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PETITIONER: UNION OF INDIA

       Vs.

RESPONDENT: M/S.  MODI INDUSTRIES LTD.

DATE OF JUDGMENT30/03/1973

BENCH: GROVER, A.N. BENCH: GROVER, A.N. MATHEW, KUTTYIL KURIEN

CITATION:  1973 AIR 1281            1973 SCR  (3) 835  1973 SCC  (1) 781

ACT: Indian Railways Act, 1890 Ss. 26 and 41-Complaint in respect of past dues cannot be made under s. 41 before Railway Rates Tribunal--In such cages. v. 26 of Act is not a bar to a suit in civil court and question of reasonableness of charges can be gone into by civil court.

HEADNOTE: By  agreement dated July 4, 1933 the respondent company  was liable to pay charges for a railway siding at agreed  rates. Clause  23 of the agreement laid down that it shall be  open to the Railway Administration on giving six months notice of sum  intent, to revise the said charges.. Clause 24  related to  termination of the agreement in the event of  nonpayment of dues within one month of demand., On March 26, 1949  the- railway  authorities informed the respondent that the  rates were  proposed  to be increased with effect  from  April  1, 1949.   The  respondent objected" to the increase  as  being against clause 23 of the agreement.  By a subsequent  letter in September 1951 the Divisional Superintendent of the Rail- way  asked the respondent to pay the charges at much  higher rates.   There  was  prolonged  correspondence  between  the parties  without the respondent agreeing to pay  the  higher rates  demanded.   On September 29,  1955  the.   Divisional Engineer  addressed  a letter to  the  respondent  proposing revision  of  the siding charges with effect from  April  1, 1956  after the expiry of six months according to clause  23 of the agreement.  These proposed’. charges were much  lower than  the charges demanded by the earlier letters..  On  May 17, 1957 the General Manager of the Railway sent a letter to the  plaintiff for payment of Rs. 93,981-8-0 in  respect  of the  period  December  1  1949 to March  31,  1956.  it  was intimated  that on failure to make the said  payment  within one  month the supply of wagons would be stopped’ and  steps to determine the agreement would be taken., In May 1957  the respondent served a notice under s. 80 of the Code of  Civil Procedure  and’  thereafter filed a suit.  The  trial  court partly  decreed  the suit.  The High, Court  decreed  it  in toto.  In the appeal by certificate to this Court, filed’ on behalf  of the Union of India, the questions that  fell  for consideration  were  :  (i)  whether  the  civil  court  had jurisdiction  in  view  of  Ss. 26 and’  41  of  the  Indian

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Railways Act, 1890, to determine the reasonableness; of  the charges-,  (ii)  whether  the  courts  below  if  they   had jurisdiction  were  justified in holding the charges  to  be unreasonable. Dismissing the appeal, HELD  :  (i) From the facts it appeared that the  rates  are being revised and actually enhanced, but then the matter was kept  pending and there was exchange of  correspondence  and discussion between the parties from time to time.  No effort was  made to enforce the demand made in the various  letters and the plaintiff was allowed to make payments according  to the  rates originally agreed.  It was only in May 1957  that the respondent was really threatened to make payment of  the outstanding  amount calculated at the revised rates on  pain of  the  supply of wagons being stopped  and  the  agreement being determined. According to the decisions of this Court it was hardly  open to the respondent to file a complaint under s. 41 of the Act with regard to the. 836 Reasonableness  or otherwise of the rates and charges  which had  already ’become due and payable.  The plaintiff had  no grievance  whatsoever with :regard to the charges which  had been fixed with effect from April 1, 1956.  By means of  the letter dated September 29, 1955, and therefore there was  no question  of its filings, a complaint with regard to  those charges.   Its  grievance was confined only  to  the  amount which  was  being  demanded  on the  basis  of  the  revised enhanced rates between the period December 1, 1949 and March 1,  1956.  If that amount bad actually been realised by  the railway authorities the plaintiff could only file a suit for its  refund and could not have laid a complaint under s.  41 of  the  Act before the Railway Tribunal.   By  analogy  the plaintiff  could not have filed a complaint with regard  to the  past dues as the Railway Tribunal could not have  given any  relief in respect thereof ’following the law laid  down by this ,Court.  In this view of the matter apart from other questions  involving  the  validity  of  clause  23  of  the agreement  as also of the notice or intimation of  rates  on the  ground on noncompliance with its terms the suit  ,could not  be  held barred under s. 26 of the Act  and  the  civil court could grant the relief claimed. [842H-843P] Union  of  India  v. The  Indian  Sugar  Mills  Association, Calcutta,  [1967]  3 S.C.R. 219, Raichand  Amulakh  Shah  v. Union  of  India, [1964] 5 S.C.R. 148 and Upper  Doab  Sugar Mills  Ltd.  v. Shahdara (Delhi)  Saharanpur  Light  Railway Company Ltd., [1963] 2 S.C.R. 333 at p. 342, referred to. (ii) There was no serious infirmity in the reasoning of  the High  Court by which it arrived at the conclusion  that  the question  of reasonableness of the charges, keeping in  mind the  ’facts  of  this case, was justiciable.   Nor  bad  any justification  been  shown  ’for  reopening  the  concurrent finding  of the two Courts below that the rates  which  were demanded for the period in question were unreasonable.   The suit was thus rightly decreed. [843E]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1616  of 1967. Appeal  by certificate from the judgment and order dated  ’- September  30,  1966 of the Allahabad High  Court  in  First Appeal -No. 198 of 1960. Gobind Das and B. D. Sharma, for the appellant.

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C. B. Agarwala, Uma Mehta, S. K. Bagga, Swreshta Bagga and Ram Arora, for the respondent. The Judgment of the Court was delivered by GROVER,  J.---This  is  an  appeal  by  certificate  from  a judgment ,of the Allahabad High Court in a suit filed by the plaintiff-respondent   for   an   injunction   against   the defendant-appellant  restraining it from realizing the  sum, of Rs. 93,981-8-0 on account of the alleged siding  charges for  the period December 1, 1949 to March 31, 1956 and  from stopping  the supply of wagons in the railway siding of  the plaintiff  and further from cancelling the agreement  ,dated July 4, 1933 for the aforementioned reason. The  facts necessary for deciding the appeal may be  stated. By means of an agreement dated July 4, 1933 the  plaintiff entered  into an agreement with the Secretary of  State  for India-in-Council  through  the agent of  the  North  Western Railway (now represented 837 by the Union of India) whereby it was agreed that the former shall  Jay a railway siding from Begamabad Station  Yard  of that  railway  for enabling the plaintiff to  carry  on  its business  at its, premises.  Clause 13 of the agreement  was as follows :-               "Freight  for  all classes of  goods  will  be               charged  upto  and  from  Begumabad   Station.               Railway Receipts and invoices shall be  issued               to and from the station only and in accordance               with the rates from time to time published  in               the Goods Traffic Books of this Railway  Admi-               nistration will make the following charges  in               each  direction  from every  wagon  loaded  or               empty  in  or removed from the lines A  and  B               mentioned in clause 15 below               (1) Per 4 wheeled wagon Re. One.               (2) Per 6 wheeled wagon Re. One and annas                          eight                     (3) Per 8 wheeled wagon Re. two."               Clause 23 of the agreement provided               "Notwithstanding  anything  laid down  in  the               foregoing clauses of this Agreement, it  shall               be  open  to  the  Railway  Administration  on               giving  six months notice of such  intent,  to               revise the charges laid down in clauses 8, 12,               13 and 19 of this Agreement". Clause  24  related to termination of the agreement  in  the event of non payment of dues within one month of demand.  On March  26,  1949 the Divisional Superintendent of  the  E.P. Railway (successor in interest of the North Western Railway) informed  the plaintiff that the rates were proposed  to  be increased  with  effect from April 1,  1949,  the  increased charges being mentioned in that letter.  As this  intimation was  not in accordance with clause 23 of the  agreement  the plaintiff   refused  to  agree  to  the   increase.    Other objections  were ’also raised, one of the  objections  being that   the   charges   were   excessive.    The   Divisional Superintendent  addressed  another letter on  May  18,  1949 informing  the plaintiff that with effect from  December  1, 1949  the charges mentioned therein would be made.   A  good deal   of   correspondence  and  discussions   between   the representatives of the plaintiff and the railway authorities took  place  and  by  a  letter  dated  July  20,  1951  the Divisional Superintendent intimated that the revised  siding charges  in  force from December 1, 1949  were  purely  pro- visional  and  were  subject  to  revision.   Meanwhile  and subsequent to the above date the required tests were made to

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determine  the  charges.  In September 1951  the  Divisional Superintendent  wrote  to  the  plaintiff  that  the  siding charges should be, paid with effect 838 from December 1, 1949 to September 30, 1951 at the following rates :-   (i) Per 4 wheeled wagon           Rs.     51-   (ii) Per 6 wheeled wagon          Rs.     7/8/-   (iii) Per 8 wheeled wagon         Rs.      10/- The   plaintiff  protested  against  what  was  called   the exorbitant nature of the charges and made it clear that  the letter  of September 1951 did not comply with clause  23  of the  agreement and that the charges were  unreasonable  and could  not  be  legitimately  made.   Another  letter  dated October  26/November  6,  1951 was sent  by  the  Divisional Superintendent  saying that the siding charges to be  levied with effect from first October 1951 were being assessed  and would be intimated to the plaintiff and meanwhile it  should ,continue  to  pay  the charges demanded in  the  letter  of September 1951 provisionally.  The Divisional Superintendent addressed another letter dated November 27, 1951  explaining the  result of the test and the actual cost of the  shunting etc.   A  demand was made’ that the revised  siding  charges should  be paid from December 1949 to September 30, 1951  at Rs. 4/- per 4 wheeler, Rs. 6/per 6 wheeler and Rs. 8/- per 8 wheeler.  The plaintiff, however. did not pay the  increased rates  demanded.   On  September  29,  1955  the  Divisional Superintendent addressed a letter to the plaintiff proposing revision  of  the siding charges with effect from  April  1, 1956  after the expiry of six months according to clause  23 of  the  ,agreement.   The  charges  as  demanded  were   as follows:--      (i) 4 wheeled wagon Rs. 1 20/-      (ii) 6 wheeled wagon     Rs. 2 -10/-      (iii) 8 wheeled wagon    Rs 3 501- On  May 17, 1957 the General Manager of the Railway  sent  a letter  to the plaintiff for payment of the, amount  of  Rs. 93,981-8-0  representing the difference between the  amounts due  from  December  1,  1949 to March  31,  1956.   It  was intimated  that on failure to make the said  payment  within one month the supply of wagons would be stopped and steps to determine  the  agreement would be taken.  In May  1957  the plaintiff served a notice under s. 80 of the Civil Procedure Code  to be defendant and ,.hereafter in October  1958  the suit out of which the appeal has arisen was filed. Out of the issues framed by the trial court on the pleadings of the parties the following need be mentioned               (1)   "Whether  the enhancement of the  siding               charges  by  the  defendant  is   unjustified,               exorbitant and illegal ?               8 39               (2)   Whether the demand of Rs. 93,981-8-0  by               the defendant is illegal ?               (3)   Whether the court has no jurisdiction to               try the suit ?" On  issue.   No.  1 the trial court held  that  the  charges demanded were unjustified and exorbitant.  It was held  that out  of  the  demand of Rs. 93,981-8-0 the  demand  for  Rs. 22,111-3-0  was  illegal.  On issue No. 4  the  trial  court expressed the view that it had jurisdiction to try the  suit in respect of that portion of the claim whereby the legality of  the  enhanced  siding charges  had  been  challenged  on account of being in violation of clause 23 of the  agreement but it had no jurisdiction to try the suit in respect of the second  ground whereby the enhanced siding charges had  been

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challenged as unjustified and exorbitant. The  plaintiff appealed to the High Court and the  defendant filed cross objections.  The High Court affirmed the finding of the courts below that the enhancement made by the Railway Administration  was highly unjustified and exorbitant.   But it  did  not accept its finding about the  legality  of  the enhancement and also on the question of the jurisdiction  of the  civil  court.  The appeal was consequently  allowed  in toto and the cross objections were dismissed. The  principal  question which has been agitated  before  us relates to the jurisdiction of the civil court to  determine the  reasonableness of the charges.  A  subsidiary  question has  been  raised  that assuming the  civil  court  had  the jurisdiction,  whether  the courts below were  justified  in holding  that  to  be  unreasonable.   For  the  purpose  of determining  the question of jurisdiction we shall  have  to examine the relevant provisions of the Indian Railways ,Act, 1890, hereinafter called the ’Act’.  Section 3 contains  the definitions.  Clauses 11 and 13 defining the words "traffic" and rates" are as follows -               "(11) "trafic" includes rolling stock of every               description as well as passengers, animals and               goods;               (13) "rate" includes any fare, charge or other               payment  for  the carriage of  any  passenger,               animal or goods"; Chapter V headed "traffic facilities" commences with S.  26. According  to that section except as provided in the Act  no suit  shall be instituted or proceedings taken for  anything done  or any omission made by the Railway Administration  in violation or contravention of any provision of that Chapter. Section   27   (1  )  places  a  duty   on   every   Railway Administration  to afford all reasonable facilities for  the receiving,  forwarding  and delivering of traffic  upon  and from the several railways belonging to or worked 840 by  it and for the return of the rolling stock.  Section  29 is as follows :-               S.29  (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               of 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".. Section 34 relates to the constitution of the Railway  Rates Tribunal for the purpose of discharging functions  specified in Chapter V. Sections 39     and  40 give the  jurisdiction and powers of the Tribunal, Section 41  to the extent it  is material may be reproduced :-               S.41 (1)   "Any   complaint  that  a   railway               administration-               (a)   is contravening the provisions of s.  28               or               (b)   is  charging  for the  carriage  of  any               commodity between two stations a rate which is               unreasonable or

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             (c)   is  levying  any other charge  which  is               unreasonable, may  be, made to the Tribunal, and the Tribunal  shall  hear and  decide  any  such  complaint  in  accordance  with  the provisions of this Chapter".               (               2               )                ................................................... .               (3)   In the case of a complaint under  clause               (b)  or  clause  (c) of  subsection  (1),  the               Tribunal  may fix such rate or charge-  as  it               considers reasonable :               Provided               that .........................................               (4)........................          " on  behalf of the appellant the bar created by the s. 26  to the  jurisdiction of ordinary courts has been  invoked.   It has  been  argued that s. 29(2) postulates the  fixation  of rates  of  charges other than those contemplated  by  sub-s. (1).    If   there  is  any  grievance  that   the   railway administration is levying a charge which is unreasonable  it will be covered by S. 41 (1) (c) and there- 841 fore,   only  a  complaint  can  be  made  to  the   railway administration  in  that matter.  The  jurisdiction  of  the civil  court will be barred because  exclusive  jurisdiction has  been  conferred  on  the  Railway  Rates  Tribunal  for determining whether the charge being levied is unreasonable. According to the High Court Chapter V has nothing to do with charges  which are payable under a contract.   The  validity and interpretation of clause 23 of the agreement between the parties  was  a matter for the interpretation of  the  civil court and could not possibly be barred by s. 26 of the  Act. Section  41  (1) (c) has no application  to  an  enhancement already made in the purported exercise of the right under  a contract. Now  section  26  only bars the institution  of  a  suit  or proceedings  for  anything  done or  any  omission  made  in violation  or contravention of any provision of  Chapter  V. Section  29(2)  empowers the Central Government to  fix  the rates  of any other charges by a general or  special  order. In  view of the language of s. 41 (1) (c) if it  is  assumed that  the  rates cannot be unreasonable and if  the  Central Government  fixes unreasonable rates it may be  possible  to say  that there has been a contravention or violation of  s. 29(2).  But such fixation of rates under that provision  has to be by a general or special order.  It has been  suggested that  a  communication  made under a  contract  cannot  fall within the meaning of the word "order" as contemplated by s. 29. Prima facie, there may be some difficulty in acceding to the contention of the learned counsel for the appellant that any part of s. 29 will cover a revision of rates made by the railway  authority  in terms of a contract  but  the  matter seems  to stand concluded by the decision of this  Court  in Union  of  India  v. The Indian  Sugar  Mills-  Association, Calcutta()  according  to which it is  immaterial  that  the charges being levied by the railway administration arise  as a result of a voluntary agreement.  The real difficulties in the  way  of  the appellant are two fold;  firstly,  if  any question arises about the validity of a clause of a contract that  will be entertainable by a civil court.  As laid  down in Raichand Amulakh Shah v. Union of India (2) the  Railways Tribunal  has  no jurisdiction to decide whether  the  rules

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empowering  the railway administration to levy a  particular charge are ultra vires or whether the railway administration collected  amounts  in excess of the charges  which  it  can legally  levy under a rule.  In Upper Doab Sugar Mills  Ltd. v.  Shahadara  (Delhi)  Saharanpur  Light  Railway   Company Ltd.(,’) two main points arose; one was whether the  Railway ,Tribunal  had  jurisdiction to entertain the  complaint  as regards  the  reasonableness  of  the  rates  prior  to  the institution of the complaint (1) [1967] 3 S. C. R. 219.    (2) [1964] 5 S. C. R. 148. (3) [1963] 2 S. C. R. 333 at p. 342. 6-L797SupCT/73 842 and  the  other  was whether it had  jurisdiction  to  grant refund  for the aforesaid period.  This is what was said  by Das Gupta J.               "The words "charging" in cl. (b) and "levying"               in  cl. (c) were used in the one and the  same               sense.  We find it impossible to agree however               that  they were used to include  "collecting".               It  appears to be clear that if the  intention               of  the legislature was to give  the  Tribunal               jurisdiction  over  complaints  in  connection               with  charges  ,already made  the  legislature               would have used the words "has charged and  is               charging"   and  would  not  merely  say   "is               charging".   Special  jurisdiction of  such  a               nature  would  be given clearly and  the  very               fact  that  the words "has charged"  have  not               been  used is sufficient ground for  ,thinking               that it was not the legislature’s intention to               give the Tribunal jurisdiction over complaints               in  connection with charges made in the  past.               In our opinion, the words "is charging" in cl.               (b)  and  "is  levying" in  cl.  (c)  must  be               construed to mean "is demanding a price at the               present time for services to be rendered". Coming to the facts of the present case it is apparent  that one of the main questions involved was whether clause 23  of the  contract  between the parties was not void  because  it contravened  s.  29  of the Indian  Contract  Act.   Another question  which had to be investigated was whether a  proper notice regarding the enhancement of rates had been given  in accordance  with the terms of the said agreement.  From  the facts which have been stated it appears that the rates  were being revised and actually enhanced, but then the matter was kept  pending and there Was exchange of  correspondence  and discussion  between-  the  parties from time  to  time.   No effort  was made to enforce the demand made in  the  various letters  and  the  plaintiff was allowed  to  make  payments according  to the rates originally agreed.  It was  only  in May  1.957 that the plaintiff was really threatened to  make payment of the outstanding amount calculated at the  revised rates on pain of the supply of wagons being stopped and  the agreement being determined.  It is somewhat surprising  that in  September  1955 the rates which were revised  were  very much  less-than  those  which were demanded  for  the  prior period.  The position thus remained in a flexible state  and there  is  a  good deal of substance in  the  submission  on behalf of the plaintiff-respondent that a complaint was  not filed under S. 41 of the Act because the rates which  ",were being  paid  and  actually accepted were  the  same  as  the contractual  rates  and not the revised or  enhanced  rates. According to the decisions of this Court referred to before, it was hardly open to the plaintiff to file a complaint with

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regard  to the reasonableness or otherwise of the rates  and charges which had already become due 843 and payable.  The plaintiff had no grievance whatsoever with regard to the charges which had been fixed with effect  from April  1,  1956 by means of the letter dated  September  29, 1955  and  therefore there was no question of its  filing  a complaint  with regard to those charges.  Its grievance  was confined only to the amount which was being demanded on  the basis  of  the revised ,enhanced rates  between  the  period December  1,  1949 and March 1, 1956.  If  that  amount  had actually  been  realised  by  the  railway  authorities  the plaintiff  could only file a suit for its refund  and  could not have laid a complaint under s. 41 of the Act before  the Railway  Tribunal.  By analogy the plaintiff could not  have filed  a complaint with regard to past dues as  the  Railway Tribunal could not have given any relief in respect  thereof following the law laid down by this Court.  In this view  of the  matter  appart  from  other  questions  involving   the validity  of  clause  23 of the agreement ,as  also  of  the notice  or intimation of enhancement of rates on the  ground of non-compliance with its terms the suit could not be  held barred  under  S. 26 of the Act and the  civil  court  could grant the relief claimed.      We  have  not been shown any serious infirmity  in  the reasoning  of  the  High Court by which it  arrived  at  the conclusion that the question   of  reasonableness   of   the charges, keeping in mind the  facts   of  this   case,   was justiciable.   Nor  has  any justification  been  shown  for reopening  the  concurrent finding of the two  courts  below that  the rates which were demanded for the period in  ques- tion were unreasonable.  The suit was thus rightly decreed. The  appeal fails and it is dismissed; but we make no  order as to costs. G.C.                        Appeal dismissed. 844