14 October 1970
Supreme Court


Case number: Appeal (civil) 1742 of 1966






DATE OF JUDGMENT: 14/10/1970


CITATION:  1971 AIR  349            1971 SCR  (2) 594  1970 SCC  (3) 606

ACT: Indian  Railway  Act,  1890, s.  24-Railway  Rates  Tribunal constituted  under s, 24-Jurisdiction of Tribunal  under  s. 41(1)(b)-Subject to Limitations in ss. 29 & 42-Tribunal  can give   relief   if  he  rates  between  two   stations   are unreasonable   and   discriminatory   and   there   by    in contravention of s. 28.

HEADNOTE: The  respondent company 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   manufacturing activities  and also its manufactured  products.   Initially the  Railways  were levying 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  1, 1964,  the "standard telescopic class rates".   In  charging the  goods  freight,  however, the actual  distance  of  the branch  line was multiplied 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 declaration  that the  rates between tsations specified in the complaint  were unreasonable  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 defended the complaint and contended that the rates were reasonable, that they were not discriminatory,  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 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 decision of  the  Tribunal was  filed by the Union of India in this Court.   The  Court had to consider the question of the Tribunal’s  jurisdiction under  s. 41 (1) (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. 41(1) (b) the  expression used is not ’station-to-station rates but  a rate  between two stations which is unreasonable.  There  is nothing  in  the  rules 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 unreasonable. [601 E] 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 relife n respect of rates  which  are found to be unreasonable between two 595 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  of 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 to give formal shape to its view. [602 A-B]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION :- Civil Appeal No.  1742  of 1966. Appeal  by special leave. from the judgment and order  dated April  18, 1966 of the Railway Rates Tribunal at Madras  in Complaint No. 4 of 1963. Jagadish Swarup, Solicitor General, A. S. Nambyar and S.  P. Nayar, for the appellant. H.   R. Gokhale, M. K. Ramamurthi, Shyamala Pappu and B.   D. Sharma, for the respondent. The Judgment of the Court was delivered by-- 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 length  was  a "light  railway" constructed 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  front



October 1, 1962, and now forms part of the Indian Railways. The  Company  used the branch line  for  transporting  coal, limestone  etc. required for its  manufacturing  activities, and   also  for  transporting  its  manufactured   products. Initially the Railways were levying freight over 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  1,  1964,   the "standard  telescopic class rates".  In charging  the  goods freight, however, the actual distance of the branch line was multiplied by three. The Company filed a complaint before the Railway Rates  Tri- bunal   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 declaration that the rate between  the stations specified in the complaint were unreasonable 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 distance 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 co,-,tended that in any  event;  the levy is not unjust, unreasonable or discriminatory; 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 reasonsthat  the  "reason for  inflation" on the branch line was due to large  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 of years and for  effectively working the branch line it had become necessary to undertake extensive  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 before 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  because  the Company had selected certain commodities and certain sets of stations  in support of its grievance under s.  41(1)(b)  of the ’Indian Railways Act, 1890. 59 7 On  the  pleadings  before the  Tribunal,  six  issues  were settled, four of which are material:               "(1) Is the complaint not maintainable against               the   respondent   (Union  of   India)   under               s.41(1)(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 over the Alnawar-Dandeli Section ?               (3)   Whether the impugned method of  charging               on  inflated  distance  (at  three  times  the               actual   distance  over  the   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               continuous  distance  basis,  but  with  three               times   the,  inflation  in   the   chargeable               distance  over the Section, is subjecting  the               complainant’s  traffic to the undue  prejudice               in  contravention  of  s.  28  of  the  Indian               Railways Act ?" The   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(1)(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(1)(b), it  was  still open  to the Company 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 Section".  On Issue No. (3)  they  held that  the  jurisdiction  of  the  Tribunal  to  examine  the validity of the impugned method of charging the distance  by a multiple of three of the actual distance over the  Section to  arrive at the distance for determining  freight,  though governed  by  the order of the Central Government,  was  not excluded. On Issue No. (4) the Chairman observed:               "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 said               L436 Sup Cl/71               598               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  certain  rates               for  specific  commodities  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 affected.  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. 1, 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 that reason." Mr. Munshi agreed with that view.  In his view charging  the



company’s  traffic over the branch line at tariff  rates  on continuous distance basis but at three times the  chargeable distance over the branch line was "unwarranted,  unjustified and therefore unreasonable. 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 distance by three.  He also agreed that the jurisdiction  of the  Tribunal to entertain 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  and to fix new rates  in  lieu  of  rates declared  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.               The  Tribunal  by a unanimous order  made  the               following ,directions :               applicable  to  the  Alnawar-Dandeli   Branch,               subject   the   complainant   to   an    undue               disadvantage in contravention of Section 28 of               the  Indian  Railways  Act,  and  also  render               unreasonable   per  se  the  rates   for   the               complainant’s traffic to and from Dandeli."               Against that order, this appeal has been filed               with special leave.               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  administration,  or  any   particular               description   of  traffic,  in   any   respect               whatsoever,  or subject any particular  person               or  railway administration or  any  particular               description   of  traffic  to  any  undue   or               unreasonable prejudice or disadvantage in  any               respect whatsoever."               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)               (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."               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 two stations a rate which is               unreasonable, or               (c) .       .      .      .      ."               may be made to the Tribunal, and the  Tribunal               shall  hear and decide any such  complaint  in               accordance   with  the  provisions   of   this               Chapter.



              .     .     .      .       .     ."               S.    42-"The  Central Government 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 relating to matters set out in clauses (a) to (c) thereof is restricted  by the terms of S. 29(3) and S. 42.  Section  28 prohibits   a  railway  administration  from  making   undue preference  or subjecting any particular person  or  railway administration  or any particular description of traffic  to any  undue or unreasonable prejudice or disadvantage,.   But even in a dispute relating to the matters set out in 600 s.   41(1)(a), (b) and (c), where the Central Government has fixed by  general or special order maximum and minimum range of  rates  for  the  whole or any  part  of  a  railway  the complaint  that the railway 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 commodity 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  granted  any undue or  unreasonable  preference  or advantage  to,  or in favour of any  particular  person,  or shown any undue or unreasonable prejudice or disadvantage to any  person  or  railway administration  or  any  particular description 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 unreasonable. In  the present case the maximum and minimum range of  rates have been fixed by the Central Government.  A complaint that the railway administration has acted in contravention of the order issued by the Central Government may be determined  by the  Central Government and not by the Tribunal.  Again  the Central  Government  alone  has the  power  to  classify  or reclassify any commodity or to increase or reduce the  level of  class rates and other charges.  ’the  Tribunal  accepted these  limitations  upon the exercise of  its  powers.   The Tribunal  however found that the charge made by the  railway administration 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 discriminatory.   The finding proceeds upon appreciation  of evidence  which  has  been examined in  great  detail.   The finding of the Tribunal cannot be challenged in this  appeal with  special leave under Art. 136 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 contended in respect  of  station-to-station rates the Tribunal had no jurisdiction to give relief.  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  between two specific points (stations  only):  and



cl. (8) provided that 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 Tariff 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               reduced   rate   applicable  to   a   specific               commodity booked from one specified station to               another specified 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  relevance   in determining the matter in dispute in this appeal, for in  S. 41  (1 ) (b) the expression used is not  "station-to-station rates",   but   a  rate  between  two  stations   which   is unreasonable.   There  is nothing in the  rules  which  even indirectly affects the jurisdiction of Tribunal to determine whether   the  rates  for  carriage  of  certain   specified commodities  between  two stations  are  unreasonable.   The Tribunal  has expressly 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, that it is incompetent to grant relief which might even  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  commodities, 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 rates which  are found   to  be  unreasonable  between  two  stations.    The complaint  made by the Company 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  has  not  given  any  relief   in contravention of those provisions.  The Tribunal has  merely declared  that  the charging rate of freight  determined  by multiplying  by three the distance over which the goods  are transported for specific commodities is in contravention  of s. 28 of the Indian Railways Act, 1890. 602 We  do not see force in the opinion expressed by Mr.  V.  K. 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  exercise   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. G.C.                                       Appeal dismissed. 603