioners indents allotted under WIS policy was 18 made without following the terms of the said policy as well as without giving any opportunity of hearing to the petitioners the impugned action is bad in law, therefore, cannot be sustained. Accordingly, the impugned decision is quashed and set aside.
30. The writ petition is allowed only to the above extent, however no order as to costs.
31. Urgent photostat certified copy of this judgment, if applied for be supplied to the parties after fulfilling all the formalities.
(Samapti Chatterjee, J)