Madhya Pradesh High Court
Union Of India (Uoi) And Anr. vs Satna Stone And Lime Co. Ltd., Satna And ... on 6 July, 1999
Equivalent citations: AIR2000MP101, AIR 2000 MADHYA PRADESH 101, (2000) 2 ARBILR 87
Author: A.K. Mathur
Bench: A.K. Mathur
JUDGMENT S.K. Kulshrestha, J.
1. This Miscellaneous Appeal has been filed by the Union of India and the General Manager, Central Railway, Bombay, against the judgment dated 28-4-1995 passed by the learned First Additional District Judge, Satna, in Misc. Judicial Case No. 9/93, whereby the learned Addl. District Judge has rejected the objections filed by the appellants and has made the award the rule of the Court and directed a decree to be drawn accordingly. During the pendency of the arbitration proceedings, M.P. No. 1/91 was filed by M/s. Satna Stone and Lime Co. Ltd. and both the cases were, therefore, heard together and are being disposed of by this common order.
2. Facts as noticed from the impugned Award dated 22-12-1992 are that the Satna Stone and Lime Company Ltd., Satna, entered into an agreement with the Government of India and General Manager, G.I.P. Railway on 23-3-1897, whereby a siding was provided to the company for clearance of their goods. This agreement was revised from time to time and the last such agreement was executed on 1-10-1942. The dispute before the Arbitrator arose from this agreement.
3. The Railway Siding provided under the agreement consists of two parts: private portion measuring 512.12 metres and the Assisted siding measuring 440.14 metres. Dispute concerning the arbitration was with regard to the assisted siding provided to M/s. Satna Stone and Lime Company Ltd. According to Clause .10 of the Agreement, the company was to pay interest at the rate of 6% per annum on the actual cost of the siding; depreciation at 1/2% per annum on the cost and maintenance charges at 2 1/2% per annum on the said cost. The cost of the original construction was valued at Rs. 20,780/-, but in 1961-62 with some extension and replacement of rails, the cost came to Rs. 53,661/- and it was on this cost that the company paid the interest, depreciation charges and maintenance charges, as stipulated under Clause 10 of the Agreement, to the Railways. By letter dated 24-8-1968, the Railway informed the Company that maintenance charges will be at the rate of 4 1/2% per annum instead of 2 1/2% stipulated in the Agreement and the same shall be calculated not at Rs. 53,661/-, but at the book cost or the re-assessed cost of the siding from time to time. Bill at the enhanced rates was also sent to the company and the company objected to the revised percentage for maintenance charges and the demand as per reassessed cost, but deposited the amount under protest up to April, 1975. Subsequently, various bills were sent making a demand at 4 1/2% of the re-assessed cost and the company kept in making payment under protest and without prejudice. By letter dated 8-8-1978, the Company, therefore, called upon the Railways to refer the matter concerning the dispute about liability of the Company to pay - maintenance charges at the revised rate of 4 1/2% and to pay charges on the re-assessed cost of the siding to the Arbitrator, but the Railways failed to refer the dispute and, on the contrary, by letter dated 24-12-1986, informed the Company that the matter was under consideration, with the result, the Company filed an application under Section 20 of the Arbitration Act, 1940. The proceedings were contested on the ground that the application was barred by limitation. This objection was rejected by the learned District Judge, Satna, by order dated 31-7-1991, against which the Railways filed a revision before this Court, which was also rejected. By order dated 4-2-1992, Justice B.P. Beri, Retired Chief Justice of the Rajasthan High Court, was appointed sole Arbitrator and directed to pass his Award and submit the same in the Court within six months.
4. The learned Arbitrator, by his Award dated 22-12-1992, decided the claim in favour of the Company holding that the Railways were not entitled to revise the maintenance cost and to claim the same on the reassessed value and it could claim the amount only in accordance with the provision made in Clause 10 of the Agreement executed between the - parties. Accordingly, the learned Arbitrator directed the Railway to refund a sum of Rs. 14,86,773.02 as excess amount recovered by the Railways with simple interest amounting to Rs. 13.38,087.49 thereon calculated up to 22-12-1992 and a further interest of Rs. 28,24.860.51 at the rate of 6% per annum until the date of payment. The learned Arbitrator also directed the Railway to return the National Savings Certificates and National Defence Certificates of the value of Rs. 68,300/-, which where deposited as security on the raised capital cost. It was directed that the Railway shall charge maintenance cost only in accordance with the Agreement.
5. On the said Award being filed, the objections raised by the Railway under Section 30 of the Arbitration Act were rejected by the learned Additional District Judge and the Award was made the Rule of the Court, accordingly, a decree has been drawn. It is against this judgment and decree that the present appeal has been filed under the provisions of Section 39 of the Act.
6. We have heard learned counsel for the parties and perused the record.
7. Learned counsel for the appellant Railway submits that the claim of the respondent was apparently barred by limitation as the respondent did not raise the same within a period of three years from the first demand raised. Learned Counsel has pointed out the likewise, the application under - Section 20 filed long after the dispute was raised, was also barred by limitation and, therefore, the learned District Judge ought not to have referred the matter to the Arbitrator and in any case, the Arbitrator could not have made the Award in respect of the claim which was time barred. Learned counsel for the appellants has further submitted that the Arbitrator proceeded on wrong foundation of law in holding that the percentage of maintenance charges could not have been revised as the same was not referable to the power under Section 29 of the Indian Railways Act, 1890 and that only the amount as per Clause 10 of the Agreement could have been claimed. Learned counsel for the respondent Company has submitted that the objection with regard to the application under Section 20 being within limitation or otherwise stood already decided, against which revision filed before this Court was also dismissed and, therefore, the matter cannot be re-agitated in the present appeal against the Award which has been made the Rule of the Court and the claim made by the Company was within limitation as Railway had raised a consolidated bill in the year 1975 and the payment was made under - protest and by letter dated 8-8-1978, the Railway was requested to refer the dispute for arbitration, with the result, proceedings of arbitration commenced on that date as per Sub-section (3) of Section 37 of the Arbitration Act, 1940. Learned counsel for the respondent Company has further pointed out that Clause 10 clearly provided for rights and liabilities of the parties in respect of the maintenance charges and the Railway could, therefore, not have claimed any amount by either revising the percentage for maintenance charge or reassessing the cost on which charge was to be made.
8. As contended by the learned counsel for the appellants, the foundation for the claim of maintenance at the revised rate of 4 1/2% on the cost of the assisted siding and the maintenance charge on the basis of the present day cost of the siding is on para 1827 of the Indian Railway Code for the Engineering Department, which has been held to be statutory by a Division Bench of this Court in the decision reported in 1986 MPLJ 324 : Mohanlal v. Union of India, in which it has been observed that the instructions in the Indian Railways Code are mandatory and have force of law. Para 1827 of the Code reads as follows:
"1827. Interest and Maintenance of Assisted Sidings.- The applicant should pay annually to the Railway administration interest and maintenance charges as follows:
(a) Interest to be charged on the book value of the portion of the cost of siding borne by the Railway at the prevalent rate of dividend payable by the Railways to the General Revenue as may be fixed from time to time.
(b) Repair and maintenance charges at the rate of 4 1/2% on the cost of the portion of ' siding borne by the railway or its present day cost, whichever Is higher. For calculating these charges, the cost of the portion of siding borne by the Railway will be revalued every five years in accordance with such general or special orders as may be issued by the Railway Board from time to time. This payment will ordinarily cover the maintenance by the railway of the works paid for by the applicant outside his premises. The maintenance of the works inside the applicant's premises is the applicant's own concern. Railway should however ensure that the maintenance of works by the applicant beyond the railway limits conforms to the requisite standard prescribed by the railway. For this purpose railway should undertake periodical inspections and the cost of such periodical inspection should be a charge against the applicant. If, in any case, it is considered desirable that the railway should also maintain works beyond the railway limits, the railway may undertake maintenance of these works, provided the applicant agrees to pay the required charges to be fixed by the railway.
In case provision of office and residential accommodation for Railway staff posted at the siding becomes necessary directly as a result of providing the facility to the party, the Railway Administration should recover repair and maintenance charges for these structures as an additional charge over and above the percentage charges levied on the Railway's share of the cost."
9. On the basis of the above provision in the Code for the Engineering Department, learned counsel has submitted that the power is referable to Section 29(2) of the Indian Railway Act, 1890, which was in force at the relevant time, and since the rate for maintenance charges is uniformly applied on the cost of the siding worked out in accordance therewith, Railway was entitled to charge the amount accordingly on the basis of such revised percentage of cost. Before we proceed to consider the contention on merits it is necessary to deal with the objections with regard to the bar of limitation raised by the learned counsel for the appellants. It is not disputed that the Company had been informed by Railway by letter No. 698-M-131 dated 24-8-1968 that thereafter the maintenance charges will be at the rate of 4 1/2% per annum instead of 2 1/2% stipulated in the Agreement, and further that the maintenance percentage will be calculated not at Rs. 53,661/- but at the book cost or the reassessed cost of the siding from time to time. Thus, the claim of the Railway for charging the amount at the revised percentage and at the cost to be worked out/reassessed had become known to the Company through the said letter in the year 1968 itself. In fact, the Award of the learned Arbitrator also bears recital that the Railway sent bill at the enhanced rate, which was objected to by the Company by letter dated 15-10-1969 on the ground that the Railway had no right to unilaterally enhance the rate in violation of the terms of the Agreement and thereafter the company made payment under protest up tc April, 1975. As noticed from the impugned Judgment, it was only by letter dated 8-8-1978 that the Company required the Railway to refer the dispute for arbitration. The application under Section 20 of the Arbitration Act was thereafter filed on 24-2-1987 While the learned counsel for the appellants contends that the sole Arbitrator should have been whether or not the claim of the Company was within limitation, learned counsel for the respondent has sub-mitted that insofar as the application under Section 20 of the Act is concerned, since the decision rejecting the objection about proceedings under Section 20 of the Act being barred by limitation has attained finality, the matter cannot be gone into in the present appeal against the impugned judgment by which the Award has been made the Rule of the Court.
10. Insofar as bar of limitation is concerned, the matter has to be seen from two angles: whether the claim to be adjudicated by the Arbitrator was barred by lapse of time and whether there was any valid claim for reference under Section 20 of the Act. The Delhi High Court had an occasion to consider this aspect of the matter in Union of India v. M/s. Vijay Construction Co. (AIR 1981 Delhi 193) and it was observed that these are two distinct matters and deal with different eventualities and Section 37(3) which deals with claim being within time before the Arbitrator, has no relevancy to the time within which and from what date application under Section 20 has to be filed. The observation contained in para 7 read as follows:
"7. Mr. Kumar urges that under Section 37(3) of the Act, for the purposes of the Section and of the Indian Limitation Act, an arbitration shall be deemed to be commenced when one party to the arbitration agreement serves on the other party thereto a notice requiring the appointment of an arbitrator and as that notice was sent on 17th November, 1976, that is the date when the right to apply under Section 20 of the Act would accrue in the eventuality of the arbitrator not being appointed by the other party. We cannot agree. This argument seems to mix up the question of the time of the commencement of the arbitration, and the question of limitation for filing application under Section 20 of the Arbitration Act. These are two distinct matters and deal with different eventualities. One has no connection with the other. Section 37(3) deals with claim being within time before the arbitrator, which has no relevancy to the time within which and from what date application under Section 20 has to be filed. The whole confusion in the argument arises from the - failure to appreciate the distinctiveness of matters."
11. The Supreme Court had also examined this aspect of the matter in Union of India v. L.K. Ahuja and Co.. (1988) 3 SCC 76 : (AIR 1988 SC 1172) and paragraph 6 it was observed:
"It appears that these questions were discussed in the decision of the Calcutta High Court in Jiwnani Engineering Works Pvt. Ltd. v. Union of India (AIR 1978 Cal 228) where one of us (Sabyasachi Mukharji, J.) was a party and which held after discussing all these authorities that the question whether the claim sought to be raised was barred by limitation or not, was not relevant for an order under Section 20 of the Act. Therefore, there are two aspects. One is whether the claim made in the arbitration is barred by limitation under the relevant provisions of the Limitation Act and secondly, whether the claim made for application under Section 20 is barred. In order to be a valid claim for reference under Section 20 of the Arbitration Act, 1940, it is necessary that there should be an arbitration agreement and secondly differences must arise to which the agreement in question applied and, thirdly, that must be within time as stipulated in Section 20 of the Act."
12. From the above decisions, it is clear that although bar of proceedings under Section 20 of the Arbitration Act on the ground of limitation had attained finality, it having been turned down by this High Court even in revision, still whether or not the claim of the Company was within limitation could have been gone into by the Arbitrator. The learned Arbitrator has, in fact, considered this aspect of the matter and under his covering letter dated 21-1-1993 has communicated the reasons for the rejection of the Railway's plea of limitation, as paragraphs 16-A and 16-B to his Award. The reasons communicated by the learned Arbitrator read as follows:
"16-A. Let me also deal with the question of limitation, issue, 11 here. The Railway has not pleaded any specific article of the Limitation Act. However, learned counsel Mr. Bhandari stated that Article 113 governs the case and the period started either on 24-8-1968 when the rates were revised or on 22-6-1976 when the first payment was made. The application under Section 20 of the Arbitration Act was moved on 21-2-1987. Protest does not enlarge the period of limitation. Mr. Pandey, learned counsel for the Plaintiff, contended that firstly under Section 37(3) of the Arbitration Act, arbitration shall be deemed to have commenced when one party to the Agreement serves on the other party thereto a notice requiring the appointment of an Arbitrator as provided by the Agreement. The notice was served by the Plaintiff vide their letter dated 8-8-1978 (P-12) proposing that the matter be referred to arbitration and nominated Shri P. S. Kaicker as the nominee. This letter is admitted in Railway's letter P/13 of 7-2-1979. The plaintiff addressed another letter on 22-2-1979 document P/14 specifically asking for reference of the dispute to arbitration and again nominating Mr. P.S. Kaicker as their arbitrator. This letter of the Plaintiff was - acknowledged by Railway's letter of 9-3-1979 P/15. Plaintiff again requested the General Manager Central Railway vide their letter dated 31-3-1979 for reference of dispute to arbitration . This letter of the Plaintiff was filed as Annexure before the learned District Judge, Satnaon 10-4-1989. The first payment was made by the plaintiff on 22-6-1976. Thus the arbitration proceedings commenced within three years of the payment. Secondly Mr. Pandey contended that this is a case covered by Section 22 of the Limitation Act because the breach of contract has been continuing as a gross violation of Clause 10 of the Agreement and therefore it was a continuing wrong. He relied on 1970 UJ (SC) 367.
16-B. I am unable to say anything about the applicability of the Supreme Court authority which has not been produced before me. However, the case is squarely covered by Section 37(3) of the Arbitration Act. This provision intends to relieved a party from the hardship of the Limitation Act. Therefore, the deeming provision of Section 37(3) is applicable to this case. Reference may be made to Penukonda v. Balasubramaniam, AIR 1949 Mad. 559 (DB) and Maharaj Singh v. Vulcan Insurance Co. Ltd., AIR 1972 Delhi 182. Accordingly I rejected the plea of limitation on the basis of Section 37(3) of the Arbitration Act."
13. It is clear from the reasons that the notice was served by the Company by letter dated 8-8-1978 proposing that the matter be referred to arbitration. The said letter was followed by another letter of the Company dated 22-2-1979. Learned Arbitrator negatived the plea of limitation on the ground that the was a case of continuing wrong.
14. In order to appreciate the controversy, it is necessary to refer to Clause 10 of the Agreement, which reads as under:
The maintenance of the siding shall be carried out by the Governor-General. The applicant shall pay to the Government-General a sum of 9 per cent per annum calculated on the actual cost of the siding as paid by the Governor-General to cover Interest (6 per cent) maintenance (2 1/2 per cent) and depreciation (1/2 per cent).
(ii) For the maintenance of the sub-grade of the siding, and of the sub-grade and super-grade of that portion of the siding lying on the land of the Applicant, the Applicant shall pay, to the Governor General on demand the actual cost of maintenance plus 12 1/2 percent supervision charges. Materials required for such renewals, as may in the opinion of the Governor-General be necessary, will be supplied by the Governor-General and charged to the Applicant at the rates shown in the priced ledgers of the Governor-General plus 12 1/2 per cent Stores supervision charges. All unserviceable material removed from the portion of the sidings lying on the land of the Applicant shall be handed over to the Applicant."
15. From the above clause, it is clear that insofar as stipulation for payment of maintenance of the siding was concerned, it was 2 1/2% on the actual cost of the siding as paid by the Governor-General. Quite contrary to the above stipulation, it is an admitted position that the Railway by their letter dated 24-8-1968 had informed the Company that thereafter the maintenance charges will be at the rate of 4 1/2% per annum instead of 2 1/2% stipulated in the Agreement and will be chargeable on the booked cost or re-as-sessed cost of the siding from time to time.
However, as noticed from the impugned Judgment, the actual bill for the period 1-11-1963 to 31-3-1975 was sent by Railway on 1-5-1975 and the amount on this bill was paid under protest by the Company on 22-6-1976. By letter dated 8-8-1978, the Company requested the appellant Railway to refer the matter for arbitration on ground that enhancement was in breach of agreement between the parties. It is, therefore, clear that the dispute had clearly crystallized into a demand on 1-5-1975 and the letter dated 8-8-1978 seeking reference of this dispute was not within limitation from the demand. Even if it is assumed that the matter was in a flux after letter dated 24-8-1968 directing the Company that maintenance would be chargeable at 4 1/2% per annum of the reassessed cost, in any case, it had attained finality upon bill dated 1-5-1975 having been sent to the Company demanding charges at the revised rate and, therefore, even the letter dated 8-8-1978 was not within the period of limitation attracting the provision of Sub-section (3) of Section 37 of the Arbitration Act of deemed commencement of the limitation (arbitration?) within the period of limitation. Since the dispute was with regard to the breach in claiming the amount not covered by Clause 10 the breach was complete when the bill dated 1-5-1975 raised with regard to this demand and the payment under protest made on 22-6-1976 voluntarily and not under any coercive process, did not give a fresh date for commencement of limitation. Since the dispute was with regard to the breach of the conditions of the Agreement, the limitation could not be counted on the hypothesis of continuing wrong. Learned counsel for the respondent Company has referred to the decision of the Calcutta High Court in AIR 1956 Calcutta 644; Mury Exportation v. Khaitan and Sons, in support of his contention that the limitation for claim is to be adjudged when it is Instituted and not when the Arbitrator actually takes up the matter, as also to the decision of the Delhi High Court in. AIR 1972 Delhi 182: Maharaj Singh v. Vulcan Insurance Co. Ltd. and in Union of India v. M/s. Vljay Construction Co. (AIR 1981 Delhi 193) (supra). In the present case, as observed by us above, even the notice requiring reference of the dispute to the arbitration was beyond the period of limitation and the claim was, thus, clearly barred. 16. The next contention of the learned counsel for the appellants is that the Arbitrator has proceeded on a wrong proposition of law as the basis of his award by holding that the provisions of Section 29 of the Indian Railway Act in relation to the demand were not attracted. Learned counsel for the respondent has referred to the decision in, AIR 1987 SC 81 : M/s. Hindustan Tea Co. v. M/s. K. Sashikant and Co. that the award cannot be set aside on the ground that the Arbitrator reached wrong conclusions or failed to appreciate the fact and also to the decision reported in, AIR 1971 SC 1646 : Union of India v. Kallnga Construction Co. in which their Lordships have observed that the appellate Court cannot sit in appeal over the conclusion of the arbitrator by re-examining and reappraising the evidence as unless the finding is perverse, it cannot be a case of an error apparent in the award. We are conscious of the limitations in appeal against the arbitral awards. In the present case, what clearly appears to us is that the learned Arbitrator has not taken note of the decisions reported in, AIR 1968 SC 22 : Union of India v. Indian Sugar Mills Association and AIR 1969 SC 630 : Union of India v. M.P. Sugar Mills. Section 29 of the Indian Railway Act, 1890, applicable during the relevant period, reads as under:
"Power of the Central Government to fix maximum and minimum rates.- (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 or charges shall apply.
(3) Any complaint that a railway administration is contravening any order issued by the Central Government under Sub-section (1) shall be determined by the Central Government."
17. The words "any other charges" appearing in Sub-section (2) of Section 29 were considered by the Apex Court in Union of India v. Indian Sugar Mills Association (AIR 1968 SC 22) (supra) and it was observed in paragraph 7 as follows:
"We are unable to accept this submission made on behalf of the Railway. It is correct that Section 29(1) of the Act will apply to rates of charges for carrying goods from station to station over the railway itself, in such a case, the Central Government can fix the maximum and minimum rates, whereas the actual - rates to be charged can be'fixed by the Railway Administration itself. If any person has a grievance that the rate being charged by the Railway is excessive, he can complain to the Tribunal, and the complaint would be covered by the provisions of Section 41(1)(b) of the Act. This charge for carriage of goods over the railway or part of a railway is the only charge in respect of goods which can be the subject-matter of a complaint under Section 41(1)(b) of the Act. The language of Section 41(1)(b) by itself, excludes its applicability to passenger fares. Charges are often made by the Railway for wharfage and demurrage but the Jurisdiction of the Tribunal to deal with the fixation of these charges is expressly taken away by Section 45(1)(b) of the Act. Consequently, it appears that, in respect of a commodity carried by a railway over its own railway lines, the only charge that the Railway can levy, and which can be the subject-matter of a complaint under Section 41(1)(b) will be the charge for carriage of the commodity between two stations and it would be in respect of the discharge by the Railway of its statutory duty of carrying goods between stations maintained by it. There does not appear to be any other statutory duty in respect of which any other charge could be levied by the Railway, and, consequently if the interpretation sought to be put on behalf of the Railway is accepted, the result would be that Section 29(2) will become Ineffective and redundant, because there would be no other charges in respect of which fixation of rates by the Central Government would be required. Similarly, the provision contained in Section 41(1)(c) would also be redundant, as there would be no other charges in respect of which a complaint could be filed under this provision. It is clear that a complaint under Section 41(1)(b) relates to fixation of a rate relating to charges mentioned In Section 29(1) while Section 41(1)(c) relates to a complaint In respect of any other charge mentioned in Section 29(2). It appears to us, in these circumstances, that the expression "any other charge" used in Section 29(2) and Section 41(1)(c) cannot be given the narrow meaning of covering a charge in respect of the statutory duty of the Railway so as to exclude charges made or levied by the Railway for all other services. In this connection, the language used in Clauses (b) and (c) of Section 41(1) is significant. Section 41(1)(b) as has been mentioned earlier, covers a complaint in respect of a charge for carriage of any commodity between two stations at a rate which is unreasonable, while Section 41(1)(c) relates to the levy of any other charge which is unreasonable. The expression "any other charge" in Clause (c) must, therefore, cover charges which are not included in Clause (b). Clause (b) specifically mentions charges for carriage of a commodity between two stations and, hence, the expression "any other charge" in Clause (c) must necessarily include within it a charge for carriage of any commodity between places other than two stations. In the present case, the shunting engine charge and the siding charge are both being levied by the Railway for carrying goods from the Railway to sidings not forming part of the railway. In bringing goods from other stations to Riga station on lines 1, 2 or 5 the railway would only be carrying the goods between stations. It is only thereafter, when the wagons are shunted by the railway to lines 3 and 4 or over lines 6 and 7 to the factory of the Company, that the railway will be carrying goods between a station and another place or between two different places which cannot either of them be described as stations. This charge for carriage of the commodity, in the context In which the expression "any other charge" is used in Section 29(2) and Section 41(1)(c), must be covered by this expression. It appears to us to be immaterial that the charge being levied by the Railway for taking the wagons to the assisted sidings or to the factory of the Company arises only as a result of a voluntary agreement by the Railway which the Railway, at its opinion, might have refused to enter Into. It is correct that the Railway was not bound to agree to carry the goods of the Company to the assisted siding or to the factory of the Company: but it seems to us that, once the Railway did, in fact, agree and decide to charge the Company for it, the Railway became bound to make the charge in accordance with Section 29(2) of the Act. If a rate of charge is prescribed by the Central Government under Section 29(2) for such voluntary service and the person receiving the service feels aggrieved, he can complain to the Tribunal under Section 41(1)(c) of the Act and have the reasonable rate determined. Even if no rate is prescribed by the Central Government under Section 29(2) and the Railway levies such a charge, it will be competent for the person aggrieved to file the complaint against the rate of charge before the Tribunal under Section 41(1)(c).
18. Again, in Union of India v. M.P. Sugar Mills (AIR 1969 SC 630) (supra), it was observed that the definition of "rate" cannot possibly be applied to Section 29(2). Paragraph 12 of the judgment reads as follows:
"It is true that the argument sought to be raised now has not been dealt with before, but it seems to us that the answer to this is simple. The definition of "rate" cannot be applied to the expression "rates" merely means the scale or amount of any other charges. The definition of the word "rate" cannot possibly be applied to Section 29(2) of the Act."
19. We find from the Award of the learned Arbitrator that the learned Arbitrator has negatived the plea that the charge was referable to the power under Section 29(2) of the Indian Railway Act by taking into account the definition of "rate" in Section 3(13) of the Act and holding that the section was applicable only in case of fare, charge or other payment for the carriage of any passenger, animal or goods and not for laying an assisted siding or the Capital Cost thereof or the maintenance charges therefor. Thus, within the limitations referred to above and pointed out by the learned counsel for the respondent we are fortified in our view by the decision of the Supreme Court in, AIR 1989 SC 268 : U.P. Hotels v. U.P. State Electricity Board, that in order to set aside an award, there must be a wrong proposition of law laid down in the award as the basis of the award. In the present case, tlie learned Arbitrator has proceeded to negative the plea of the Railway about applicability of Section 29(2) of the Indian Railway Act, 1890, and as Is clear from the law declared by the Apex Court in the decisions aforesaid, he has proceeded on wrong proposition of law in the Award in allowing the claim of the Company. It has already been referred to above that the claim of the Railway is founded on paragraph 1827 of the Code for the Engineering Department and the Instructions contained therein have been held to be mandatory having force of law as per the decision of this Court in Mohanlal v. Union of India (1986) MPLJ 324) (supra). The charge is also refer-able to the power contained in Sub-section (2) of Section 29 of the Indian Railway Act. Under these circumstances, we find that there is an error apparent on the face of the award which deserves to be set aside. Insofar as the claim of the petitioner in the Miscellaneous Petition is concerned, the same is founded on the very agreement and the petitioners have sought injunction against Railways to make railway siding operational and an order for reimbursement of loss amounting to Rs. 38,86,983/-. In view of the fact that the claim to the petitioner has been negatived, as stated above and the petitioners seek to enforce contractual obligations, no relief can be granted in this Misc. Petition.
20. Accordingly, the appeal filed by the Union of India succeeds and is allowed. The impugned judgment making the Award the Rule of the Court as also the Award are, both, set aside. The petition (M.P. No. 1/91) is dismissed. In the facts and circumstances of the case, the parties are left to bear their own costs.