Gauhati High Court
Megha Technical & Engineers (Pvt.) Ltd vs The Union Of India & Ors on 10 August, 2017
Author: Hrishikesh Roy
Bench: Hrishikesh Roy, Ujjal Bhuyan, Paran Kumar Phukan
IN THE GAUHATI HIGH COURT
(HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
WA No.333/2010
Megha Technical & Engineers (Pvt.) Ltd.,
An existing company within the meaning of the Companies
Act, 1956 having its Registered Office at Lumshong,
P.O. Khiliehriat-793200 Dist. -Jainatia Hills,
Meghalaya.
......APPELLANT.
VERSUS
1. The union of India,
Represented by the Secretary, Ministry of railways,
Railway Board, Railway Bhawan, New Delhi.
2. The General Manager,
North Eastern Frontier Railways,
Maligaon, Guwahati, (Assam).
3. The Chief Commercial Manager
North Eastern Frontier Railways,
Maligaon, Guwahati, (Assam).
4 The Chief Commercial Manager, FM
North Eastern Frontier Railways,
Maligaon, Guwahati, (Assam).
5 The Chief Goods Clerk
Bongaigaon Weighbridge, N.E.F. Railways,
Bongaigaon, Assam.
6 The Goods Clerk(C)
Digaru Railway Station,
North Eastern Frontier Railways,
Maligaon, Guwahati, (Assam).
7 The General Manager,
Eastern railways, C.C.O. Office, Old Koilaghat Building,
3 Koilaghat Street, Kolkata - 700001.
8 The Chief Commercial Manager,
Eastern railways, C.C.O. Office, Old Koilaghat Building,
3 Koilaghat Street, Kolkata - 700001.
9 The Senior Commercial Manager
Eastern Railway, Malda (West Bengal)
.......RESPONDENTS.
BEFORE HON'BLE MR JUSTICE HRISHIKESH ROY HON'BLE MR JUSTICE UJJAL BHUYAN AND HON'BLE MR JUSTICE PARAN KUMAR PHUKAN For the Appellant : Mr. A. Goyal. .... Advocate.
For the respondents : Mr. M.K. Choudhury. ... Sr. Advocate.
Mr. A. Barkataki ... Advocate WA No.333/2010 Page 1 of 10 2 Date of hearing : 01.08.2017 Date of Judgement : 10.08.2017 JUDGMENT AND ORDER (Hrishikesh Roy, J.)
Heard Mr. A. Goyal, the learned Counsel representing the petitioner. Also heard Mr. M.K. Choudhury, the learned Senior Counsel appearing for the Railways Authorities.
THE ISSUE
2. The Railway is empowered to penalize consignors when excess load is detected, through re-weighment of the loaded railway wagons and the question to be answered by the Full Bench is, whether a show cause notice/ opportunity, should be provided to the consignor, before punitive charge is levied, for the excess load.
3. The matter is placed before the Full Bench, on account of the divergent views taken by this Court in Union of India vs. M/s. Salt Marketing Centre, reported in 1993 (3) GLT 548, where the Division Bench opined that the principles of natural justice must be followed for penalizing a consignor whereas, the counter opinion is expressed in the Union of India vs. M/s. Murali Manahar Enterprises, reported in 1997 (2) GLT 257, where it is held that, parties to the contract in commercial transactions, cannot invoke the writ jurisdiction of the Court. It thus declared that the earlier decision in M/s. Salt Marketing Centre (Supra), was a per incurium decision.
PETITIONER'S ARGUMENTS 4.1 Mr. A. Goyal, the learned counsel for the appellant (writ petitioner) firstly submits that in the case of M/s. Salt Marketing Centre (Supra), there was no binding contract between the Railways and the consignor and thus the punitive charge for the excess load was being levied, under Section 73 of the Railways Act, 1989. On the other hand, the parties in M/s. Murali Manahar Enterprises (Supra), were bound by a contract to pay punitive charge for excess weight and WA No.333/2010 Page 2 of 10 3 therefore the situations in the two cases, are projected to be different. It is thus argued that the decision in M/s. Salt Marketing Centre (Supra) was rendered in the context of the facts of that case and that ratio may not have a direct application in the later decision in M/s. Murali Manahar Enterprises (Supra), since in the latter case, the parties are covered under contractual obligation. 4.2. The learned counsel submits that although power to levy punitive charge is conferred under Section 73 of the Railways Act, when the word "may" is used in the Section, it is a discretionary power to be exercised by the authority. Referring to the provisions of Railways (Punitive Charge for Overloading of Wagon) Rules, 2012 (hereinafter referred to as 'the Punitive Charge Rules'), where the word "shall" is used, the Counsel argues that the Rule cannot override the Railways Act. It is therefore contended that the discretionary power must be exercised in the context of each situation with due opportunity, to the affected party.
4.3 The appellant submits that the consignor is made responsible for the accuracy of the particulars furnished by them in the forwarding note, during entrustment of goods to the Railways but there could be factors unrelated to the consignor, such as a faulty weighbridge or defective weighment etc. when the accuracy of the declared load in the forwarding note, may not match. The Counsel thus questions that where the consignor is not at fault, should they still be automatically penalized.
4.4 Mr. Goyal argues that penalizing a party is a quasi-criminal process and in the event of a bona fide mistake, the consignor should not be subjected to punitive charge, by interpreting the powers under Section 73 of the Railways Act, to be mandatory. The counsel therefore argues that penal provision must not be applied blindly, as the power has to be applied with due discretion, in appropriate situations.
RAILWAYS ARGUMENTS 5.1 On the other hand, Mr. M.K. Choudhury, the learned senior counsel for the respondent/Railways submits that the dishonest intent or delinquency of the consignor, is not a relevant factor for levying punitive charge for overloaded WA No.333/2010 Page 3 of 10 4 wagons, as the objective of the levy is to prevent damage to wagons and the rail tracks and accordingly the counsel submits that whenever overloading of wagons is detected, the punitive charge must automatically be levied and providing opportunity in such cases is unnecessary.
5.2 Since goods were loaded at Owner's Risk by accepting the consignor's declared weight and the concessional rate of tariff was availed by booking the goods at Owner's Risk, the levy of punitive charge for overloaded wagons is contended to be mandatory and not a matter of discretion. 5.3 The Railway counsel refers to the use of the work 'shall', in Rule 3 of the Punitive Charge Rules, to argue that levy of punitive charge is not a matter of option and the penalty for overloaded wagons is mandated by law, in all contingencies where the railway wagons were detected to be overloaded, beyond its normal carrying capacity.
5.4 Mr. Choudhury submits that it will be impracticable to issue show cause notice and provide hearing to the consignor, before punitive charge is levied since the penalty amount is to be collected before the delivery of the consignment, under Section 73 of the Railways Act. The senior counsel therefore contends that if delivery of the goods loaded on wagons, is put on hold to provide opportunity to the consignor, the railway operation at the place of delivery, through blockade of rail track, would be severely jeopardized and it is not at all a viable option.
DISCUSSION & DECISION
6. The submissions made by the learned counsel have received our earnest consideration in the following discussion.
7. The judgment in a later case can be described as per incurium decision only when, a binding verdict for a similar case, is ignored by the Court. But when decisions are rendered in different factual context, the disregarding of the ratio in the earlier case, cannot be said to be a per incurium decision.
8. In appropriate and similar circumstances, respect for an earlier judgment WA No.333/2010 Page 4 of 10 5 should be the norm but exceptions are permitted in deserving cases. Where the facts are dissimilar and the parties are governed by different terms, applying the same verdict would result in unequal treatment. Therefore, when a decision is reached on different facts, the previous decision cannot be described as per incuriam decision, where the Court is confronted with another situation where parity of judgment, will not be warranted.
9. The circumstances in both cases must be alike and only then, consistency of judicial approach can be expected. But in our considered view, the situations in M/s. Salt Marketing Centre (Supra) and M/s. Murali Manahar Enterprises (Supra) were dissimilar and therefore, it was not correct to categorise the earlier judgment as a per incuriam verdict, when the circumstances in the latter case are incompatible.
10. To analyze the issue further, the consignor in the first case i.e. M/s. Salt Marketing Centre (Supra) was not covered by any contract with the Railways but they were penalized for excess load, by invocation of Section 73 of the Railways Act, whereas in the case of Murali Manahar Enterprises (Supra), the parties were covered by a commercial contract. In such differential situation, the ratio of the earlier case may not be applicable in the later decision, since ".... every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generosity of the expressions which may be found there are not intended to be expositions of the whole law, but governed and qualified by the particular facts of the case in which such expression are to be found. The other is that a case is only an authority for what it actually decides............ [Lord Halsbury in Quinn vs. Leatham reported in 1901 AC 495 (506)].".
11. The process to penalize a party for overloaded wagons must be construed as a quasi-criminal proceeding. The detection of excess weight could either be for deliberate defiance of the maximum carrying capacity or faulty re-weighment or even a bona fide mistake of the parties. Therefore in all situations when re- weighment shows excess loading, punitive levy may not be the only WA No.333/2010 Page 5 of 10 6 consequence. The power to penalize should be invoked in appropriate cases and cannot be a matter of course, without providing any opportunity to the affected party. Such imposition in our view, will be arbitrary and fail the test of justice.
12. The Punitive Charge Rules is a piece of subordinate legislation, enacted under Section 87 of the Railways Act. Therefore, the subordinate legislation cannot naturally override the words in the Railways Act. The use of the word 'may' in Section 73, must in our opinion prevail and the word 'shall' in Rule 3 of the Punitive Charge Rules, cannot therefore make it mandatory, to levy punitive charge in all cases, when excess load is detected, through re-weighment of the goods.
13. That apart, only because statutory provision is made for levy of penalty, it cannot be said that penalty must inevitably be imposed in all situations. With the use of word 'may' in Section 73 of the Railway Act, the authority is empowered to exercise discretion and not be bound to levy penalty in every situation. In the context of such a provision, in Employees' State Insurance Corporation vs. HMT Ltd. and another reported in (2008) 3 SCC 35, the Supreme Court held that the enabling power in a statute cannot be construed as imperative. In fact, it was suggested that endeavour should be made to construe such penal provision as discretionary, unless the statute is held to be mandatory in character. In the case before us, the wordings in Section 73 of the Railways Act does not mandate penalty in all cases of excess weight since discretion is available with the authority and therefore, we feel that the discretionary power should be exercised with due opportunity to the affect party.
14. When excess load is detected through re-weighment of the loaded commodities, the authority is empowered to penalize the errant consignor. But in order to fasten penal responsibility, the breach committed by the party must be verified with a modicum of opportunity to the party proposed to be penalized. Unless providing for due opportunity is read into the penalization power, the decision to impose penalty could be arbitrary. In circumstances when the cause WA No.333/2010 Page 6 of 10 7 for the excess weight is not traceable to the consignor, to penalize them simply because of excess weight, would not be justified since the power to penalize, has to be exercised on some rational basis. Therefore as held in State of Bihar and others vs. Industrial Corporation (P) Ltd. and Others reported in (2003) 11 SCC
465), the principles of natural justice must be followed, before a party is penalized.
15. When re-weighment of the loaded commodities on a goods train is done during transportation without the representative from the consignor, the weight in the re-weighment, is taken as the basis for levying the penalty. But penalizing a consignor has not only civil consequences but also tarnishes reputation. In such situation, to require an opportunity to be provided, prior to penalization under Section 73, should in our opinion, be read into, for exercise of penalising power. Merely because provision is available for a representation of the consignor to travel in the goods train, the requirement of an opportunity to be afforded cannot get diluted since, one sided inference is drawn on excess load. There could be bonafide explanation for the higher load recorded in the re-weighment process. Therefore to rule out any such eventuality, an opportunity of rebuttal must in our understanding, be provided to the consignor.
16. If we consider the implications for the party to be penalized, to deny them the opportunity when civil and penal consequences will follow, would be unfair and unreasonable. Such consequences will not be justified without verifying whether it is a case of deliberate infringement of the carrying capacity of the wagons.
17.1 The issue of penalizing a dealer, for their failure to register under the Orissa Sales Tax Act, 1947, was examined in M/s Hindustan Steel Ltd. Vs. State of Orissa reported 1969 (2) SCC 627, and in that context, the Supreme Court declared that WA No.333/2010 Page 7 of 10 8 ".................
The liability to pay penalty does not arise merely upon proof of default in registering as a dealer. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or acted in conscious disregard of its obligation. Penalty will not also be imposed merely it is lawful to do so. Where penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Those in charge of the affairs of the Company in failing to register the Company as a dealer acted in the honest and genuine belief that the Company was not a dealer. Granting that they erred, no case for imposing penalty was made out.
......................"
17.2 Applying the ratio laid down in Hindustan Steel Ltd. (supra), a Division Bench of this Court in the case of Brajalal Banik Vs. State of Tripura, 79 STC 21, held that imposition of penalty cannot be an automatic consequence of a failure to pay due tax. That was a case dealing with imposition of penalty under the Tripura Sales Tax Act, 1976 for failure to pay sales tax by the due date. It was held that penalty cannot be imposed without hearing the affected party; hearing has to be given even if there is no express provision in the statute for such hearing.
17.3 Following the above decision, in Vishal Retail Ltd. Vs. State of Assam, (2015) 1 GLR 711, where a Division Bench of this Court was considering the question as to whether contravention of the provisions of the Assam Value Added Tax Act, 2003 would lead to automatic imposition of penalty, it was held that there cannot be automatic imposition of penalty. It was further held that imposition of penalty is a coercive measure and, therefore, the order of penalty should be a speaking order. This would require application of mind to all the relevant factors including the response of the affected person upon notice. The power to impose penalty is discretionary and therefore must be exercised in a reasonable and rational manner, otherwise it would be arbitrary and capricious. 17.4 According to us, the above enunciation of the law on imposition of penalty, should also apply for penalization for overloaded wagons, under Section 73 of the Railways Act.
18. The punitive levy under Section 73 of the Railways Act is intended to WA No.333/2010 Page 8 of 10 9 protect the wagons and tracks from being subjugated to excess wear and tear. But to inevitably penalise the consignor on each occasion when excess load is detected through re-weighment, would hardly be fair without providing any opportunity. The detection of excess load beyond what was declared in the forwarding note, may prima facie lead to an adverse inference against the consignor. But such presumption cannot be the basis of penalty without any opportunity to the consignor since what is recorded may not convey the entire picture and there could be mitigating factors. Therefore to rule out the penalizing of an innocent consignor, an opportunity must be provided.
19. The Railway authorities are empowered under Section 73 to recover penalty when a consignment is found to be heavier than the declared weight. But the section requires the issue to be resolved, before delivery of consignment. But the figure in the re-weighment should not in our understanding be the cause for penalizing and an opportunity must be provided to the consignor to establish that they should not be fastened with punitive charge. To insist on adherence to the principles of audi alteram partem before anyone is penalized, would prevent arbitrary penalization and further the cause of justice.
20. In so far as the impracticability of providing opportunity, before punitive charge is levied on account of the Section 73 prescription for recovery of all dues before delivery of goods, the difficulties expressed by the Railways counsel, cannot be said to be unsurmountable. Some workable mechanism can always be evolved to defer recovery of punitive charge, till after delivery of the consignment. In fact, Section 83 of the Railways Act provides for subsequent recovery of charges, payable to the Railways and hence recourse to the Section 83 to levy penalty can also be an option, when punitive charge for overloaded wagon is proposed to be realized, from an errant consignor. This aspect can certainly be addressed by the Railways so that recovery of legitimate levy is not affected, even after due opportunity is afforded.
WA No.333/2010 Page 9 of 10 1021. Following the above discussion, we are of the considered opinion that the view expressed in M/s Salt Marketing Centre (supra) on levy of punitive charge was the correct enunciation of law and the contrary opinion in the M/s Murali Manahar Enterprise (supra), does not lay down the correct law. The issue is decided accordingly and all consequences will thus follow.
JUDGE JUDGE JUDGE
Barman/Datta
WA No.333/2010
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