Union of India v. M/s Indian Oil Corporation Ltd.

Judgment / Order of the Supreme Court

1Copy pinpoint1. This batch of 76 appeals is at the instance of the Union of India being the unsuccessful respondent before the High Court and is directed against the common set of judgements and orders dated 23.02.2018 passed by the High Court of Allahabad in FAO Nos. 726, 730-739, 765, 772-793, 798-814, 825-826, 829-830, 833-842,

* Ed. Note: Pagination as per the original Judgment.

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844-848, and 850-855 respectively of 2014, by which the High Court allowed all the abovementioned appeals filed by the respondent herein (original appellant) and directed the railway administration to refund the difference of approx.. 110 km that was illegally levied towards the freight charges. A. FACTUAL MATRIX

2Copy pinpoint2. The respondent company herein had booked various consignments of furnace oil between the years 2002 & 2005 via railway from Baad to Hisar route. Indisputably the freight for the same was calculated by the appellant on the basis of a total chargeable distance of 444 km. as per the then prevailing distance table plying for the said route.

3Copy pinpoint3. On 07.04.2004, the Ministry of Railways vide its Letter No. TCR/2043/2002/2, decided to rationalize the method of calculating the ‘chargeable distance’ between the pairs of station routes by way of rounding off the aggregate of the ‘actual engineering distance’ to the next higher kilometre only once at the end. The said letter is reproduced below: - “Rates Circular No. 14 of 2004 GOVERNMENT OF INDIA (BHARAT SARKAR) MINISTRY OF RAILWAYS (RAIL MANTRALAYA) RAILWAY BOARD No. TCR/2043/2000/2 New Delhi, Dt. 07.04.2004 To, The General Managers (Comml.). All Indian Railways, NCR SUB: ounding off of Chargeable Distance: R Rationalization of fares and freight. REF: oard’s letter no. TCR/2043/2002/4 dated B 05.02.2003 Reference is invited to Board’s above cited letter wherein Zonal Railways were asked to print their new Local Distance Tables (LD1) and Junction Distance Tables (JDT) effective from April 1, 2003, indicating the actual engineering

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distances of the various sections upto two decimal places. Board desire confirmation in this regard and that these books have been printed and circulated to other railways also. It was also indicated in the letter under reference that the method of “rounding off” to be adopted for arriving at the ‘chargeable distance’ shall be communicated in due course. The Ministry of Railways have now decided in rationalize the method for arriving at the ‘chargeable distance’ between a specific pair of originating and destination points. The actual engineering distances upto two decimal places of the various sections from originating station to destination station will be added up and the distance so aggregated would be finally rounded off to the next higher kilometre for deriving the chargeable distance. It may be ensured that for deriving the “chargeable distance”, the summation of individual sectional distances be “rounded off” only once at the end. This rationalization is aimed at ensuring uniformity in the method of deriving the distance of charging fares and freight for all customers across the Indian Railways. In order to have a uniform date of implementation, all railways shall change over to the rationalized procedure with effect from 01.06.2004. As these instructions have prospective effect and may result in variation in fares and freights when compared with the existing fares and freight, neither would any undercharges be raised by the railways nor would the railways refund charges collected in past cases. Rail users may be intimated of the proposed changes well in advance and staff may also be made well conversant with the changes contemplated. This issues in consultation with C&IS Directorate and with the concurrence of Finance Directorate in the Ministry of Railways. Sd/- (L. Venkataraman) Director, Traffic Comml. (Rates) Railway Board”

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4Copy pinpoint4. This new methodology was being adopted in order to ensure uniformity in deriving the chargeable distance for fares and freight across the Indian Railways, and pursuant to it, the various zonal railways were required to revise their respective distance tables accordingly.

5Copy pinpoint5. The letter as referred to above specifically stipulated that, the change over to the new ‘rationalized procedure’ shall take place w.e.f. 01.06.2004 and further that as the aforementioned change might result in variation in the fares and freights in comparison to the then existing charges / rates, the said change would not entitle either the Railways or the end-users to recover or seek any under-charge or excess charge that was already paid prior to the implementation of the said policy.

6Copy pinpoint6. However, since many zonal railways were yet to print and make available their revised local distance tables and junction tables at their respective stations by the scheduled date of implementation, the Ministry of Railways vide its letter dated 24.09.2004 changed and moved the date of implementation of the aforesaid new methodology to 01.01.2005. It was further clarified that till the revised guidelines were implemented, the chargeable distance would continue to be calculated as per the earlier prevailing methodology and procedure as applicable. The said letter reads as under: - “Rates Circular No. 14 of 2004 GOVERNMENT OF INDIA (BHARAT SARKAR) MINISTRY OF RAILWAYS (RAIL MANTRALAYA) RAILWAY BOARD No. TCR/2043/2000/2 New Delhi, Dt. 24.09.2004 To, The General Managers (Comml.) Al Indian Railways, NCR Managing Director, Konkan Railway Corporation, Belapur Bhavan, Sector-11, CBD Belapur, New Mumbai – 400614 The Chief Administrative Officer/ FOIS Camp: CRIS, Chanakyapuri, New Delhi – 21

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SUB: ounding off of Chargeable Distance: R Rationalization of fares and freight.

Please refer to Board’s message dated 25.06.2006 wherein it was communicated that the revised procedure of charging fares and freight by rounding off the actual engineering distance only once at the end shall come into force from 01.10.2004. As all the Zonal Railways have not printed their local distance tables and junction distance tables by the target time, it has been decided that the revised procedure of charging fares and freight by rounding off the actual engineering distance only once at the end shall come into force from 01.01.2005 i.e., First January two thousand five.

It has also been decided that till the implementation of revised guidelines, the earlier procedure for calculating the chargeable distance on the basis of old distance tables should be followed by Zonal Railways. Moreover, the receipt of LDTs/JDTs prepared on the basis of Board’s guidelines by concerned Railways should be intimated to this office.

Sd/- (PURAN CHAND) Deputy Director, Traffic Comml. (R) Railway Board”

7Copy pinpoint7. On 05.07.2005, the Chief Commercial Manager of the North Central Railway Zone addressed a letter bearing No. DRM/CLAOG/RAD/ Distance Table/2004/20 to the Chief Goods Supervisor (CGS), Baad inter-alia stating that the earlier chargeable distance of 444 km from the Refinery Baad to Hisar as per the old distance table should be changed to 334 km as per the new junction table, and that the “correct distance should be charged”. The said letter reads as under:

“NORTH CENTRAL RAILWAY Dated: 05.07.2005 No. DRM/CLAOG RAD/Distance Table/2004/20 Chief Commercial Manager (M&R) North Central Rail Allahabad

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SUB: harging of FO HPS Book from IOC BAAD to C Hissar (HSR): As per old distance table prior to formation of Zone and Division, the distance, Refinery to HSR via TKD was being charged as under: -

1. Refinery BAAD to BAAD station 04 Km

2. BAAD to TKD 145 Km

3. TKD to HSR 295 Km Total 444 Km As revised distance table of NCR, NR were not received, hence the charging was as per the earlier practice of 444 Km. These all the distance tables were critically reviewed from revised distance tables of NCR and the distance from IOC BAAD to HSR should be as under: -

(A) The distance from IOC BAAD to HSR via PWL is as under:

1. Refinery BAAD to BAAD station 04 Km

2. BAAD to TKD 93.62 Km

3. TKD to HSR 235.56 Km Total 333.18 Km

(B) The distance from HSR via AWR is as under:

1. Refinery BAAD to BAAD station 04 Km

2. BAAD to MTJ 10.22 Km

3. AWR to RE 74.21 Km

4. RE to HSR 142.56 Km Total 354.17 Km

As the traffic of FO and HPS is moving via PWL, hence the chargeable distance should be 334 Km. CGS has been instructed to change the distance of HSR according to the new junction distance table i.e., 334 Km.

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CGS BAAD has been instructed that the other disputed distance should also be corrected as per the new junction distance table and the correct distance should be charged. Sd/- (P.K. PANDEY) Sr. Divl. Comml. Manager Agra”

8Copy pinpoint8. The respondent upon learning about the aforesaid letter dated 05.07.2005 changing the chargeable distance from 444 km to 334 km for the route from Refinery Baad to Hisar, made further inquiries with the concerned Railway office & came to learn that, although there had been no change in the physical track length for the said route and that the actual distance from Baad to Hissar via Palwal was in fact 333.18 km, yet the appellant was charging freight at a wrong chargeable distance of 444 km for the same route.

9Copy pinpoint9. In view of the aforesaid, the respondent company sent a notice of claim dated 07.11.2005 under Section 78B of the erstwhile Railways Act, 1890 (for short, the “Act, 1890”) to the appellant demanding refund of the difference of 110 km in the freight charges that had been erroneously charged on the basis of the wrong chargeable distance which was subsequently changed.

10Copy pinpoint10. The respondent vide the aforesaid notice of claim had demanded refund for a total of 122 consignments for which freight had been levied on the basis of a chargeable distance of ‘444 km’. However, the appellant herein rejected all of the claims and declined to refund the 110 km difference in freight charges. B. PROCEEDINGS BEFORE THE RAILWAY CLAIMS TRIBUNAL

11Copy pinpoint11. Aggrieved by the same, the respondent in all filed 122 claim applications under Section(s) 13(1)(b) r.w. 16(1) of the Railway Claims Tribunal Act, 1987 (for short, the “RCT Act”) for refund towards the difference of 110 km in freight charges, with the lead application being the OA/(III)/229/20006/Mathura before the Railway Claims Tribunal, Ghaziabad (“RCT”).

12Copy pinpoint12. During the pendency of the aforesaid claim applications, the respondent company held meetings with the appellant more particularly the General Manager, North Central Railway, Allahabad, who upon scrutinizing the matter allowed refund for inasmuch as

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45 (sic) claims (approx..), which had been made within the statutory time period of 6-months under Section 78B of the Act, 1890 – now Section 106 of the Railways Act, 1989 (for short, the “Act, 1989”).

13Copy pinpoint13. The Railway Claims Tribunal, Ghaziabad vide its common final judgement and order dated 26.12.2013, dismissed the remaining 77 claim applications of the respondent as being time-barred. The said decision of the RCT is in two parts: - (i) First, the RCT observed that though the chargeable distance was only 334 km still the freight charges had been levied for a distance of 444 km. This according to the Tribunal was a case of excess payment of freight, and thus the refund that was sought was for an ‘overcharge’. The relevant observations read as under: - “18. [...] In this case, the goods were booked from ‘A’ to ‘B’, showing the chargeable distance as 444 Kms. and payment was given by the applicant company for the same distance, but later on, Railways reworked the chargeable distance as only 333.18 Kms. The consignment in question was carried through the same route. So, it is clear that the payment was to be made for 333.18 Kms., whereas it was made for 444 Kms. In this way, the applicant company had to pay for 444 Kms, instead of 333.18 Kms. Hence, the present case is for the refund of this excess payment of freight, which can only be termed as refund of overcharge and nothing else and so, the notice under Section 106(3) of the Railways Act, 1989 is necessary.” (Emphasis supplied) (ii) Secondly, since the case at hand was one for refund of an overcharge and the notice of claim had not been sent within the prescribed time-period of 6-months as required under Section 106(3) of the Act, 1989, the claim application was time-barred. The relevant observations read as under: - “24. [...] Furthermore, perusal of the record shows that the applicant company had served a notice on 07.11.2005 upon the Respondent Railway, but the

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date of booking of the consignment in question was 25.08.2002. Hence, it has been revealed that the said notice was time barred as per the provisions of the aforesaid Section 106(3) of the Railways Act, 1989, which had been well within the knowledge of the applicant company also as per the aforesaid letter dated 28.01.2009. In this context, Ld. Counsel for the Respondent has placed reliance on the case law, titled as Birla Cement Works v. G.M., Western Railways & Anr., 1995 SCC (2) 493. We have carefully perused the said case law and it supports the contention of the Respondent Railway. xxx xxx xxx

26. In view of the above, it has been held the applicant company has not served a valid and legal notice on the Respondent Railway within the statutory period under the provisions of Section 106(3) of the Railways Act, 1989. As such, the applicant company is not entitled for any compensation. [...]” (Emphasis supplied)

14Copy pinpoint14. Thus, the RCT, whilst dismissing the respondent’s claim applications held that, the respondent’s claim was for a refund of an overcharge and since the notice of claim was not served in terms of Section 106(3) of the Act, 1989, the claim was time-barred. C. IMPUGNED ORDER

15Copy pinpoint15. Aggrieved with the aforesaid, the respondent went in appeal under Section 23 of the RCT Act before the High Court of judicature at Allahabad. In all 76 First Appeals from Order were filed, with the lead appeal being the FAO No. 843 of 2014 wherein the High Court vide its judgement & order dated 23.02.2018 allowed the aforesaid appeal, by placing reliance on the decision of this Court in Hindustan Petroleum Corp. Ltd. v. Union of India reported in (2018) 17 SCC 729. The High Court took the view that since in the case at hand the freight had been paid as per the notified chargeable distance which was later found to be incorrect, it was a case of “illegal charge” and not that of “overcharge”. The relevant observations read as under: -

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“[...] In this case, the freight was paid by the appellant as per the notified distance and freight charges were paid accordingly. However, later on it was revealed that the distance was less and that is how the appellants had claimed the amount. This was one of the facts on which the Apex Court held in favour of the appellant (Hindustan Petroleum) and this was a question of illegal realisation of freight and not of over charging as submitted by the counsel for the respondent. [...] The finding of fact by the Tribunal dismissing the claim of the claimant is bad in the eye of law as held by the Apex Court in Hindustan Petroleum (Supra), there was no need for issuance of notice. I am fortified in my view by both the decisions of the Apex Court in Hindustan Petroleum (Supra) and West Coast Paper Mills (Supra). Hence, this is not a case of over charge at all as the freight was paid as per the rates notified for certain distance. No other view can be taken in this matter. The judgment in Hindustan Petroleum (Supra) will enure for the benefit of the appellant in this case also. In view of the above, the appeal is allowed. The respondents to calculate the difference within 12 weeks from today and pay the appellant.” (Emphasis supplied)

16Copy pinpoint16. Accordingly, the High Court vide the aforesaid judgement & order dated 23.02.2018 disposed of the lead appeal of FAO No. 843 of 2014, and thereafter by a batch of common orders disposed of the other 75 appeals in terms of its findings recorded in the final judgement and order passed in the lead appeal.

17Copy pinpoint17. The aforesaid order dated 23.02.2018 as passed in FAO No. 843 of 2014 i.e., the lead appeal was challenged and carried upto this Court by way of the special leave petition being SLP (C) No. 3987 of 2021. This Court vide its order dated 04.03.2021 refused to interfere with the order dated 23.02.2018 passed in FAO No. 843 of 2014 as the claim amount was very low. Thus, the said Special Leave Petition came to be dismissed by this Court, however the question of law was kept open. The relevant portion reads as under: -

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“O R D E R We decline to interfere in this Special Leave Petition, as we find that the claimed amount is very low. The Special Leave Petition is dismissed accordingly, leaving the question of law open.”

18Copy pinpoint18. In view of the aforesaid, the appellant herein being aggrieved, has challenged the final orders passed by the High Court in the other 75 appeals involving a total sum of Rs. 1,55,03,652/- (approx.). D. SUBMISSIONS ON BEHALF OF THE APPELLANT

19Copy pinpoint19. Mrs. Rukhmini Bobde, the learned counsel appearing for the appellant in her written submissions has stated thus: - “WRITTEN SUBMISSIONS ON BEHALF OF THE APPELLANT

1. The present Appeal has been filed against the final judgement of the Hon’ble High Court of Allahabad a batch of First Appeals, whereby the Hon’ble High Court has allowed all the abovementioned appeals filed by the Respondent-IOCL while relying upon the judgment dated 23.02.2018 passed in First Appeal from Order No. 843 of 2014 (@pg. 79 of the present Appeal) which is illegal and perverse as the Hon’ble High Court has ignored to answer the questions of law. It is submitted that the order dated 23.02.2018 in First Appeal from Order No. 843 of 2014 was challenged by the Appellant-Union before this Hon’ble Court and the said petition bearing SLP(C) No. 3987 of 2021 was dismissed by this Hon’ble Court on 04.03.2021 on the ground that claim amount was very low. It is however submitted that the claim amount of all the batch matters herein comes to approximately Rs. 1,55,03,652/-.

2. The facts of the lead case herein are that the Respondent-IOCL had sent a legal notice dated 07.11.2005 under Section 106 of the Railway Act, 1989 to the Appellant-Union for refund of excess freight charges with respect to a consignment dated 25.08.2022, due to change in methodology, having

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been applied prospectively from 01.01.2005 which resulted in variation in fares and freights when compared with the then existing fares and freight. It is submitted that the present Appeal is not a case of error in the existing notified freight change.

3. The case of the Appellant-Union is that Section 106 of the Railway Act, 1989 does not apply to the present case at all since as per the circulars dated 07.04.2004 and 24.09.2004 (@page 141 and 144 of the Appeal respectively) issued by the Appellant-Union, the change in distance happened due to rationalization of the distances, aimed at ensuring uniformity in the method of deriving the distance of charging fates and freight for all customers across Indian Railways. The rationalization was also directed to be applied prospectively (from 01.01.2005 onwards) and the date of transport of consignment was on 25.08.2002 i.e. more than 2 years before application of the circular. It is further submitted that the Appellant-Union in its circular dated 07.04.2004 had specifically stated that the Appellant-Union would not be raising any issue of undercharges due to the variation nor was the Petitioner going to refund the charges collected in past cases, thus ensuring balance of convenience. Therefore, the question of overcharging does not arise at all as the Respondent-IOCL has been charged the freight charges as per the then prevailing existing fares and freights of the time and consequently, the Respondent-IOCL cannot raise any claim for compensation under Section 106 of the Railway Act, 1989.

4. Even assuming and without admitting to the case of the Respondent-IOCL, if the Respondent-IOCL is able to present a case for being overcharged and thus Section 106 of the Railways Act, 1989 to be applicable, the case of the Respondent-IOCL is barred from raising any claim as per the provisions of Section 106 of the Railways Act, 1989 on the ground of delay.

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5. It is also pertinent to take a close look at the facts of the following case laws: a. In Birla Cement Works v. G.M., Western Railways and Another’, the Petitioner earlier used to transport through metre-gauge from the railway siding at Chanderia. However, after conversion into broad-gauge the railway siding was at Difthkola Chittor Broad-Gauge Rail Link, which lead to an increase of 34 km, which was added to the freight charges. The Petitioner had belatedly raised its claim under Section 78-B of the Railway Act, 1890 (pari materia to Section 106 of the Railways Act, 1989) and were thus barred by limitation. The principal contention raised by the Petitioner was that it had discovered the mistake when the railway authorities confirmed by their letter that they had committed a mistake in charging excess freight on wrong calculation of distance. The limitation started running from the date of discovery and therefore stands excluded and that Section 78-B of the Railway Act, 1890 had no application to the facts. However, this Hon’ble Court held that since admittedly the claims of the Petitioner were made under Section 78-B of the Railway Act, 1890 beyond a period of six months, the claim had become barred by limitation. It should be mentioned that the facts of Birla Cement would have only been applicable in the present Petition if there was a case of overcharging. However, as the Respondent had booked according to the prevailing freight charges at that time, the facts of Birla Cement does not arise at all. b. In Union of India and Others v. West Coast Paper Mills Ltd and Another (III), the Respondents were being charged a flat rate irrespective of the commodity carried and were

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not given the benefit of telescopic system of rates which was allowed by the Railways to others. This led to a scenario wherein the Respondents had to pay freight on certain goods at three times compared to what would have been payable in case the benefit of telescopic system of rates was allowed to them. This was construed to be an illegal and unreasonable charge. Reference is made to paragraph 20 of the Judgement: “20. In the case at hand, the freight rates notified by the Railway Administration in exercise of its statutory power to do so, so long as they were not declared illegal and unreasonable by the Tribunal under Section 41 of the Act, were legal and anyone carrying the goods by rail was liable to pay the freight in accordance with those rates. The freight paid by the respondents was as per the rates notified. Thus the present one is not a case of overcharge at all. It is a case of illegal recovery of freight on account of being unreasonable and in violation of Section 28 of the Act, consequent upon such determination by the Tribunal and the decision of the Tribunal having been upheld by this Court. A case of “illegal charge” is distinguishable from the case of “overcharge” and does not attract the applicability of Section 78-B of the Railways Act.” The facts are different from the present case as the Respondent-IOCL in the present case was only being charged the notified rates as per the prevailing rules at the time of booking. The Respondent-IOCL was aware of the freight charges at the time of booking.

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c. In Hindustan Petroleum Corporation Limited v. Union of India’, the facts were different from the present case as the Railways had migrated to a computerized railway freight charges system from a manual system, which lead to decrease in the distance notified between Asaudah Railway Station, District Rohtak, Haryana and Partapur, District Meerut, Uttar Pradesh. It is submitted that this Hon’ble Court had correctly held that there was no overcharge and therefore Section 106 of the Railways Act, 1989 is not applicable. However, it is most humbly and respectfully submitted that as on merits there is no discussion in law as to whether any refund is payable dehors Section 106 of the Railways Act, 1989. In the present case, the Appellant-Union had stated as per the circulars dated 07.04.2004 and 24.09.2004 that it would not be raising any issue of undercharging nor would be providing any refund and that the charges are prospective.

6. Therefore, it is requested to allow the present Appeal and reverse the judgement of the Hon’ble High Court.” E. SUBMISSIONS ON BEHALF OF THE RESPONDENT

20Copy pinpoint20. Mr. Shashwat Goel, the learned counsel appearing for the respondent in his written submissions has stated thus: - “WRITTEN SUBMISSIONS ON BEHALF OF THE RESPONDENT - M/S INDIAN OIL CORPORATION LTD A. RESPONDENT’S CASE/ ARGUMENTS IN BRIEF

1. It is respectfully submitted that the present matter pertains to ‘illegal charge’ / ‘illegal realization’ of the freight amount by the Petitioner (i.e. the Railways) from the Respondent oil company. Admittedly, the Petitioner herein has charged the freight amount from the Respondent for a distance of 444 km, instead of

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333.18 km between ‘Baad’ (BAD) station to ‘Hissar’ (HSR) station. This is nothing but ‘illegal realization’ of freight from the Respondent and it cannot be termed as ‘overcharge’. It is submitted that there is a difference between ‘illegal realization’/ ‘illegal charge’ and ‘overcharge’ of freight amount. An ‘overcharge’ is something which is in excess of that what is due according to law and is paid by a party on account of mistake of fact. Whereas, ‘illegal realization’ / ‘illegal charge’ is excess realization of charges due to change in ‘notified’ distance or rates.

2. It is submitted that the Petitioner has been calculating the freight amount for a distance of 444 km as it was ‘notified’ in the old distance table. Therefore, this cannot be termed as overcharge. Admittedly, upon realizing that the said distance was wrongly calculated, the appropriate authority of the Petitioner ‘critically reviewed’ the old distance tables and thereafter notified the corrected distance/ rate between BAD to HSR as 333.18 km on 05.07.2005 (i.e. Annexure P-3 @ Pg. 146 of SLP). This notification of corrected distance made the earlier realization of freight for 444 km under the erstwhile notified rates, illegal. Further, the cause of action for recovery of such illegal realization’ of freight arose on 05.07.2005, when the corrected distance was notified by the Petitioner. Immediately, the Respondent filed its claim petitions on 07.11.2005 for recovery of excess amount for the extra distance which was illegally realized by the Petitioner.

3. The present case is squarely covered by a judgment of this Hon’ble Court passed in the matter of Hindustan Petroleum Corporation Limited v. Union of India, (2018) 17 SCC 729 (attached herewith). In the said case, the Petitioner therein (i.e. Hindustan Petroleum Corpn.) paid freight to the Railways (i.e. Petitioner herein) for the notified distance of 125 km, between the period 01.04.2008 to 30.09.2010. Subsequently, the said distance of 125 km was corrected by the

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Railway to 100 km on 27.02.2011. Immediately, HPCL filed its claim petitions on 30.03.2011, which were rejected as being time barred U/s 106(3) of the Railways Act, 1989 by the Railways; Railways Tribunal & the High Court. When the said matter reached this Hon’ble Court, the Railways (i.e. the Petitioner herein) placed reliance on the judgment of this Hon’ble Court in Birla Cement Works, (1995) 2 SCC 493 to buttress its argument that the claims filed by HPCL were barred U/s 106(3) of the Railways Act. It is submitted that the said judgment of Birla Cement Works was distinguished by this Hon’ble Court and it was held that excess realization of freight by the Railways from HPCL was ‘illegal’ and therefore HPCL’s claims were allowed. It was further held that there was no requirement of giving any notice under Section 106 of the Railways Act as there was no overcharge by the Railways. The findings of this Hon’ble Court in HPCL’s case are as follows: “8. Birla Cement Works [Birla Cement Works v. Western Railways, (1995) 2 SCC 493] was a case where the petitioner therein (i.e. Birla Cement Works) came to know of the alleged excess amount of freight on wrong calculation of distance through a letter dated 12-10-1990 issued by the Railway authorities. This primary fact is conspicuously absent in the present case. In the present case what was paid was as per the fixed rate on the basis of notified distance which subsequently was corrected by another Notification upon introduction of the Terminal Mechanism System (TMS) at Asaudah Railway Station, District Rohtak, Haryana.

9. On the other hand, in West Coast Paper Mills Ltd. [Union of India v. West Coast Paper Mills Ltd., (2004) 3 SCC 458] this Court in para 20 of the said Report took the view that as the freight paid was as per the rates notified

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the case would not be one of overcharge at all. If that is the view taken by this Court on an interpretation of the pari materia provision in the erstwhile Act i.e. the Railway Act, 1890 (i.e. Section 78-B) we do not see why, in the facts of the present case which are largely identical, we should be taking any other view in the matter.

10. Consequently and in the light of the above, we allow the present appeals, set aside the order of the High Court as well as that of the Railway Claims Tribunal, Chandigarh and allow the claims of the appellant which will be paid forthwith on due and proper calculation.” B. SUBMISSIONS ON THE ISSUES FRAMED BY THIS HON’BLE COURT Issue No.1 - What is the scope of Section 106 of the Railway Act, 1989, and if the said provision is applicable to the present case at hand? (i) It is submitted that Section 106 of the Railways Act, 1989 stipulates that a ‘Notice has to be sent to the Railways within six months for : (a) ‘claim for compensation’ (under sub-section (1) & (2)); & (b) for ‘refund of overcharge’ (under sub-section (3)). It is clear from a bare reading of this section that a notice cannot be sent to the Railways for any other purpose/ for raising a claim under any other head which is not mentioned in the said section. The term(s) ‘illegal charge’ / ‘illegal realization of freight’ is not mentioned in S.106. Therefore, there is no legal requirement of sending a notice under S.106 for raising a claim on account of ‘illegal charge’ / ‘illegal realization’ of freight. It is pertinent to mention here that a claim of illegal charge’ will not fall under the category of overcharge as undisputedly, there is a difference between the terms - ‘overcharge’ and ‘illegal charge’. (ii) In this regard, reliance is placed upon a judgment of this Hon’ble Court passed in the matter of Union of India & Ors. v. West Coast Paper Mills Ltd. & Anr. (IlI),

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(2004) 3 SCC 458 (attached herewith). In the said case, an interpretation of the pari materia provision (like S.106) in the erstwhile Act i.e. the Railway Act, 1890 (i.e. Section 78-B) was done by this Hon’ble Court. While considering the distinction between an ‘overcharge’ and ‘illegal charge’ for the purposes of Section 78-B of the Railways Act, 1890 (i.e. same as Section 106 of the Railways Act, 1989), it was held by this Hon’ble Court that : “20. ........ A case of “illegal charge” is distinguishable from the case of “overcharge” and does not attract the applicability of Section 78-B of the Railways Act.” It is pertinent to mention here that this Hon’ble Court has also analysed in detail the meaning of the term ‘overcharge’ in Para 19 of the above-mentioned judgment. (iii) It is reiterated that the present matter pertains to ‘illegal charge’ / ‘illegal realization’ and not of overcharge’ of the freight amount. Therefore, in view of the aforesaid submissions, it is submitted that the provision of Section 106 of the Railways Act, 1989 is not applicable upon the present case. In this regard, reliance is also placed upon paras 8-10 of the judgment of this Hon’ble Court passed in Hindustan Petroleum Corporation Limited’s case (supra). Issue No.2 - Whether the decision of this Court in Birla Cement Works vs. G.M. Western Railways (1995) is applicable to the case at hand? (i) It is respectfully submitted that the decision of this Hon’ble Court in Birla Cement Works is not applicable upon the present case. Pertinently, the said decision has already been distinguished by this Hon’ble Court in the subsequent case of Hindustan Petroleum Corporation Limited (supra), which is identical to the present case. (ii) The case of Birla Cement Works pertains to refund of ‘overcharge’ which was made by the Railways.

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Whereas, the present case is that of recovery of ‘illegally realized’ freight from the Railways. (iii) In the case of Birla Cement Works, the Railways had charged excess freight from the Petitioner therein (i.e. Birla Cement), than what was stipulated in distance table (i.e. overcharge). Whereas, in the present case, the Railways (i.e. the Petitioner) had realized the freight amount from the Respondent on the basis of the distance, i.e. 444 km, that was notified in the erstwhile distance table which subsequently got corrected & was notified by the Railways as 333.18 km (i.e. illegal realization of freight). (iv) In the case of Birla Cement Works, the Petitioner therein (i.e. Birla Cement) came to know of the alleged excess amount of freight on account of wrong calculation of distance through the letter issued by the Railways. It was not the case where the distance was corrected and re-notified by the Railway authorities. In Birla Cement Works, there was a mistake by the Railways in calculating the freight amount by wrongly taking into account the distance that was stipulated in the distance table in that case. It is submitted that the said mistake/ error was of such a nature that even the Petitioner therein (i.e. Birla Cement) could have also found, had it been diligent. Instead, it kept paying the freight charges to the Railways and filed its claim only when the Railways informed it that the same was wrongly calculated. Whereas, in the present case, the Respondent has paid the freight charges as per the distance of 444km notified in the erstwhile distance table, which later on stood corrected; notifying the distance as 333.18 km. In the present case, Respondent was not sleeping over its rights. The Respondent filed its claims soon after the corrected distance was notified by the Petitioner herein and the Respondent came to know about the illegal charge. There is no sort of lack of vigilance or bona fides of the Respondent in the present case.

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Issue No.3 - What was the reason for revising the freight charges? In other words, whether the revision of freight charges was done pursuant to a new methodology being adopted or due to an error in the existing notified freight charges? (i) It is submitted that the freight charges/ the distance between BAD station to HSR station was revised / corrected by the Petitioner vide its notification dt.05.07.2005 (Annexure P-3 @Pg.146 of the SLP). The said revision/ correction was carried out after ‘critically reviewing’ the old distance tables with the revised distance tables of the North Central Railways (NCR). It is clearly stated in the said notification that the earlier notified distance of 444 km was used for calculating the freight as the revised distance table of NCR, despite being available, was not received earlier. This clearly shows lapses on part of the Petitioner. Despite being aware that the revised distance tables had come for the NCR, the same were not considered and the Petitioner continued calculating the freight as per the old distance, which is illegal. (ii) It is further submitted that there is no change in the tracks or route from BAD to HSR. It appears that the wrong distance was notified in the old table, that is why there was a need to critically review the same before notifying the corrected distance.

4. It is pertinent to mention here that the Petitioner has made a subtle attempt to mislead this Hon’ble Court by introducing circulars dt.07.04.2004 & 24.09.2004 in its SLP. The Petitioner has used the said circulars to erroneously allege that the change of distance was to be applied prospectively from date mentioned in the said circulars. In this regard it is submitted that the said circulars do not pertain to change of distance. The said circulars stipulate the guidelines for rounding off the chargeable distance upto two decimal places. Even the file no. of the said circulars is completely

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different from the notification issued on 05.07.2005, whereby the corrected rates were notified between BAD & HSR. The file no. of the circulars dt. 07.04.2004 & 24.09.2004 is TCR/2043/2000/2, whereas, for the notification dt.05.07.2005, it is DRM/CLAOG RAD/ Distance Table/2004/20. It is submitted that this fact in itself makes it clear that the subject matter of the circulars dt. 07.04.2004 & 24.09.2004 and notification dt.05.07.2005 are totally distinct and separate and the said circulars have no bearing upon the present case.

5. It is also pertinent to mention here that there is an unexplained delay of 661 days in filing the SLP by the Petitioner. In the light of the aforementioned submissions, it is humbly prayed that the present SLP filed by the Petitioner be dismissed.” F. ANALYSIS

21Copy pinpoint21. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the following pivotal questions fall for our consideration: - I. What is the scope of Section 106 sub-section (3) of the Railways Act, 1989? In other words, what constitutes an “overcharge” within the meaning of Section 106 sub-section (3) of the Railways Act, 1989? What is the difference between an “Overcharge” and an “Illegal Charge”? II. Whether, the claim towards the refund of difference of 110 km in freight charges is covered by Section 106 sub-section (3) of the Railways Act, 1989? In other words, Whether the claim is for a refund of an ‘overcharge’? III. Whether, the difference of 110 km in freight is liable to be refunded? In other words, whether the notified chargeable distance of ‘444 km’ was an Illegal Charge or not? i. Relevant Statutory Scheme and Provisions

22Copy pinpoint22. Earlier, in India the law pertaining to the railways was scattered into several enactments and executive orders, each regulating different aspects of the railways throughout the country. The reason behind

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the multiple different legislations on the railways was the number of changes that were rapidly taking place due to the expansion and establishment of various railway corridors across the country.

23Copy pinpoint23. The Indian Railways Act, 1890 was the first prominent legislation to be passed to consolidate the law and embody all important provisions relating to the railways. The Act, 1890 since its enactment remained the sole substantive legislation for regulating railways in India for nearly half a century.

24Copy pinpoint24. Despite being amended several times, the Act, 1890 was not able to keep pace with the changes that were rapidly taking place in the Indian railway infrastructure and network. Over the course of time, several committees were constituted with a view to streamline the functioning of Indian Railways and meet the challenges of changing times. Various recommendations were made to the Government by these committees, with the most significant one being the complete reorganization of the railway into several operational zones.

25Copy pinpoint25. Due to large and sweeping nature of the changes recommended, the Act, 1890 required an extensive revision, something which could not be done by amendment, and thus, a new exhaustive Act was required for the consolidation and nationalization of the Indian Railways.

26Copy pinpoint26. Accordingly, the Railways Act 1989 came to be enacted with a view to amend and consolidate the legislation relating to the Railways and to replace the erstwhile Indian Railways Act, 1890. The statement of objects and reasons of the Act, 1989 reads as under: - “STATEMENT OF OBJECTS AND REASONS The Indian Railways, Act, 1890 was enacted at a time when the railways in India were mostly managed by private companies. The Government of India primarily played the role of a coordinating and regulating authority in various matters, such as inter-railway movement of traffic, fixation of rates, sharing of revenue, earnings of through traffic, apportionment of claims liability amongst the railways, providing reasonable facilities to passenger and goods traffic, etc. This role was accordingly reflected in the Act. But now, except for a very small portion of the railways, the entire railway system has become part of the Government of India. To give effect to the changes

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in the railway system from time to time, the Act had also undergone changes number of times since its enactment in 1890. In addition, as some of the original provisions enacted in 1890 had continued without any change, a need for their replacement by new provisions more responsive to the needs of the present day was felt and some other provisions have become redundant. There has also been a demand, both within and outside Parliament, for the re-enactment of the Act so as to reflect the large number of changes that have occurred in the railways. It has, therefore, become necessary to consolidate and amend the law relating to railways by a new act.

2. The Bill, while giving effect to the changes that are necessary due to the change of circumstances, provides, among other things, for the following matters, namely: - (i) The railways are being administered by zonal railways. This position had not been given effect to in the Act. The Bill provides for the constitution of railway zones, abolition of existing zones and appointment of General Managers as heads of these railways administrations. (ii) Power has been given to the Central Government to fix the rates for the carriage of passengers and goods over the railways instead of the existing provisions to fix only the maximum and minimum rates for such carriage and leaving the fixation of specific rates to the railway administrations. In addition, the railway administrations are also being authorised to specify lump sum rates for the carriage of goods. (iii) In accordance with certain judicial pronouncements, the Bill provides for statutory recognition of the railway receipt as a negotiable instrument. (iv) The Bill specifically provides for limiting the monetary liability of railway administrations in respect of payment of compensation of loss, damage, etc. of goods. Provision has, however been made for full liability subject to the condition that the consignor while entrusting the goods to a railway administration

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for carriage, should declare the value of the goods and pay a percentage charge on such value. (v) The offences included in the Act have been rationalised and a few new offences have also been included in the Bill. Punishment for some of the offences had not been changed since the enactment of the Act. Penalties provided for the offences under the Act have been made more stringent which would include, among other things, a minimum punishment for many of the offences.

3. The Bill seeks to achieve the aforesaid objects.” (Emphasis supplied)

27Copy pinpoint27. The Act, 1989 is a consolidating and amending legislation relating to the Railways which received assent and came into force on 03.06.1989 replacing the erstwhile Act, 1890 by virtue of the repealing provision contained in Section 200 of the Act, 1989. The Act, 1989 is divided into 16 Chapters and 200 Sections. Chapter XI of the Act, 1989 sets out the provisions (Section(s) 93 to 112) relating to the Responsibilities of Railway Administration as Carriers, and it deals with claims for refund and compensation in respect of the goods carried by railway.

28Copy pinpoint28. In addition to the aforesaid statute, the Railway Claims Tribunal Act, 1987 was also enacted for the establishment of the Railway Claims Tribunal with a view to provide the procedural framework and forum for inquiry, determination and adjudication of claims against the railway administration. The statement of objects and reasons of the RCT Act reads as under: - “STATEMENT OF OBJECTS AND REASONS An Act to provide for the establishment of a Railway Claims Tribunal for inquiring into and determining claims against a railway administration for loss, destruction, damage, deterioration or non-delivery of animals or goods entrusted to it to be carried by railway or for the refund of fares or freight or for compensation for death or injury to passengers occurring as a result of railway accidents or untoward incidents] and for matters connected therewith or incidental thereto.”

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29Copy pinpoint29. Section 13 of the RCT Act provides that the Railway Claims Tribunal shall inter-alia exercise powers and jurisdiction under Chapter VII of the erstwhile Act, 1890 (now Chapter XI of the Act, 1989) pertaining to inquiry and determination of claims for compensation for loss, destruction, damage etc. and claims for refund of freight etc. in respect of goods carried by railway. The said provision reads as under: - “13. Jurisdiction, powers and authority of Claims Tribunal. – (1) The Claims Tribunal shall exercise, on and from the appointed day, all such jurisdiction, powers and authority as were exercisable immediately before that day by any civil court or a Claims Commissioner appointed under the provisions of the Railways Act, — (a) relating to the responsibility of the railway administrations as carriers under Chapter VII of the Railways Act in respect of claims for — (i) compensation for loss, destruction, damage, deterioration or non-delivery of animals or goods entrusted to a railway administration for carriage by railway; (ii) compensation payable under section 82A of the Railways Act or the rules made thereunder; and (b) in respect of the claims for refund of fares or part thereof or for refund of any freight paid in respect of animals or goods entrusted to a railway administration to be carried by railway. (1A) The Claims Tribunal shall also exercise, on and from the date of commencement of the provisions of section 124A of the Railways Act, 1989 (24 of 1989), all such jurisdiction, powers and authority as were exercisable immediately before that date by any civil court in respect of claims for compensation now payable by the railway administration under section 124A of the said Act or the rules made thereunder.

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(1B) The Claims Tribunal shall also exercise, on and from the commencement of Part XIV of Chapter VI of the Finance Act, 2017 (7 of 2017), the jurisdiction, powers and authority conferred on the Tribunal under Chapter VII of the Railways Act,1989 (24 of 1989). (2) The provisions of the Railways Act, 1989 (24 of 1989) and the rules made thereunder shall, so far as may be, be applicable to the inquiring into or determining, any claims by the Claims Tribunal under this Act.” (Emphasis supplied)

30Copy pinpoint30. Section 15 of the RCT Act bars the jurisdiction of courts and other authorities from entertaining or exercising any power in respect of matters referred to in Section 13 of the RCT Act. The said provision reads as under: - “15. Bar of jurisdiction. — On and from the appointed day, no court or other authority shall have, or be entitled to, exercise any jurisdiction, powers or authority in relation to the matters referred to in sub-sections (1), (1A) and (1B) of section 13.”

31Copy pinpoint31. Section 16 of the RCT Act provides that an application may be made to the Railway Claims Tribunal for any claim of compensation or refund from the railway administration as provided under Section 13 of the said Act. The said provision reads as under: - “16. Application to Claims Tribunal. — (1) A person seeking any relief in respect of the matters referred to in sub-section (1) or sub-section (1A) of section 13 may make an application to the Claims Tribunal. (2) Every application under sub-section (1) shall be in such form and be accompanied by such documents or other evidence and by such fee in respect of the filing of such application and by such other fees for the service or execution of processes as may be prescribed: Provided that no such fee shall be payable in respect of an application under sub-clause (ii) of clause (a) of sub-

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section (1) or, as the case may be, sub-section (1A)] of section 13.”

32Copy pinpoint32. Section 23 of the RCT provides for a statutory appeal on both a question of fact and law, to the High Court against any order passed by the Railway Claims Tribunal. The said provision reads as under: - “23. Appeals. — (1) Save as provided in sub-section (2) and notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908) or in any other law, an appeal shall lie from every order, not being an interlocutory order, of the Claims Tribunal, to the High Court having jurisdiction over the place where the Bench is located. (2) No appeal shall lie from an order passed by the Claims Tribunal with the consent of the parties. (3) Every appeal under this section shall be preferred within a period of ninety days from the date of the order appealed against.”

33Copy pinpoint33. Section 17 sub-section (2) of the RCT Act inter-alia provides that no application for claim of compensation or refund from the railway administration shall be entertained by the tribunal, until the expiry of three-months from the date on which the notice of claim was made in accordance with Section 78B of the erstwhile Act, 1890 (now Section 106 of the Act, 1989). The said provision reads as under: - “17. Limitation. — (1) The Claims Tribunal shall not admit an application for any claim— (a) under sub-clause (i) of clause (a) of sub-section (1) of section 13 unless the application is made within three years from the date on which the goods in question were entrusted to the railway administration for carriage by railway; (b) under sub-clause (ii) of clause (a) of sub-section (1) 3[or, as the case may be, sub-section (1A)] of section 13 unless the application is made within one year of occurrence of the accident;

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(c) under clause (b) of sub-section (1) of section 13 unless the application is made within three years from the date on which the fare or freight is paid to the railway administration: Provided that no application for any claim referred to in sub-clause (i) of clause (a) of sub-section (1) of section 13 shall be preferred to the Claims Tribunal until the expiration of three months next after the date on which the intimation of the claim has been preferred under section 78B of the Railways Act. (2) Notwithstanding anything contained in sub-section (1), an application may be entertained after the period specified in sub-section (1) if the applicant satisfies the Claims Tribunal that he had sufficient cause for not making the application within such period.” ii. Scope of Section 106 of the Railways Act, 1989

34Copy pinpoint34. In the present lis, we are concerned with Section 106 of the Act, 1989, which is pari-materia to Section 78B of the erstwhile Act, 1890. Section 106 deals with notice for claim of compensation and refund of overcharge. The said provision reads as under: - “106. Notice of claim for compensation and refund of overcharge. – (1) A person shall not be entitled to claim compensation against a railway administration for the loss, destruction, damage, deterioration or non-delivery of goods carried by railway, unless a notice thereof is served by him or on his behalf,— (a) to the railway administration to which the goods are entrusted for carriage; or (b) to the railway administration on whose railway the destination station lies, or the loss, destruction, damage or deterioration occurs. within a period of six-months from the date of entrustment of the goods. (2) Any information demanded or enquiry made in writing from, or any complaint made in writing to, any of the

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railway administrations mentioned in sub-section (1) by or on behalf of the person within the said period of six months regarding the non-delivery or delayed delivery of the goods with particulars sufficient to identify the goods shall, for the purpose of this section, be deemed to be a notice of claim for compensation. (3) A person shall not be entitled to a refund of an overcharge in respect of goods carried by railway unless a notice therefor has been served by him or on his behalf to the railway administration to which the overcharge has been paid within six months from the date of such payment or the date of delivery of such goods at the destination station, whichever is later.”

35Copy pinpoint35. A close reading of the aforesaid provision would indicate that Section 106 of the Act, 1989 is in two-parts and deals with and encompasses two distinct types of claims that may be made or sought against the railway administration by way of a notice: - (i) First¸ the claims towards the ‘compensation’ from the railway administration which has been provided under Section 106 sub-section (1). The compensation may be sought in respect of any loss or damage or destruction caused to the goods which were being carried by the railway. (ii) Secondly, the claims towards the refund of any ‘overcharge’ that has been levied in respect of any goods which were being carried by the railways, and this has been provided under Section 106 sub-section (3).

36Copy pinpoint36. Thus, Section 106 of Act, 1989 contains the statutory provisions that enables any person to make a claim from the railway administration, either for (i) compensation OR for (ii) refund of overcharge, in respect of any goods which were being carried by the railway by sending a notice of claim.

37Copy pinpoint37. Apart from containing the enabling provision for making a claim, Section 106 further provides when such a claim may be made. Section 106 sub-section (1) provides that a claim for compensation may be made where there has been a loss or damage or destruction or deterioration or non-delivery of the goods that were being carried by the railway. Whereas, Section 106 sub-section (2) provides that a

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claim for refund may be made where there has been an overcharge in respect of the goods carried and the said overcharge was paid to the railway administration.

38Copy pinpoint38. Lastly, Section 106 also provides how a claim may be made and the mode & manner in which the notice must be made by stipulating a pre-condition in the form of a prescribed time-limit for making any claim thereunder: - (i) Section 106 sub-section (1) prescribes twin-conditions for a Notice of Claim for Compensation and provides that such notice must be made within a period of 6-months from the date of entrustment of goods AND the notice must be served to the Railway Administration to whom the goods were entrusted. (ii) Similarly, Section 106 sub-section (3) also stipulates twin- conditions for making a Notice of Claim for Refund of Overcharge and provides that such notice must be made within a period of 6-months from either the date of payment of such overcharge or the date of delivery of the goods in respect of which the overcharge was paid AND that the notice must be served to the railway administration to whom the overcharge was paid.

39Copy pinpoint39. Thus, a statutory time-period of 6-months has been provided for making a notice of claim under Section 106 of the Act, 1989, and if the notice of claim is not made within the stipulated period, then the claim becomes time-barred.

40Copy pinpoint40. The High Court of Gujarat in its decision in Shah Raichand Amulakh v. Union of India & Ors. reported in (1971) 12 GLR 93 had observed that the object behind the time-limit prescribed under Section 78B of the 1890 Act (now Section 106 of the Act, 1989) is to prevent stale or dishonest claims from being made, which if otherwise allowed would make it difficult to enquire into their merits due to lapse of time. The relevant observations read as under: - “3. [...] the object of service of notice under this provision clearly is to enable the railway administration to make an inquiry and investigation as to whether the loss, destruction or deterioration was due to the consignor’s laches or to the wilful neglect of the railway administration and its servants and further to prevent stale and possibly dishonest claims being made when, owing to delay, it may be practically

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impossible to trace the transaction or check the allegations made by the consignor or the consignee. It is, therefore, apparent that the provision requiring that notice of claim must be given within six months even where the claim is for refund of an overcharge in respect of animals or goods carried by railway is intended to prevent stale and perhaps dishonest claims being made when, by reason of lapse of time, it may not be possible to inquire and find out whether the claim made is well-founded or not. [...]” (Emphasis supplied)

41Copy pinpoint41. Shah Raichand Amulakh (supra), further held that the term “overcharge in respect of carriage of goods” used in Section 78B of the 1890 Act (now Section 106 of the Act, 1989) means and includes all such charges that are related to the railway’s carrier business and those which are incidental to the carriage of the goods by railway irrespective of whether they are incurred prior to or subsequent to the railway transit, and thus would include loading and unloading of goods. The relevant observations read as under: - “3. [...] To bring the claim for refund within the mischief of the section, the overcharge must be in respect of goods carried by railway. The words “carried by railway” qualify goods and if any overcharge is recovered in respect of goods which satisfy this description, it would be “overcharge” by the railway administration in respect of demurrage and wharfage charges, it is according to the plain and natural meaning of the words, an overcharge in respect of goods which are carried by railway. 1 do not think it is possible to limit the ambit and coverage of the section by reading the words “overcharge in respect of goods carried by railway” as indicating that the overcharge must be in respect of carriage of the goods. To read these words in such a manner would be to refuse to give effect to their plain natural meaning and to rewrite the section by substituting some such words as “overcharge in respect of carriage of goods.” That would be clearly impermissible under any cannon of construction.

4. [...] Demurrage and wharfage charges are thus clearly terminal charges and though it is true that they

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are charges in respect of the period subsequent to the completion of the transit, all the same, they are incidental to the business of the railway administration as a carrier. These charges are, therefore, not unrelated to the business of a carrier carried on by the railway administration. The railway administration makes these charges because there is delay in unloading the wagon or removing the goods from the platform. These are clearly charges in respect of the goods carried by railway as much as freight and other charges. If, therefore, there is any overcharge made by the railway administration in respect of demurrage and wharfage charges, a claim for its refund would clearly come within the scope and ambit of Section 77. It would be a claim for refund of an overcharge in respect of goods carried by railway within the meaning of that section.” (Emphasis supplied)

42Copy pinpoint42. The Orissa High Court in Union of India & Ors. v. Steel Authority of India Ltd. reported in (1996) SCC OnLine Ori 60, while examining Section 78B of the Act, 1890, made the following pertinent observations which are reproduced as under: - “12. [...] What this section provides for is, apart from claim for compensation for the loss, a claim for refund of overcharge to a person in respect of animals or goods carried by the Railways. The condition precedent for making such a refund is that the person should have preferred a claim in writing for such overcharge or compensation within six months of the date of delivery of the animals or goods for being carried by the Railway.” (Emphasis supplied)

43Copy pinpoint43. Thus, it can be seen from above that when it comes to a Notice for Claim for Refund of Overcharge under Section 106(3) of the Act, 1989 the following conditions must be fulfilled: - a. Claim must be for refund of an ‘Overcharge’, b. Overcharge must have been paid to the Railway Administration in respect of the goods carried by the railway

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c. Notice must be issued within 6-months from the date of payment or delivery of goods for which overcharge was paid, and d. Notice must be served to the concerned railway administration to whom the overcharge was paid.

44Copy pinpoint44. Thus, the rigours of Section 106 sub-section (3) i.e., the 6-month time- period for making a notice of claim, is only attracted, when the refund is for an overcharge. Whenever, an application is made under Section 16 of the RCT Act for refund, what needs to be seen is whether the same is for a refund of an overcharge or not? If the claim is for an overcharge, Section 106 sub-section (3) would be applicable. a. What is meant by an “Overcharge”?

45Copy pinpoint45. At this stage, it would be apposite to understand what is meant by the term “overcharge” used in Section 106 of the Act, 1989. The term “overcharge” has neither been defined in the Act, 1989 nor the erstwhile Act, 1890. The term “overcharge” is derived from the word ‘charge’ prefixed by the word ‘over’ and means “something more than the correct amount or more than a certain limit”. The Black’s Law Dictionary has defined “overcharge” as follows [See: Henry Campbell Black on ‘Black’s Law Dictionary’, 4th Edn., 1968 at Pg. 1610]: - “an exaction, impost, or incumbrance beyond what is just and right or beyond one’s authority or power.”

46Copy pinpoint46. The Law Lexicon has defined the term “overcharge” as “a charge of a sum, more than is permitted by law”. [See, P. Ramanatha Aiyar on ‘The Law Lexicon’, 2nd Edn., 1997 at Pg. 1389].

47Copy pinpoint47. The term “overcharge” as used in Section 78B of the Act, 1890 (now Section 106 of the Act, 1989) was first interpreted by the Gujarat High Court in Shah Raichand Amulakh (supra) to mean any charge in excess of what is prescribed or permitted or due by law. It was further held, that for a sum to be an overcharge, it must be of the same character as the charge itself or of the same genus of charge. Accordingly, the High Court held that the demurrage and wharfage charges that had been levied on a consignment in excess of what was permissible under the law was an overcharge under Section 78B. The relevant observations read as under: - “2. [...] “Overcharge” is not a term of Article It is an ordinary word of the English language which according

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to its plain natural sense means any charge in excess of that prescribed or permitted by law. To be an overcharge, a sum of money must partake of the same character as the charge itself or must be of the same genus of or class as a charge; it cannot be any other kind of money such as money recovered where nothing is due. Overcharge is simply a charge in excess of that which is due according to law.” (Emphasis supplied)

48Copy pinpoint48. In yet another decision of the Gujarat High Court in Union of India v. Mansukhlal Jethalal reported in (1974) SCC OnLine Guj 12 the scope of Section 78B of the Act, 1890 (now Section 106 of the Act, 1989) came to be examined. In the said case, the Railway besides the freight was levying new charge in the form of shunting charges etc. It was contended that since, the freight encompassed the terminal charges for shunting, the additional charges being levied was arbitrary and illegal. The High Court held that since the additional charges were not being levied in excess of the prescribed charges, but were an altogether a different charge, the same could not be termed as an overcharge and thus, Section 78B of the Act, 1890 was not attracted and no notice of claim was required. The relevant observations read as under: - “2. The trial Court has held that it has got jurisdiction to entertain this suit. It is also held that no claim notice as contemplated under Section 78-B of the Indian Railways Act, 1890 (which will be hereinafter referred to as “the Act”), was necessary as it was not a case of recovery of over charges. Non-giving of such a notice, therefore, was not fatal to the suit. The material averments made in the plaint are, that the plaintiff booked salt from Kuda Salt Siding Station, on the line of Western Railway Administration, owned and represented by the Union of India (original defendant), to salt merchants at Dhrangadhra and at various other stations. That the said salt consignments are booked in wagon loads from Kuda Salt Siding Station. In para 12 it is averred that since 1-6-1961 the Western Railway Administration, in addition to charging usual freight on goods, traffic from and to Kuda Salt Siding

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Station, wrongly, illegally, arbitrarily and unreasonably levied an additional new charge by- way of siding charges or shunting charges or placement of wagon charges or removal of wagon charges. In paras 13 to 18, reference is made regarding the increases made, in those charges from time to time and such collections made. In para 26, it is averred that the, defendant Western Railway Administration charged freight on the wagon load salt consignment of the plaintiff from Kuda Salt Siding Station to destination and the said freight includes terminal charges for shunting, placement and removal of wagons at the place where, the salt, to be loaded, is stacked and hence the defendant- Western Railway Administration, in addition to freight, is not entitled to levy new charge with effect from 1-6-61 either as siding charges or as shunting charges or as placement charges or as removal charges or under the pretext of any other charge and the levy of the said new charge from the plaintiff with effect from 1-6-61 is wrong all the arbitrary, unauthorised and unreasonable and excessive and the plaintiff is entitled to the refund of this new charge paid by him to the defendant-Western Railway Administration. This also amounts to double taxation. In para 28 of the plaint, plaintiff actually refers to the total amount recovered in that manner. In the relief clause 33 prayer made is to recover the suit amount which includes the amount it paid by way of new charges as said earlier, and the notice charges, and it is in terms stated that it is a claim for refund of new charger by way of siding charges, shunting charges, placement charges received by the defendant Western Railway Administration from the plaintiff. xxx xxx xxx

27. In the instant case, it is not the opponent’s case that charges in excess of the prescribed charges were recovered from him and he wants refund of such charges. What he claims is that the railway administration had collected such charges illegally, arbitrarily and unreasonably. These charges referred to as ‘new charges’ were levied by the railway administration from time to time and such collections made in the past are challenged on the aforesaid grounds.

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In my opinion, they cannot be termed ‘overcharges’, so as to attract the provisions of Section 78-B [...]” (Emphasis supplied)

49Copy pinpoint49. In Birla Cement Works v. G.M. Westerm Railways & Anr. reported in (1995) 2 SCC 493, this Court held that the excess freight charged by mistake due to a wrong calculation of distance was an overcharge and thus, was covered by Section 78B of the 1890 Act (now Section 106 of the Act, 1989). The relevant observations read as under: - “2. The principal contention raised by the petitioner is that it had discovered the mistake when the railway authorities confirmed by their letter dated 12-10-1990 that they had committed a mistake in charging excess freight on wrong calculation of distance. The limitation starts running from the date of discovery of mistake and, therefore, stands excluded, by operation of Section 17(1)(c) of the Limitation Act, 1963 (Act 21 of 1963) and that Section 78-B has no application to the facts in this case. In consequence, the High Court and the Tribunal have committed error of law in rejecting the claim for refund. We find no force in the contention. xxx xxx xxx

4. [...] Section 78-B of the Act provides that a person shall not be entitled to refund of overcharge or excess payment in respect of animals or goods carried by Railway unless his claim to the refund has been preferred in writing by him or on his behalf to the Railway Administration to which the animals or goods were delivered to be carried by Railway etc. within six months from the date of the delivery of the animals or goods for carriage by Railway. The proviso has no application to the facts of this case. An overcharge is also a charge which would fall within the meaning of Section 78-B of the Act. Since the claims were admittedly made under Section 78-B itself but beyond six months, by operation of that provision in the section itself, the claim becomes barred by limitation. Therefore, the Tribunal and the High Court have rightly concluded that the petitioner is not entitled to the refund of the amount claimed.” (Emphasis supplied)

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50Copy pinpoint50. In Steel Authority of India Ltd. (supra), the goods were booked to be carried through a longer-route and the freight was accordingly charged for the long route. However, the goods instead were dispatched through the shorter route. The Orissa High Court held that overcharge is anything charged in excess of what is actually to be charged for a particular thing. The High Court observed that as the goods had been booked for the longer route, the freight was also payable for the longer route. Since, no freight in excess of what was payable was realized, the High Court held that the claim for refund of the difference in freight charges was not one of overcharge. The relevant observations read as under: - “4. [...] the coal imported at Visakhapatnam Port for carriage to Rourkela Steel Plant was required to be booked and carried by the longer route covering 1082 kilometres instead of by the shorter route of 667 kilometres. According to the plaintiff, in view of the rationalisation scheme and the general order, it had no choice but to pay freight for the longer route, as booking could not be for carriage over the shorter route.

5. It is the further case of the plaintiff that in or about April, 1987, an officer came to know that some of the rakes booked were despatched to Rourkela by the shorter route (covering a distance of 667 kilometres) though weight charges were recovered for carriage by the longer rationalised route (covering a distance of 1082 kilometres). On further enquiry made at different junctions, it was gathered that during the period 15-4-1986 to 28-11-1986 and 5-1-1987 to 28-2-1987, a large quantity of imported coal booked from Visakhapatnam to Bondamunda had in fact been carried, not by the rationalised route but by the shorter route. On coming to know about the aforesaid fact, alleges the plaintiff, it lodged a demand for refund of the differential amount of Rs. 1,32,87,749/-, but the same was turned down. [...] xxx xxx xxx 13-A. The word “overcharge” has not been defined in the Act. Therefore, the common parlance meaning has to be taken to explain its meaning. In common parlance, the

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simple meaning of “overcharge” is anything charged in excess of what is actually to be charged for a particular thing. Taking this to be the meaning of “overcharge”, it has to be seen as to whether the claim of the respondent is or is not for refund of overcharge. Admittedly, the goods were booked for being carried over the rationalised route which covers a distance of 1082 kilometres. It is neither the respondent’s case nor the appellants’ case that what was charged towards freight was in excess of what was payable for the distance of 1082 kilometres. In other words, the respondent was not “overcharged” because no freight in excess of what was payable for 1082 kilometres was realised.

14. To appreciate the meaning of “overcharge”, as illustration from the facts of the present case would, I feel, be appropriate. Say for example, ‘A’ had booked the coal for being carried by the shorter route covering a distance of 667 kilometres but freight was charged from him for the longer route covering a distance of 1082 kilometres. Here, since the coal was booked to be carried by the shorter route, freight ought to have been determined accordingly. So, any amount recovered from ‘A’ towards freight in excess of what was legally payable for the distance of 667 kilometres would be an ‘overcharge’ because what was recovered from him was over and above what was actually payable for the distance of 667 kilometres over which goods were booked. Alternatively, if ‘A’ had booked the goods over the longer route covering a distance of 1082 kilometres and freight was charged for such distance but carriage was over the shorter route covering distance of 667 kilometres, in such a situation, if ‘A’, on coming to know that though he had booked the goods to be carried over the longer route and had paid the freight accordingly yet as the goods were carried over the shorter route, claims for a refund, this claim would not be one for “overcharge” for the simple reason that he had booked the goods by a particular route and paid the freight that was payable for that distance. The claim of the respondent in the present case is of a like nature. Thus, under no stretch

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of imagination can it be said that its claim is for refund of over-charge. The contention of the learned counsel for the appellants that the claim made by the respondent for refund of overcharge, therefore, must fail.” (Emphasis supplied)

51Copy pinpoint51. In Rajasthan State Electricity Board v. Union of India reported in AIR 2001 Bom 310, the freight was initially being charged on an inflated distance rate as fixed by the Central Government. Later the freight was fixed to be charged on the actual distance, however, the railway continued charging freight as per the old inflated distance under a mistaken belief that the same was still applicable. The High Court prima-facie was of the view that the refund of the difference in freight was an overcharge and thus barred by Section 106(3) of the Act, 1989. However, the High Court relegated the petitioners therein to avail the statutory remedy and dismissed the writ petition leaving all issues open for determination by the Railway Claims Tribunal. The relevant observations read as under: - “2. The facts of the case, which are not in dispute, are:— Petitioners, Rajasthan State Electricity Board, are an autonomous public body, wholly owned and controlled by the State Government of Rajasthan. For the generation of electricity at their Thermal Power Station at Kota (Rajasthan), coal is transported from collieries situate in areas covered by the Eastern and South Eastern Railways to a station called Gurla, situate in Kota Division of the Western Railway. Between the 4th March, 1992 and 31st December, 1992, the Petitioners booked 248 rakes for carrying coal to Gurla. The routes on which these wagons were transported include a section of Central Railway, viz., Katni-Singrauli. In exercise of powers under section 71 of the Railways Act, 1989, the Central Government had imposed, for movement of coal wagons over this section “inflated distance rate” of freight. Consequently, for the coal wagons moved by the petitioners, the freight included the inflated distance rate for this particular section of Katni- Singrauli. For the wagons booked by the petitioners, freight was paid at Gurla Station of Kota Division of the Western Railway. The Railway Authorities charged the petitioners

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freight on the basis of inflated distance rate over Katni- Singrauli section upto 31st December, 1992, but from the 1st January, 1993, the Railways started charging freight on the basis of actual distance for Katni-Singrauli section, instead of inflated distance rate, and the petitioners paid the charges on that basis. xxx xxx xxx

9. It was submitted on behalf of the Petitioners that sub- section (3) of section 106 of the Railways Act, 1989 is not attracted in the facts of this case-inasmuch as there was no dispute regarding the over-charge. The instant case was a case of collection of inflated distance charge without authority of law. It was submitted that there is a distinction between over-charge and a wrong charge. It was, therefore, submitted that the Petitioners were not required to give notice as contemplated by sub-section (3) of section 106 of the Railways Act, 1989, since the claim was not a claim for refund of an overcharge in respect of goods carried by railway. On the other hand, the respondents contend that this clearly a case where the Petitioners claim refund of an over-charge in respect of goods carried by railway, and, therefore, admittedly, the Petitioners claim that they have been charged more than what they should have been charged because the circular under which inflated distance charge was levied had been withdrawn, and was not operative during the period in question. Despite this, the Petitioners were compelled to pay the inflated distance charge.

10. In our view, the submission urged on behalf of the respondents must prevail, and the same is clearly supported by the principles laid down by the Apex Court in Birla Cement Works v. G.M., Western Railways, (1995) 2 SCC 493 : AIR 1995 SC 1111. The petitioner therein manufacturer of Cement at Chittorgarh in Rajasthan, had transported cement to various destinations through railway carriages. Prior to 3rd May, 1989, the Petitioner got the cement transported through meter gauge from the railway siding at Chanderia. After conversion into broad gauge the railway siding was at Difthkola Chittor Broad Gauge Rail

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Link. Consequently, 34 kilometres’ distance was added to levy freight charges. Thereafter, between May-June, 1989 and March, 1990 the Petitioner had booked various consignments of cement and transported them to diverse destinations and paid the freight charges. Later, on January 21, 1991, the Petitioner had sent a notice to the Western Railway under section 78-B of the Indian Railway Act, 1890, claiming refund of different amounts. Since it was rejected, the Petitioner laid a claim under section 16 of the Act before the Railway Claims Tribunal, which dismissed the petition holding the same to be barred under section 78-B of the Indian Railway Act, 1890. xxx xxx xxx

16. [...] Having regard to the scheme of the Act, we are satisfied that it provides a complete mechanism for correcting any error, whether of fact or law, and that not only a remedy is provided by way of claim before a Tribunal, but also a further appeal to this Court, which is a Civil Court. It would, therefore, not be appropriate for this Court, in exercise of its writ jurisdiction, to give relief, which authority, in law, has been vested in the Claims Tribunal under section 13 of the Railway Claims Tribunal Act, 1987. xxx xxx xxx

18. We, therefore, find no merit in this Writ Petition, and the same is accordingly dismissed, and Rule discharged, but without prejudice to the right of the petitioners to seek remedy before the appropriate forum, if so advised.” (Emphasis supplied)

52Copy pinpoint52. The aforesaid decision of the Bombay High Court came to be challenged before this Court. A 2-Judge Bench of this Court in Rajasthan State Electricity Board v. Union of India reported in (2008) 5 SCC 632, set-aside the High Court’s order and held the appellant therein to be entitled to refund of the freight charges. The relevant observations read as under: - “4. In the present case between 4-3-1992 and 31-12-1992 the appellant had booked rakes for carrying coal to Gurla.

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