594

UNION OF INDIA

v.

WEST COAST PAPER MILLS LTD.

October 14, 1970

(J. C. SHAH AND A. N. GROVER, JJ.]

Indian Railway A.ct, 1890, s. 24-Railway Rates Tribunal constituted

under s, 24-Jurisdiction of Tribunal under s. 41(1)(b)-Subject to

limitatlons in ss. 29 & 42-Tribimal can give relief if he rates between two

stations are unreasonable and. discriminatdry and thereby in contravention

of s. 28.

The respondent coinpany had a factory which

was situated in Dandeli

at the terminus

of· Alnawar-Dandeli branch of the southern Railway. It

used the branch line for transporting coal, limestone etc. required for its

manufactt1ring activities and also its manufactured products. Initially

the Railways were

levyirig freight on this branch line at

"common rates"

for all commodities on "a weight basis". On representations made by the

users

of this branch line, the Indian Railways substituted, with effect from

February I,

1964, the

"standard telescopic class rates". In charging the

goods freight, however, the actual distance of the branch line

was

multi­

plied by three. The company filed a complaint before the Railway Rates

Tribunal and challenged

as

"unjust, unreasonable and discriminatory" the

method of

levy of freight on goods traffic. The company claimed that the

levy

of rates offended the provisions .of s. 28 of the Indian Railways Act,

1890, and that the existing rates were per se unreasonable The company

claimed a . deeiaration that the rates between he tsations specified in the

complaint were unreasonable and a llirection to the Railway to levy with

effect from the date of the complaint standard rates and charges for the

traffic on the branch line without "inflating the distance". The Union di

India as representing the Southern Railway defended the complaint and

contended that the rates were reasonable,. that they were not discrimina­

tery, and since they were fixed by· order of the Central Government the

Tribunal

was precluded from questioning the legality and propriety

thereof. The

.Tribunal held that the rates in question were in contraven­

tion of s. · 28 of the Act being unreasonable and discriminatory. It further

held that it had jurisdiction under

s. 41 (1) (b) of the Indian Railways

Act to consider the complaint. .

By special leave appeal against the

deci­

sion of the Tribunalwa s filed by the Union of India in this Court. The

Court had to consider the question

of the. Tribunal's jurisdiction under

s. 41

(I) (b) in the light of R. 63 of Goods Tariff No. 28, Rule 69 of

Goods Tariff No. 29 and

ss. 29 and 42 of the Railways Act.

HELD : Rules

63 of Goods Tariff No. 28 and 67 of Goods Tariff No.

29 refer to

"station-to-station" rates. In s. 4f(l) (b) the expression used

·is not 'station~to-station rates but a rate between two stations which is

unreasonable. There is nothing in the rul.es which even indirectly affects

the jurisdiction

of the Tribunal to determine whether the

rates for carriage

of certain specified commodities between the two stations are unreason­

able. [601 E]

The Tribunal is invested with the authority subj.Ct to tire limitations

contained in s. 29(3) and s. 42 to entertain a complaint and to give re­

life n respect of rates which are found to be unreasonable between two

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UNION v .. WEST COAST PAPER MILLS (Shah, /,) 59 5

stations. The complaint made by the company in the present case did

not seek intervention of the Tribunal in matters which may be raised only

for decision to the Central Government by s. 29 and s. 42 of the Act,

and the Tribunal had not

given any relief in contravention of these

pro­

visions. The Tribunal had merely declared that the chargeable rate di

freight determined by multiplying by three the distance over which the

goods

were transported, for specific commodities, was in contravention of ·s. 28 of the Indian .Railways Act. The relief thus granted by the Tribunal

was within its jurisdiction. [601 G]

The· view expressed by one of the members of the Tribunal that even

if the Tribunal holds that the rates between · two stations in respect of a

specific commodity are unreasonable, it cannot make a declaration to that

effect, must be rejected. Such a view would deprive the Tribunal of its

power 10 give formal shape to its view. [602 A-BJ

C1v1L A.PPELLATE JURISDICTION : Civil Appeal No. 1742 of

1966.

Appeal by special leave from the judgmertt and order dated

April

18, 1966 of the Railway Rates Tribunal at Madras in

Com­

plaint No. 4 of 1963.

Jagadish Swarup, Solicitor General, A. S. Nambyar and S. P.

Nayar, for the appellant.

H. R. Gokha/e, M. K. Ramam11rthi, Shyamala Pappu and

B. D. Sharma, for the respondent.

B The Judgment of the Court

was delivered by-

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Shah, J.-This is an appeal with special leave against the order

of the Railway Rates Tribunal constituted under

s. 34 of the Indian

Railways Act

9 of 1890.

The West Coast

Paper Mills Ltd.-hereinafter. called · 'the

Company'-is a manufacturer of paper and paper products .. It has

set up a factory at Bengurnagar

in Dandeli at the terminus of

Alnawar-Dandeli branch line of the Southern Railway. This

,branch line 32 Kilo-meters in leugth

was a

"lfght railway" cons­

tructed and opened for traffic by the Government of Bombay in

1919, .principally for the purpose of transporting forest produce

collected in the surrounding region. With the reorganisation of

the States under the States Reorganization Act the ownership of

the Railway passed to the Mysore Government. The Railway

was

finally taken over by the Government of India with effect from

October

l, 1962, and now forms part of the Indian Railways.

The

Company used the branch line for transporting coal, lime-·

stone etc. required for its manufacfuring activities, and also for.

transporting its manufactuied products. Initially the Railwavs

'Were levying freight over this branch line at "common rates" for

596 SUPREME COURT REPORTS_ [1971]2 S.C.R.

all commodities on "a weight basis". On representations made by

the users of fhis branch line, the Indian Railways substituted, }Vith

effect from February l, 1964, the "standard t~lescopic class rates'

In charging the goods freight, however, the actual distance of the

.branch line was multiplied by three.

A

The Company filed a complaint before the Railway Rates Tri-B

bunal

anc! challenged as

"unjust, unreasonable and discriminatory"

the method of levy of fr~ight on goods traffic. The Company

claimed that the levy of rates offended the provisions of

s.

28 of

;he Indian Railways Act, 1890, and that the existing rates were

per se unreasonable. The Company Claimed a declaration that the

rate between the stations specified in the complaint were unreason- c

able and a direction to the< Railway to levy with effect from the date

of the complaint standard. rates and charges for the traffic on the

branch line without "inflating the distance··.

The Union of India as representing the Southern Railway de­

fended the complaint. They contended that the introduction of

"standard rates and fares" over the section "on a continuous dis­

tance basis with three times inflation of the chargeable distance"

for goods was made on the authority of the Central Government

under its directive and the Railway Rates Tribunal

is

precluded

from questioning its legality or propriety. They also contenclcd

that in any event the levy is not unjust, unreasonable or discri;ni­

natory; that the increased rate on the basis of "inflated distance"

was in vogue in different sections of the Indian Railways; that such

inflation was adopted.either because of the higher cost of operation

of the particular section or because of unusually heavy capital costs

involved

on a particular system of Railway and for similar reasons;

that the

"reason for inflation" on the branch line was due to br~e

capital investment for the rehabilitation of this branch line by the

Central .Government it was taken over from the previous owners;

that before the branch line was purchased it was. working at a loss

for a number

ot years and for effectively working the branch line

it had become necessary to undertake

c,xtensive repairs and renewal

work including complete relaying of the track, construction of

crossing stations etc; that the total costs of such repairs and renewal

was Rs. 28.99 lakhs, and that even after the introduction of higher

rates and fares with ·~three times inflation" in distance, the users

of branch line will be paying less than what they were paying be­

fore the introduction of the new rates. The Union denied the

charge of discrimination and undue preference

and contended that the Tribunal had no jurisdiction to hear the complaint merely be­

cause the Company had selected certain commoditi9S and certain

sets

of stations in suppoFt of its grievance under s. 41(1)(b) of the

Indian Railways

Acti 1890.

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UNION v. WEST COAST PAPER MILLS (Shah, J.) 597

A On the pleadings before the Tribunal, six issues were settled,

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four of which are material :

"(I) Is the complaint not maintainable against the

respondent (Union of India) under s. 41 ( 1 J(b) of

the Indian Railways Act, 1890 (Act 9 of 1890)?

(2) Whether rates for the carriage of complainant's

traffic have become unreasonable

as a result of

inflating the chargeable distance

OYer the

Alnawar-Dandeli Section ?

(3) Whether the impugned method of charging on

inflated distance (at three times the actual dis­

tance over ihe Alnawar-Dandeli Section to arrive

at the distance for charge) is governed by

any

order of the·Central Government,

·and, if so,

whether the complaint is not maintainable for·

the same reason ?

(4) Whether the respondent (Union of India) in

charging the complainant's traffic over the

Alnawar-Dandeli Section at tariff rate on conti­

nuous distance basis, but with three times the in­

flation in the chargeable distance over the Sec­

tion, is subjecting the complainant's traffic_ to the

undue prejudice in contravention of S; 28 of the

Indian Railways Act ?"

Tho Tribunal decided the case against' the Railway Administration ..

In the view of the Chairman and Mr. Munshi (one of the members

of the Tribunal) on issue No. ( 1) the complaint was maintainable

against the Union of India under s. 41 (l )(b) of the Indian Railways

Act. They observed that though a class rate between two stations

for a commodity would fall outside the scope of

s. 41(J)(b), it

was

still open to the ('.:ompany to make a grievance in respect of the

selected few items for the purpose of attack. On Issue No. (2} ·

they held that the Railway had not made out any "justification for

inflating the chargeable distance over the Alnawar-Dandeli Sec-

tion''. On Issue No. (3) they held that the jurisdiction of the

Tribunal

to examine the validity of the

impugned method of charg­

ing the distance by a umltiple of three of the actual distance over

the section to arrive at the distance for determining freight, though

governed by the order of the C~ntral Government, was not exclud­

ed.

On Issue No. (4) the Chairman observed:

H

"There, is no doubt that the order in

question (Ext. B-4) is one issued under Section 29(1) or

the Act.

If the Tribunal were to give any relief which

might have even indirectly the effect of cancelling the

~aid

II--L436 Sup CI/71

598 SUPREME COURT REPORTS (1971 J 2 S.C.R.

order, it would amount to changing the maxima. and

minima rates and the level of class rates applicable to

Alnawar-Dandeli Section which would not be within its

power or jurisdiction. However, if it declared only cer­

tain rates for specific commoditi~s between specific pairs

of stations to be unreasonable and

fixed new rates in lieu

thereof. the level of

class rates as such would not be

iilfected. If such rates are based on the actual distance

they would also fall within the maxima and minima

under the inflated distance sanctioned

by Ext. R-4. I,

therefore,

find that

though the method of charging on

inflated distance over the Alnawar-Dandeli Section

is

governed by the order of the Central Government (Ext.

R-4) this Tribunal

does not lose jurisdiction to decide on

the unreasonableness of rates arrived thereby and the

complaint cannot

be said to be not maintainable for

thac

reason."

Mr. Munshi agreed with that view. In his view charging the com­

. pany's traffic ewer the branch line at tariff rates on continuous

distance basis but at three times the chargeal)le distance over the

branch line

was

"unwarranted, unjustified and therefore unreason­

able.

Mr.

V. K. Rangaswami the third member of the Tribunal

agreed with the Chairman and Mr. Munshi on the issue of

un­

. reasonableness of the rate charged by multiplying the disurnce by

three.

He also

agre'ed that the jurisdiction of the Tribunal to enter-

tain a complaint relating to levy of unreasonable charges between

specific stations

was not excluded. But he differed with the other

members

on the competence of the Tribunal to declare invalid the

method of levy of freight

ar1d to tix new rates in lieu of rates declar·

ed unreasonable.· In the opinion of the majority it was competent

to the Tribunal to

do so. Mr. Rangaswami held that it was for the

Railway Administration to consider the matter and to take action

to cancel the inflated distance· over the branch line generally, and

to fix

new rates.

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The Tribunal. by a unanimous order made the following G

directions :

" ...... !hut the class rate with inflated distance

applicable to the Alnawar-Dandeli Branch, subject the

complainant to an undue disadvantage

in contraventiion

of Section 28

o[ the Indian Railways. Act, and also ren-

der unreasonable

per se

the rates for the complainant's H

traffic to and from.Dandeli."

Against that order, this appeal has been filed with special leave.

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UNION V. WEST COAST PAPER MILLS (Shah, J.) 599

The relevant provisions of the Indian Railways Act 9 of 1890_

may be briefly set out :

s. 28-"A railway administration shall not make or give any

undue or unreasonable preference or advantage

to, or

in favour of, any particular person or railway

adminis·

tration, or any particular description of traffic, in any

respect whatsoever, or subject any particular person

or railway administration or any particular descrip­

tion of traffic to any undue or unreasonable prejudice

or disadvantage

in any respect

whatsoever."

s. 29-"(l) The CentraJ Government may by general or spe­

cial 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)

(3) Any complaint that a railway administration is

contravening any order issued by the Central Govern­

ment under sub-section (1) shall be determined by the

Central Government."

s. 41-"(1) Any complaint that a railway administration­

(a) is contravening the provisions of section 28, or

(b) is charging for the carriage of any commodity

between

t\Vo stations a rate which is

unreason­

able, or

(c)

may be madi; to the Tribunal, and the Tribunal shall

hear and decide any such C011iplaint in accordance

with the provisions of this Chapter.

s. 42-"The Central Governrr11!11t alone shall have power­

(a) to' classify or reclassify any commodity;

(b) to increase or reduce the level of class rates and

other charges."

The jurisdiction conferred upon the Tribunal by s. 41 and re­

lating to matters set out in claus~ (a) to (c) thereof is restricted by

.the !~ ?f s. 29(3) an~ s. 42.. Section 28 prohibits a railway

atlJn!n1stration from m~l'1ng und~I'. pre~erence or subjecting any

particular person or railway adnurustrauon or any particular des­

cription of traffic to any undue or unreasonable prejudice or dis­

advantage. But even in a dispute relating to the matters set out in

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600 SUPREME COURT REPORTS . [1971) 2 S.C.R.

s. 41(1)(a), (b) and (c), where the Central Government has fixed

by general or special order maximum and minimu':11 range of rat~s

for the whole or any part of a railway the complamt that the rail­

way administration has contravened any order issued by the Central

_ Government may be determined by the Central Government and

not by the' Tribunal. Similarly, the Central Government has and

the Tribunal has not the power to classify or reclassify .any com­

modity and to increase or reduce the level of class rates and other

charges. Subject to these restrictions, the Tribunal has the power

to determine whether the Railway Administration has acted in

contravention of the provisions of

s. 28, i.e. it has

gra.n.ted any un­

due or unreasonable preference or advantage to, or in favour of

any particular person, or shown any undue or unreasonable pre­

judice or disadvantage to any person or railway administration or

any particular descrjption of traffic, and

was charging for the

carriage of any commodity between

two stations a rate which was

unreasonable or was levying any other charge which was

unreason­

able.

In the present case the maximum and minimum range of rates

have been

fixed by

t)!e Central Government. A complaint that

t.he railway administration has acted in contravention of the order

issued by the Central Government

may be determined by the

Cen­

tral Gov~rnment and not by the Tribunal. Again the Central

Government alone has the power to classify or reclassify any com­

modity or t.o increase or reduce the level of class rates anJ other

charges. The Tribunal accepted

these limitations upon the

exer­

cise of its powers. The Tribunal however found that the charge

inad~, by the railway a<lministration under the order of the Railway

Board levying tariff at the standard rates but on the footing that

for each kilo meter the goods are transported the charge

will be

levied at three times

the standard rate is unreasonable and

discri­

minatory. The finding proceeds upon appreciation of evidence

which has been examined in great detail. The finding of the Tri­

bunal cannot be challenged in this appeal with special leave under

Art.

13 6 of the Constitution, and no attempt has been made to

challenge before

us that finding.

On behalf of the Union it was urged by the Solicitor-General,

that the impegned rates were "station to station rates", and relying

upon certain rules framed by the Railway Board, Counsel contend·

ed in respect of station-to-station rates the Tribunal had no juris·

diction to give relier. Rule 63 of Goods Tariff No. 28 in force

from August

1,

1950, provided for the station-to-station rates as

one of the types of rates chargeable. Clause (7) provided that a

"station-to-station rate" is a special rate for the total distance bet­

ween two specific points (stations only): and cl. (8) provided

that :

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UNION V. WEST COAST PAPER MILLS (Shah, J.) 601

"Station-to-station rates are as follows-

(i) those between two stations on the same Railway,

that

is, local station-to-station rates;

(ii) those between a station on one railway and a

station on another

railway."

Similarly in Rule 67 of Goods Tari.ff No. 29 in force from June 1,

1954, similar definition of station-to-station rates was given. In

Rule 67 of Goods Tariff No. 29 effective from October 1, 1958,

rates were divided into two

types-(i) Class rates; and (ii)

station· ·

to-station rates. By cl. ( 3) it was provided :

''(i) 'Station-to-station rate' means a special reduc4d

rate applicable to a specific commodity b<Xi"ai

from one specified station to another speoified

station.

(ii) Station-to-station rates may be quoted from and

to stations on the same railway or from a station

on one railway to a station on another railway."

These rules have, in our judgment, no releVllllQD in determini'lg

the matter in dispute in

thi.s appeal, for in s. 41 (1 )(b) the

expres­

sion used is not "station-to-station rates", but a rate between two

statioas which

is unreasonable. There is nothing in the

rtlles which

even indirectly affects th.e jurisdiction of Tribunal to determine

whether the rates for carriage of certain specified commodities

between two stations are unreasonable. The Tribunal has express·

ly observed that the relief granted to the Company must be within

the range of rates prescribed by the Central Government. The

Tribunal has expressly observed. tliat it

is incompetent to grant

re­

lief >Which might e"l'en indirectly cancel the order of the Central

Government under ·s. 19(1), for, it would amount to changing the

range and level of class rates applicable to the branch line. But

if the Tribunal declared that only certain rates for specific com­

modities, between specified pairs of stations, are unreasonable, the

level of class rates

is not affected. The Tribunal is invested with

the authority subject to the limitations contained

in s. 29(3) and

s. 42 to entertain a complaint and to give relief in respect of

&ates

which are found· to be unrea ionable between two stations. The

complaint made J?y the Company did not ~eek intervention of the

Tribunal

in

matters which may be raised only for decision to the

Cenft1\l-Govem:nent bys. 29 a1Jd s. 42 of the A.ct, and the Tribunal

has not given any relief in contraventio11 of those provisions. The

Tribunal has merely declared that the charging rate of freight

determined by inultiplying by three th~ distance over which the

goods are transported for specific comm0dities is in contravention

of

s.

28 of the Indian Railways Act, 1890.

602 SUPREME COURl" REPORTS (1971] 2 S.C.R.

We do not see force in the opinion expressed by Mr. V. K. A

Rangaswami and even if the Tribunal holds that the rates between

two stations in respect of a specific commodity are unreasonable,

it cannot make a declaration to that effect. Such a view would

deprive the Tribunal of its power to give formal shape to

its view.

We are not called upon to decide whether the Tribunal has power

to

fix rates in substitution of rates declared unreasonable in exer-B

cise of the jurisdiction under.

s. 41(1)(b), because no such rates are

fixed by order of the Tribunal.

The relief. granted

by the Tribunal is, in our judgment, within

· its jurisdiction.

The appeal fails and

is dismissed with costs. C

G.C. Appeal dismissed.