Gujarat High Court
Steel Authority Of India Ltd. Throgh ... vs Union Of India on 25 June, 2018
Author: Akil Kureshi
Bench: Akil Kureshi, B.N. Karia
C/FA/659/2018 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 659 of 2018
With
CIVIL APPLICATION NO. 2 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE B.N. KARIA
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
order made thereunder ?
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STEEL AUTHORITY OF INDIA LTD. THROGH AWADHESHKUMAR
DEODATTA
Versus
UNION OF INDIA
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Appearance:
MR KUNAL NANAVATI WITH MR NISARG DESAI FOR NANAVATI
ASSOCIATES(1375) for the PETITIONER(s) No. 1
MR ANAL S SHAH(3988) for the RESPONDENT(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE B.N. KARIA
Date : 25/06/2018
Page 1 of 16
C/FA/659/2018 JUDGMENT
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. This appeal is filed by the appellant original plaintiff challenging the judgment and decree passed by the learned Judge, City Civil Court, Ahmedabad, in Civil Suit No.700/2013. By such judgment, the learned Judge was pleased to accept the application of the respondent Railway administration urging the Court to reject the plaint in exercise of powers under Order VII Rule 11 of the Code of Civil Procedure.
2. Brief facts are as under. The appellant Steel Authority of India Ltd (hereinafter referred to as "SAIL") is Government of India company registered under the Companies Act and is engaged in the business of manufacture, distribution and sales of iron and steel materials. In the course of business, SAIL transports its goods through railway wagons. Certain customers of the company had placed orders for purchase of steel materials to be supplied by the company from its plant at Bokaro. Such iron and steel material dispatched by the company in 45 railway wagons from the said site to its sales office at Ahmedabad. Entire consignment of 45 wagons was detained by Railway authorities for reweighment at Sawai Madhopur station. According to the Railway administration, 44 out of these wagons were overloaded. Total excess weight was 167.33 metric tonnes. Railway administration demanded punitive and detention charges from the company. Two of the wagons were detained. Remaining 43 wagons reached the destination at Ahmedabad on 10.1.2010. Plaintiff was Page 2 of 16 C/FA/659/2018 JUDGMENT made to pay sum of Rs.30,92,412/ at Ahmedabad in addition to Rs.3,10,360/ which was paid at Sawai Madhopur station, both under protest. Railway administration further raised demand of Rs.1,41,040/ towards demurrage charges and Rs.3,50,953/ towards punitive charges. Thus a total of Rs.38,94,795/ was paid by the company to the Railway administration under protest.
3. According to the plaintiff, a request was made for reweighment of consignment before delivery which was not granted. However, the plaintiff itself after taking delivery, reweighed the wagons and found that excess load was only to the extent of 12.985 metric tonnes. According to the plaintiff, thus the Railway administration collected various charges wholly unauthorisedly and on wrong premise. The plaintiff therefore, requested for refund of such charges. When this demand was not met, the plaintiff filed the said Civil Suit for return of sum of Rs.38,94,765/, the amount which according to the plaintiff was wrongly recovered by the Railway administration. Breakup of such amount was given in the suit as under :
"(i) Rs.11,56,700/ being detention charges
(ii) Rs.7,84,112/ being punitive charges
(iii)Rs.3,50,953/ being addl. Punitive charges
(iv)Rs.9,03,000/ being demurrage charges
(v) Rs.1,41,040/ being additional demurrage charges
(vi) Rs.2,48,600/ being additional wharfage
(vii)Rs.3,10,360 payment made at Kota (A/c. punitive charges -
Rs.1,47,960/, detention charges - Rs.1,61,800/, and diversion charges - Rs.600/)"
4. Railway administration appeared before the Civil Court and opposed the suit on the ground of lack of jurisdiction.
Page 3 of 16C/FA/659/2018 JUDGMENT An application was moved urging the Court to dismiss the plaint under Order VII Rule 11 of the CPC mainly on two grounds. Firstly, that the claims were outside the purview of the Civil Court and only the Railway Claims Tribunal would have the authority to entertain such claims. Second ground raised by the defendant was that there was an arbitration agreement as per which the dispute had to be referred to arbitration.
5. The trial Court accepted the contention of the defendant of lack of jurisdiction. The Court was of the opinion that by virtue of section 36 of the Railways Act, 1989 ("the Act of 1989" for short), the jurisdiction of the Civil Court was ousted. The Court therefore, by the impugned judgment and decree rejected the plaint. It is this judgment which the original plaintiff has challenged before us.
6. Learned counsel Shri Nanavati for the appellant submitted that the Civil Court committed a serious error in non suiting the plaintiff. Jurisdiction of the Railway Claims Tribunal is provided in section 13 of the Railway Claims Tribunal Act, 1987 ("the Act of 1987" for short). Unless and until such matter of dispute falls within the said provision, jurisdiction of the ordinary Civil Court would not be excluded. According to him, the present case did not include any claim for refund of fare or part thereof or freight in respect of goods entrusted to the Railway administration. The principal issue was of wharfage and demurrage charged by the Railways and also included punitive charges. None of these would fall within clause (b) of subsection(1) of section 13 of the Railway Claims Page 4 of 16 C/FA/659/2018 JUDGMENT Tribunal Act, 1987 . He submitted that terms 'demurrage' and 'wharfage' have been defined under the Act and must be given the meaning assigned to them. Counsel relied on the following decisions:
i) Shah Raichand Amulakh Decd. By His Heir v. Union of India reported in 1971 GLR 93 in which the nature of overcharge came up for consideration. In such context learned Judge observed that overcharge is a simple charge in excess of that which is due according to law. Demurrage and wharfage charges are terminal charges.
ii) In case of M/s. Tara Iron Steel Company Ltd. v.
Union of India and another reported in AIR 2014 Rajasthan 87 in which learned Single Judge held that Railways Claims Tribunal is not conferred jurisdiction to entertain claims for refund of the wharfage or demurrage. Reliance was placed on the observations made by this Court in case of Shah Raichand Amulakh Decd. By His Heir(supra).
7. On the other hand, learned counsel Shri Anal Shah for the Railway administration opposed the petition contending that the trial Court has properly appreciated all the aspects of the matter. In view of exclusive jurisdiction of the Railway Claims Tribunal, the Civil Court's jurisdiction is ousted. Counsel relied on the following judgments in support of his contentions :
i) Udaipur Cement Works v. Union of Indian and another reported in AIR 2005 Rajasthan 267 in which the Page 5 of 16 C/FA/659/2018 JUDGMENT learned Judge held that dispute regarding excess siding charges would fall within the jurisdiction of the Claims Tribunal since siding charges are part and parcel of freight.
ii) Judgment of Andhra Pradesh High Court in case of Syed Muneer Raza and etc. v. The Chairman, Railway Board, New Delhi and others reported in 2000 AIR (AP) 204 in which dispute between the parties was about reweighment of the consignment. On the premise that there was an overweight, the Court held that such disputes would fall within the jurisdiction of Railway Claims Tribunal.
iii) Judgment of Division Bench of Madhya Pradesh High Court in case of S. Goenka Lime and Chemicals Ltd. v. Union of India and others reported in AIR 2016 MP 70, in which the Court refused to entertain the writ petition when the petitioners had challenged a demand notice issued by the Railway authorities demanding punitive charges and detention charges from the petitioner.
iv) Heavy reliance was placed on the decision of Supreme Court in case of Jagjit Cotton Textile Mills v. Chief Commercial Superintendent, N.R. and others reported in (1998) 5 Supreme Court Cases 126, in which the nature of punitive charges for overloading of wagons came up for consideration before the Supreme Court. It was held that the extra charges levied for overloading are in the nature of surcharge and not punitive in nature for any delinquency.
8. We have seen the facts. According to the plaintiff, though Page 6 of 16 C/FA/659/2018 JUDGMENT the consignment of its iron and steel materials being transported in Railway wagons was not in any manner overloaded, the Railway administration unauthorisedly detained the goods at Sawai Madhopur station and reweighed the same and claimed that the wagons were overloaded. Demurrage and wharfage was collected at Sawai Madhopur. Two of the wagons were detained. Remaining 43 wagons were allowed to reach Ahmedabad where again sizeable demurrage and punitive charges were collected. In this context when the suit was filed, the Civil Court held that this subject matter was outside the jurisdiction of the Civil Court since the Railway Claims Tribunal would have exclusive jurisdiction to entertain any dispute.
9. We may now notice relevant statutory provisions. Railway Claims Tribunal is established under section 3 of the Railway Claims Tribunal Act, 1987. Section 13 of the said Act lays down jurisdiction, powers and authority of Claims Tribunal, relevant portion of which reads as under :
"13. Jurisdiction, powers and authority of Claims Tribunal.(1) The Claims Tribunal shall exercise, on and from the appointed day, all such jurisdiction, powers and authority as were exercisable immediately before that day by any civil court or a Claims Commissioner appointed under the provisions of the Railways Act,
(a) relating to the responsibility of the railway administrations as carriers under Chapter VII of the Railways Act in respect of claims for
(i) compensation for loss, destruction, damage, deterioration or nondelivery of animals or goods entrusted to a railway administration for carriage by railway;Page 7 of 16
C/FA/659/2018 JUDGMENT
(ii) compensation payable under section 82A of the Railways Act or the rules made thereunder; and
(b) in respect of the claims for refund of fares or part thereof or for refund of any freight paid in respect of animals or goods entrusted to a railway administration to be carried by railway."
10. Section 15 of the Act of 1987 provides that on and from the appointed day, no Court or authority shall have or be entitled to exercise any jurisdiction, powers or authority in relation to the matters referred to in subsections (1) and (1A) of section 13. Under section 23 of the Act of 1987, an appeal against the judgment of the Claims Tribunal would lie to High Court.
11. Section 2(o) of the Act of 1987 provides that words and expressions used and not defined in the said Act but defined in the Railways Act or the rules made thereunder shall have the meanings respectively assigned to them in that Act or the said rules.
12. Section 2 of the Act of 1989 contains definition of several terms, relevant of which reads as under :
"(11) "demurrage" means the charge levied for the detention of any rolling stock after the expiry of free time, if any, allowed for such detention.
(14) "fare" means the charge levied for the carriage of passengers.
(17) "freight" means the charge levied for the carriage of goods including transhipment charges, if any.
(41) "wharfage" means the charge levied on goods for not Page 8 of 16 C/FA/659/2018 JUDGMENT removing them from the railway after the expiry of the free time for such removal."
13. Chapter IX of the Act of 1989 pertains to carriage of goods. This chapter contains various provisions to regulate the carriage of goods by the Railways and for levying punitive charges for overloading of wagons etc. Section 72 of the Act of 1989 pertains to maximum carrying capacity for wagons and trucks and envisages prescribing maximum limit of carrying capacity for every wagon. Section 73 contained in the said chapter provides that where a person loads goods in a wagon beyond its permissible carrying capacity as exhibited under sub section (2) or subsection (3), or notified under subsection (4) of section 72, Railway administration may, in addition to the freight and other charges, recover from the consignor, the consignee or the endorsee, as the case may be, charges by way of penalty at such rates, as may be prescribed, before the delivery of the goods. Proviso to section 73 provides that it would be lawful for the Railway administration to unload the goods loaded beyond the capacity of the wagon, if detected at the forwarding station or at any place before the destination station and to recover the cost of such unloading and any charge for the detention of any wagon on this account.
14. Having noticed the statutory provisions, it would emerge that Railway Claims Tribunal constituted under section 3 of the Act of 1987 is vested with jurisdiction, power and authority to deal with such certain specified subjects under subsection(1) of section 13 of the said Act which were till constitution of the Tribunal, exercisable by Page 9 of 16 C/FA/659/2018 JUDGMENT any Civil Court or the Claims Commissioner under the Railways Act. As per clause(b) of subsection(1) of section 13, such jurisdiction would be exercised in respect of the claims for refund of fares or part thereof or for refund of any freight paid in respect of animals or goods entrusted to a Railway administration to be carried by railway. In the present case, we are concerned with freight for goods and not fare for passengers.
15. The question that calls for consideration is whether the dispute with respect to demurrage and wharfage and further dispute with respect to levy of punitive charges would fall within clause(b) of subsection(1) of section 13 of the Railway Claims Tribunal Act, 1987? If that be so, by virtue of section 15 of the said Act, jurisdiction of the Civil Court would be ousted. The Tribunal would thus have exclusive jurisdiction.
16. We have noticed that the Act of 1987 provides that words and expressions used and not defined in the said Act but defined under the Railways Act would have the same meanings assigned to them under the said Act. Various terms which could come up for consideration for our interpretation which have not been defined in the Act of 1987 but in the Act of 1989, would have to be therefore, interpreted accordingly.
17. Term 'freight' has been defined under section 2(17) of the Act of 1989 as to mean the charge levied for the carriage of goods including transhipment charges, if any. Though not directly concerned in the present case, term Page 10 of 16 C/FA/659/2018 JUDGMENT 'fare' used in clause(b) of subsection(1) of section 13 of the Act of 1987 has been defined in section 2(14) of the Act of 1989, as to mean the charge levied for the carriage of passengers. Thus both the expressions used in clause(b) of subsection(1) of section 13 of the Act of 1987, have been specifically defined under Section 2 of the Act of 1989 and carry definite meanings. Likewise, the term 'demurrage' has been defined under section 2(11) of the Act of 1989 as to mean the charge levied for the detention of any rolling stock after the expiry of free time, if any, allowed for such detention. Term 'wharfage' has been defined in section 2(41) of the Act of 1989 as to mean the charge levied on goods for not removing them from the railway after the expiry of the free time for such removal. When the legislature has thus defined different terms such as fare and freight in one manner and terms demurrage and wharfage on the other hand in entirely different manner, it would not be possible for us to accept the contention of the Railway administration that freight must include demurrage or wharfage for the purpose of interpreting clause(b) of subsection(1) of section 13 of the Act of 1987. The terms 'fare' and 'freight' have direct corelation to charges levied by Railway for carrying of passengers or goods respectively whereas demurrage and wharfage are charged for entirely different purpose. Demurrage is levied for detention of any goods after the expiry of free time. Wharfage is levied on goods for not removing them after time for such removal is over. Dispute regarding charging of demurrage and wharfage would not include the dispute regarding fare or freight. Railway administration therefore, cannot succeed in establishing that the plaintiff's dispute Page 11 of 16 C/FA/659/2018 JUDGMENT regarding charging of wharfage was within the exclusive jurisdiction of Railway Claims Tribunal. Such a view has been expressed by Learned Single Judge of Rajasthan High Court in case of M/s. Tara Iron Steel Company Ltd. (supra) and we are in respectful agreement with the same. Learned Single Judge of this Court in case of Shah Raichand Amulakh (supra) however, was not concerned with this issue directly.
18. We may recall that the counsel for the Railways had relied on judgment of Rajasthan High Court in case of Udaipur Cement Works(supra) where this question was not directly at issue. Division Bench of Madhya Pradesh High Court in case of S. Goenka Lime and Chemicals Ltd.(supra), again did not lay down any ratio which could be applied in the present case. It was a case in which the petitioner had approached the High Court by filing a writ petition against notice issued by the Railway demanding punitive charges and detention charges. The Court held that in view of availability of alternative remedy, writ petition should not be entertained. Question whether Railway Claims Tribunal would have exclusive jurisdiction was not at issue.
19. Question of plaintiff's claim with respect to punitive charges however, still remains. As noted, section 72 of the Act of 1989 would authorise the Railway administration to lay down the maximum carrying capacity for the wagons. In terms of section 73, if it is found that the wagons are loaded beyond such permissible capacity, Railway administration would in addition to freight and other Page 12 of 16 C/FA/659/2018 JUDGMENT charges, recover charges by way of penalty at such rates that may be prescribed. As per proviso to section 73, it would also be lawful for the Railway administration to unload the goods loaded beyond the capacity of the wagon, if overloading is detected after forwarding station but before the destination station and in the process recover the charges for unloading and detention of any wagons on that count.
20. The Supreme Court in case of Jagjit Cotton Textile Mills (supra), considering the nature of such punitive charges under section 73 of the Railways Act, 1989 made the following observations :
"42. In our view, these contentions are not tenable. As has been noticed in our discussion on Points 1 and 2, the Railway statutes define 'maximum carrying capacity'; 'normal carrying capacity' (to be marked on the wagon); and the 'permissible carrying capacity'. No wagon can be loaded beyond the maximum carrying capacity. The wagon could not ordinarily be loaded beyond the normal carrying capacity or upto any upword variation thereof and this limit is called the permissible carrying capacity. Section 73 of the new Act and Rule 161A of the old Rules permit loading in excess of the permissible carrying capacity without any penal charges, now upto a limit of 2 tonnes. (Earlier it was upto 1 tonne). What is now subjected to a penal charge, is the excess over and above the permissible level above stated which is always below the maximum limit. In our view, this levy under section 73 of the new Act and the old Rule 161A is intended for dual purposes one is to see that the gross weight at the axles is not unduly heavy so that the accidents on account of the axles breaking down, could be prevented. The other reason behind the collection is that, inasmuch as the wagon has carried such excess load upto the destination point at the other end, the replacement cost of the coaches, engines or rails or of repairs to be bridges be covered. In our view, the Page 13 of 16 C/FA/659/2018 JUDGMENT extra rate is a higher rate i .e. something like a surcharge for the excess load to meet the said expense. Therefore, we do not think that any principle of 'delinquency' is ingrained in this levy as in the case of breach of civil obligations under the FERA or Customs Act or the Employees Provident Fund Act. Those cases involved penalties for breach of the Acts and were not concerned with charging a person for services rendered nor with an extra charge for services which involved extra strain to the property of the bailee who had rendered the service. Obviously the Railway Board has kept these aspects in mind while collecting these charges. There is therefore no violation of Article 14. Further, the question of reasonableness of the quantum of any such extra rate cannot be challenged before us and the appropriate forum therefor is the Railway Rates Tribunal. Rule 161A can therefore, be resorted to for collecting these penal charges from the consignee also. After all, the consignee had received delivery of the overloaded goods and used the same for their business, commercial or industrial purposes. For the above reasons, a statutory provision like section 73 or Rule 161A which permits levy on such a consignee cannot, in our view, be said to be arbitrary or unreasonable in the context of Article 14."
21. These observations were ofcourse made in context of challenge to the statutory provisions and rules contained therein for levying such penal charges. Nevertheless, the observations are germane for our purpose. It was held that such levy has dual purpose. One to see that the gross weight at the axles is not unduly heavy to prevent accident and other being of recovering charges for replacement cost of the coaches, engines or rails and repairs etc., in other words, for wear and tear for excess weight carried by the railway.
22. In view of such observations of the Supreme Court, it can be seen that the penal charges for overloading the wagons under section 73 would be part and parcel of the Page 14 of 16 C/FA/659/2018 JUDGMENT freight though charged at a higher rate for meeting with additional costs of wear and tear and also to prevent any breakage or accident. Nevertheless, the same are compensatory in nature. It can be seen that consignor would declare the weight to be loaded in wagons and would pay to the Railway, freight at the prescribed rate on such declared weight. If it is found that whether inadvertently or otherwise, the wagons carried excess weight, Railway administration would even otherwise be entitled to recover freight for such additional material. The statute authorises the Railway administration to charge such freight at the rates which would be separately prescribed and which understandably be higher than the normal freight. Nevertheless, such punitive charges would be part and parcel of freight for carriage of goods and any dispute with respect to the same would therefore, fall within the exclusive domain of Railway Claims Tribunal constituted under section 3 of the Act of 1987.
23. Subject to above observations, we find that the Civil Court committed an error in rejecting the suit on the ground of lack of jurisdiction.
24. Railway administration has also raised question of arbitration. However this was not the ground on which the Civil Court had rejected the plaint. Issue therefore, does not arise for our consideration and we are therefore, advisedly not expressing any opinion on it.
25. With these observations, appeal is allowed. Judgment and decree of the trial Court are set aside. Civil Suit is Page 15 of 16 C/FA/659/2018 JUDGMENT revived and placed back for disposal in accordance with law.
26. First Appeal and Civil Application stands disposed of.
(AKIL KURESHI, J) (B.N. KARIA, J) raghu Page 16 of 16