IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE TWENTIETH DAY OF AUGUST TWO THOUSAND AND NINE PRESENT THE HON'BLE MS JUSTICE G.ROHINI WRIT PETITION NO : 11599 of 2009 Between: Cement Corporation of India Ltd., Tandur Unit Rep. by its Assistant Engineer (Civil / HOD Civil) R/o. Tandur, R.R. District. ..... PETITIONER AND 1 South Central Railway Rep. by its General Manager Secunderabad. 2 Chief Traffic Planning Manager Transportation Branch South Central Railway, Secunderabad. .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue a Writ of Mandamus or any other appropriate writ, order or orders, Direction or Direction to declare the action of the Respondents in issuing the proceedings dated 15-5-2009 in No.T/143/C/520 whereby the 1st Respondent has converted the Private Railway Siding of the petitioner into a Railway Line in a manner contrary to the Agreement dated 25-11-1985 and against the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 as illegal, arbitrary and unconstitutional and to direct the Respondents to act in accordance with law. Counsel for the Petitioner : MR. V.SRINIVAS Counsel for the Respondents : MR. T.S.VENKATARAMANA The Court made the following : THE HON’BLE Ms. JUSTICE G.ROHINI WRIT PETITION No.11599 of 2009 ORDER: The petitioner is a company owned by the Central Government. One of the cement factories of the writ petitioner is situated at Tandur, R.R. District. Since the factory is situated at a distance of 12 km. from Tandur Railway Station, the South Central Railway permitted the petitioner company in the year 1985 to have a Railway siding from Tandur Railway Station to the factory premises of the petitioner for the purpose of transportation of raw material as well as the finished produce in Railway wagons. In pursuance thereof, the construction of Railway siding was done by the Railways as against depositing of Rs.6 lakhs by the petitioner. The land to an extent of Acs.166.36 was also purchased by the petitioner for laying the said 12 km. Railway siding. Except an extent of 106 meters of the Railway siding situated nearby Tandur Station which belongs to the Railways, the rest of the Railway siding belongs to the petitioner exclusively. For the purpose of maintenance of the said Railway siding, the petitioner entered into an agreement with the Railways in the year 1985, according to which the petitioner fully bears the cost of maintenance and operation of the Railway siding. Accordingly, the petitioner has been making use of the Railway siding for transportation of the raw material as well as its finished products for the past 24 years. While so, the Indian Cements Limited, a Public Limited Company, has taken over a cement factory belonging to M/s. Visaka Cement Industries Limited, which is situated near the factory of the petitioner near Tandur. Thereafter, M/s. Visaka Cement Industries Limited, requested the petitioner to permit them to take a branch line through the Railway siding of the petitioner in order to connect their factory with the Tandur Railway station. The petitioner states that since the negotiations took place during 1999-2001, could not be materialized, the Railways had nominated an Arbitrator for finalizing the modalities for sharing rental of the capital cost and maintenance charges for sharing portion of the existing Railway siding. In the meanwhile, the Railways by letter dated 23.01.2006 permitted M/s. Visaka Cement Industries Limited to take a Railway siding over the petitioner’s Railway line. Immediately thereafter, on 02.02.2006 and 20.02.2006, the petitioner informed the Railways that sharing or splitting up of its asset with a private party is not permissible without the prior approval of the B.I.F.R. in view of the pendency of the proceedings before the BIFR vide case No.501 of 1996. Without considering the said representations made by the petitioner, the Railways by communication dated 24.08.2006 informed the petitioner that as per Clause 19 of the Siding Agreement, the Railways was competent to permit M/s. Visaka Cement Industries Limited to take a Railway siding from the existing Railway line. By letter dated 5/11.09.2006, the petitioner replied that it has to be adequately compensated before any private party is permitted to make use of its Railway siding. In spite of series of letters, the Railways did not accept the petitioner’s claim for compensation. In the meanwhile, M/s. Visaka Cement Industries Limited started executing work for the purpose of laying the branch line from its factory to the Railway siding of the petitioner at 9/8-9 kms. In the circumstances, the petitioner filed O.S.No.702 of 2006 in the Court of the District Judge, R.R. District and by order dated 26.10.2006 status quo was ordered. However, after hearing both sides, the order of status quo was vacated on the ground that an Arbitrator was already appointed for resolving the dispute between the parties. Thereafter, the Arbitrator, who was appointed in terms of Clause 34 of the Railway Siding Agreement, passed an Award dated 24.09.2007 fixing the tollage charges to be paid by M/s. Visaka Cement Industries Limited to the petitioner and also incorporating other conditions to enable laying of a branch railway siding by the said company. An agreement was also entered into between the petitioners and M/s. Indian Cements Limited, the successor of M/s. Visaka Cement Industries Limited, on 05.02.2008 followed by a supplementary agreement dated 26.09.2008. According to the said agreement, M/s. Indian Cements Limited has to pay Rs.10.43 lakhs every month on quarterly basis. A security deposit of Rs.31.29 lakhs was also to be kept with the petitioner. The maintenance of the Railway siding will be on the petitioner and the petitioner gets a priority for using the Railway siding. Both the parties have been implementing the conditions agreed upon. While the things stood thus, the 2nd respondent issued the impugned proceedings dated 15.05.2009 converting a portion of the petitioner’s Railway siding lead line from the take off point at Tandur station yard i.e., from km 0/0 upto km 10 into a Railway line and making it clear that the said portion would be worked for public traffic henceforth and in lieu of the same the petitioner would be allowed facilities for their traffic without any maintenance cost. Aggrieved by the same, the present writ petition is filed contending that the impugned order dated 15.05.2009 by virtue of which the Railway siding belonging to the petitioner from Tandur Station to a stretch of 10 km. will become the property of the 1st respondent without payment of any compensation is arbitrary and illegal. It is also contended by the petitioners that though Clauses 20 and 23 of the Agreement empowers the Railway Administration for such conversion of the Railway siding, it has to be preceded by a six months notice apart from payment of costs. Since no such notice was issued, the impugned order is arbitrary and illegal. It is further contended that as per Section 22 of Sick Industrial Companies (Special Provisions) Act, 1985 the properties of the petitioner, which is a sick unit and the scheme sanctioned by BIFR as modified by AAIFR is under implementation, cannot be effected in any manner by anybody without the prior consent of the BIFR. Since no such consent is obtained, on that ground also the impugned order is illegal. Even on facts, it is contended that there is no scope for enabling any other person to use the Railway siding since the Railway siding in question commences at Tandur Railway Station and ends at the factory of the petitioner exclusively for transportation of its raw material and finished product. It is also alleged that the reason shown by the 1st respondent that the conversion is required for public use is false and without any basis. In the counter affidavit filed on behalf of the respondents, while denying the petitioner’s plea that the impugned action was contrary to the terms and conditions of the Siding Agreement, it is contended that the writ petition itself is not maintainable since Clause 34 of the Agreement provides for arbitration. It is also contended that the impugned order is not a termination as contemplated under Clause 20 and 23 of the agreement and therefore, no prior notice is necessary as contended by the petitioner. I have heard the learned counsel for both parties. Clause 34 of the Siding Agreement entered into between the petitioner and the Railways provides that any dispute or difference between the parties shall be resolved amicably by mutual consultation or through the good offices of empowered agencies of the Government. If such resolution is not possible, then the unresolved dispute or difference shall be referred to arbitration of an Arbitrator to be nominated by the Secretary, Department of Legal Affairs in terms of Memorandum, dated 19th December, 1975 issued by the Cabinet Secretariat, Department of Cabinet Affairs as modified from time to time. As a matter of fact, the petitioner had earlier invoked the said clause and sought arbitration on the dispute relating to tollage charges fixed by the Railways. However, the learned counsel for the petitioner contended that the impugned action being in violation of the principles of natural justice and also in breach of the contractual terms, the alternative remedy under Clause 34 of the Agreement is not a bar. It is also contended that the respondent being a State within the meaning of Article 12 of the Constitution of India is bound to act fairly even in contractual mattes and therefore the jurisdiction of this Court under Article 226 of the Constitution of India can be invoked notwithstanding the alternative remedy of arbitration. It is also the contention of the petitioner that six months prior notice is mandatory under Clauses 20 & 23 of the Agreement which empower the Railways to terminate the agreement or to work a portion of the siding for public traffic. The specific allegation of the petitioner is that no such notice was given by the Railways about the impugned action. For proper appreciation of the above contentions, it is necessary to extract the impugned order dated 15.05.2009 which runs as under: “ORDER: Now in terms of the provisions contained in clause 19, 19(a),19(b), 20(a) and 23 of the siding agreement between M/s Cement corporation of India, Tandur and the Railway Administration, and further to the notice served to M/s. CCI vide reference above, General Manager, South Central Railway has ordered that the portion of the CCI siding lead line from the take off point at Tandur station yard i.e. from Km 0/0 upto Km 10 will hence forth be converted into a railway line and the said portion of the siding will be worked for public traffic, and in lieu of the portion of the siding so taken over and worked for public traffic, M/s. CCI will be allowed facilities for their traffic equivalent and more (track being upgraded on the converted portion) without any maintenance cost, OHE cost or up-gradation cost for the converted portion thereof as mentioned above. This issue as per the orders of General Manager.” On a reading of the above order, it is clear that a portion of the Railway siding in question i.e., from km 0/0 to km 10 has been converted into a Railway line and the said portion has been ordered to be worked for public traffic. The said order, in my considered opinion, cannot be treated as a termination of agreement as contemplated under Clause 22 of the agreement which runs as under: 22. Power to Terminate Agreement if Traffic in sufficient:- (a) Notwithstanding any thing contained in this Agreement the Railway Administration shall be entitled, in the event of the Railway Administration being of the opinion that the Applicant’s traffic over the siding is insufficient to justify the retention of the siding by the Applicant, of which event the Chief Operating Superintendent/Chief Commercial Superintendent of the Railway Administration will be the sole judge to terminate this Agreement by giving to the Applicant not less than 6(six) month’s previous notice in writing of the Railway Administration’s intention to terminate this Agreement and on the expiry of such notice, this Agreement shall stand terminated. As could be seen from the Clause extracted above, termination of agreement can be resorted to when the Railway Administration is of the opinion that the petitioner’s traffic over the siding is insufficient to justify the retention of the siding. In such an event, the agreement can be terminated by giving not less than six months notice in writing. In the instant case, it is nobody’s case that the petitioner’s traffic over the siding in question is insufficient. The Railways never made such allegation nor Clause 22 was invoked while passing the impugned order. It is clear from the impugned order that a portion of the siding in question has been converted into a Railway line for public traffic invoking Clauses 19, 20 and 23 of the Agreement. The above Clauses run as under: “19. Railway Administration’s Rights regarding Use of the Siding:- In addition to any other rights, powers and liberties herein provided for, the Railway Administration shall have the following rights, powers and liberties, to ever and in connection with the siding of any extension of part hereof namely (a) To use the siding or any extension or part thereof for the purposes of the Railway Administration free of charge or any remuneration to the Applicant in respect of such use. (b) To connect or allow to be connected with the siding or any extension or part thereof any other siding of siding branching of extending there from which may have been constructed or which is hereafter be constructed or by under the authority of the Railway Administration for any other person or persons whomsoever or for the purpose of the Railway Administration and to make or allow such alterations as may be necessary to effect such connection. (c) … … … … … … (d) … … … … … … 20. Conversion of the siding:- The Railway Administration may whenever they shall think proper convert the entire portion of the said siding (coloured Red and Green on the said plan) or part thereof into Railway or Assisted siding by giving to the Applicant six month’s notice of their intention so to do on payment of such costs to the Applicant as would be considered reasonable by the Railway Administration at the time of conversion. The decision of the General Manager of the Railway Administration on the amount to be paid shall be final and binding on the parties. 23. Power to close the portion of the siding within Railway land coloured red in the annexed plan or work it for public traffic:- In the event of the Railway Administration deciding in the public interest to close the siding any part or extension thereof or to work the siding or any part or extension thereof for public traffic as part of the Railway system (the decision of the Railway being final in this case and the service of the notice as hereinafter stated shall be conclusive evidence of the same the Railway Administration may terminate this Agreement by giving to the Applicant 6 (six) month’s previous notice in writing of such decision and on the expiration of such notice this Agreement shall terminate.” On a combined reading of the above Clauses of the Agreement, it is clear that the Railways is empowered to use the siding for the purpose of the Railway Administration free of charge. That apart, the Railway Administration can also convert the entire portion of the said siding or part thereof into Railway siding. However, for such conversion, six months notice of their intention so to do on payment of such costs has to be given. Clause 23 further makes it clear that the Railway administration in the public interest can close the siding or extend the same for public traffic as a part of the Railway system. The decision so taken under Clause 23 is final, however the Railway administration is required to give six months previous notice in writing of such decision and on the expiration of such notice the agreement shall terminate. In the instant case, a notice was served on the petitioner on 11.10.2006 stating that Clause 19 (a) enables the Railways to take over siding lead line in public interest free of cost and informing the petitioner that the Railways are shifting the take off point from mid section of Tandur station yard and maintenance will not be on CCI account for the portion up to km.9/8-9 which is treated as the common portion to carry the Railway revenue earning traffic as well as eliminate any safety hazards to the public at large. Prior to that, there was another letter by the Railways on 25.01.2006 in which the petitioner was informed that it was decided by the Railways to permit take off for the ICL siding to enable the trainload traffic from the ICL plant by utilizing part of the existing lead line as common portion and that the provision of rail connectivity is essential in order to meet the rail-bound traffic and keeping in view the over all logistics for rail customers. The petitioner was also informed that necessary modifications and linking arrangements on the main line as well as at chainage 9/8-9 of the lead line will be undertaken shortly. There was also another letter on 24.8.2006 informing the above said decision and stating that the said provision of rail connectivity is operationally essential in order to meet the rail bound traffic and keeping in view the over all logistics for rail customers. The petitioner was also assured that this arrangement would not affect the movement of traffic to the petitioner siding. Again another letter was addressed on 27.9.2006 inviting the attention of the petitioner to clauses 20, 22 and 23 of the agreement which authorizes the Railway administration to utilize, provide connectivity, convert or close a siding for reasons detailed therein. Having regard to the above said letters addressed by the Railways informing their intention to convert a portion of the siding in question for public traffic, I am unable to hold that there was no prior notice to the petitioner as required under Clauses 20 and 23 of the agreement. However, it is contended by the petitioner that the letter dated 11.10.2006 was addressed by the 1st respondent when the petitioner was opposing opening of the branch railway siding without compensation and the said issue was resolved subsequently by virtue of the award of the Arbitrator dated 24.9.2007. It is also contended that pursuant to the said award, agreements dated 5.2.2008 and 26.9.2008 were entered into in terms of the conditions agreed upon and the petitioner has been receiving tollage charges from M/s. Indian Cements Limited and therefore the letter dated 11.10.2006 had lost its significance. A reading of the Award dated 24.09.2007 shows that the writ petitioner sought arbitration invoking Clause 34 of the Agreement aggrieved by the order passed by the Railways dated 17.04.2007 wherein 50% of EMI was allowed as tollage besides 25% solatium on the EMI amounting to Rs.7.46 lakhs per month to be paid by M/s. Visaka Cement Industries Limited for the use of Railway linkage and the petitioner’s Railway siding. It is apparent from the order dated 17.04.2007 that there was a dispute between the petitioner and M/s. Visaka Cement Industries Limited with regard to sharing of Railway siding of the petitioner to an extent of 9.9 km by M/s. Visaka Cement Industries Limited. A meeting was held on 24.03.2007 by the General Manager of the Railways and after consulting both the parties, it was decided that a solatium of 25% over the monthly tollage charges shall be paid by M/s. Visaka Cement Industries Limited to the petitioner company for using the Railway siding in question. Accordingly, in exercise of the powers conferred under Clause 19 (c) of the Siding Agreement the General Manger, S.C. Railway, passed the order dated 17.04.2007 working out the usage charges payable by M/s. Visaka Cement Industries Limited to the petitioner company at Rs.5.97 lakhs per month. That apart, Rs.1.49 lakhs per month towards solatium at the rate of 25% was also ordered to be paid. Thus, the total tollage charges payable per month were determined as Rs.7.46 lakhs. Aggrieved by the said order, the petitioner company sought arbitration. In the claim preferred by the petitioner company it was alleged that the order dated 17.4.2007 was passed by the Railway Administration without considering its claim for the cost of laying of new line with a current cost. After hearing both the parties, the Arbitrator passed an Award on 24.09.2007 as under : “In view of the foregoing discussions, I hereby give the following Award. The order of the Railway Administration dated 17th April, 2007 stands modified to the extent that the Railway Administration will direct M/s. Visaka Cement Limited to pay tollage charges of 70% instead of 50%, as worked out by them in paragraph 7 of the order dated 17.04.2007. The maintenance of the track/siding will continue to be responsibility of the M/s. CCI Limited as per the existing terms and conditions. Rest of the calculations, including payment of solatium, as worked out by Railway Administration, will remain unchanged. The Railway Administration will work out the figures accordingly and make offer to Visaka Ltd. for the use of siding/railway track of CCI Ltd. covered under the agreement dated 25.1.1985.” From the above, it is clear that the Award dated 24.09.2007 was only with regard to the fixation of the quantum of tollage charges as well as the maintenance and it has nothing to do with the action of the Railways in permitting M/s. Visaka Cement Industries Limited to use the Railway siding in question for the purpose of using the Railway line. Much prior to that, by letter dated 11.10.2006 the petitioner was put on notice about the intention of the Railways to shift the take off point from mid-section to Tandur Station yard making it clear that the portion upto Km 9/8-9 would be treated as the common portion. As a matter of fact, the sequence of events narrated above made it clear that the petitioner’s objections with regard to conversion of a portion of the Railway siding for public use were already considered and rejected and thereafter the dispute relating to amount of tollage charges fixed by the Railways as well as the method of arriving at the said charges was referred for arbitration and the Award passed thereupon had become final. In the circumstances, it is not open to the petitioner to re-agitate the issue and question the decision taken by the Railways for conversion of a portion of Railway siding in question. So far as the contention that the respondents have committed breach of provisions of Section 22 of the SICA by taking over the property of the petitioner without obtaining the consent of the BIFR is concerned, it is to be noticed that the impugned action in no way affects the rights of the petitioner over the Railway siding in question but it only amounts to modification of the facilities granted initially to the petitioner under the Siding Agreement. Absolutely no case could be made out by the petitioner to show that by virtue of the impugned order the Railway siding in question has become the property of the Railways. Hence, the prior consent of BIFR, as contended by the petitioner is not necessary and on that ground the impugned action cannot be held to be illegal. For the aforesaid reasons, the interference by this Court is not warranted on any ground whatsoever. Accordingly, the Writ Petition is dismissed. No costs. ______________ G. ROHINI,J Date: 20-08-2009 KLP/gbs