W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 1 of 33 IN THE HIGH COURT OF DELHI AT NEW DELHI W.P.(C) 10480/2005 & CMs 7623/2005, 8/2007 Reserved on: October 5, 2010 Decision on: October 25, 2010 JAYASWALS NECO LIMITED ..... Petitioner Through: Mr. Siddharth Bhatnagar with Ms. Sonia Dube and Ms. Priyanka Chaudhary, Advocates. versus UNION OF INDIA & ORS. ..... Respondents Through: Ms. Geetanjali Mohan with Mr. Ketan Madan, Advocate for Railways. W.P.(C) 10930/2005 & CMs 8011, 15463/2005, 9/2007 JAYASWALS NECO LIMITED ..... Petitioner Through: Mr. Siddharth Bhatnagar with Ms. Sonia Dube and Ms. Priyanka Chaudhary, Advocates. versus UNION OF INDIA & ORS. ..... Respondents Through: Ms. Geetanjali Mohan with Mr. Ketan Madan, Advocate for Railways. W.P.(C) 13144/2005 & 10027/2005, 1023/06, 10/2007 JAYASWALS NECO LIMITED ..... Petitioner Through: Mr. Siddharth Bhatnagar with Ms. Sonia Dube and Ms. Priyanka Chaudhary, Advocates. versus UNION OF INDIA & ORS. ..... Respondents Through: Ms. Geetanjali Mohan with Mr. Ketan Madan, Advocate for Railways. W.P.(C) 19958/2005 & CMs 12902, 15462/2005, 11-12/2007 W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 2 of 33 JAYASWALS NECO LIMITED ..... Petitioner Through: Mr. Siddharth Bhatnagar with Ms. Sonia Dube and Ms. Priyanka Chaudhary, Advocates. versus UNION OF INDIA & ORS. ..... Respondents Through: Ms. Geetanjali Mohan with Mr. Ketan Madan, Advocate for Railways. W.P.(C) 20189/2005 & CMs. 13114, 15400/2005, 13-14/2007 JAYASWALS NECO LIMITED ..... Petitioner Through: Mr. Siddharth Bhatnagar with Ms. Sonia Dube and Ms. Priyanka Chaudhary, Advocates. versus UNION OF INDIA & ORS. ..... Respondents Through: Ms. Geetanjali Mohan with Mr. Ketan Madan, Advocate for Railways. W.P.(C) 2103/2007 & CM 3907/2007 JAYASWALS NECO LIMITED ..... Petitioner Through: Mr. Siddharth Bhatnagar with Ms. Sonia Dube and Ms. Priyanka Chaudhary, Advocates. versus UNION OF INDIA & ORS. ..... Respondents Through: Ms. Geetanjali Mohan with Mr. Ketan Madan, Advocate for Railways. W.P.(C) 2177/2007 & CMs 4028/2007, 1363/2008 SUNFLAG IRON AND STEEL CO. LTD. ..... Petitioner Through: Mr. Siddharth Bhatnagar with Ms. Sonia Dube and Ms. Priyanka Chaudhary, Advocates. versus W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 3 of 33 UNION OF INDIA & ORS. ..... Respondents Through: Ms. Geetanjali Mohan with Mr. Ketan Madan, Advocate for Railways. W.P.(C) 3125/2008 & CM 6042/2008 JAYASWALS NECO LIMITED ..... Petitioner Through: Mr. Siddharth Bhatnagar with Ms. Sonia Dube and Ms. Priyanka Chaudhary, Advocates. versus UNION OF INDIA & ORS. ..... Respondents Through: Ms. Geetanjali Mohan with Mr. Ketan Madan, Advocate for Railways. W.P.(C) 9930/2009 & CM 8190/2009 JAYASWALS NECO LIMITED ..... Petitioner Through: Mr. Siddharth Bhatnagar with Ms. Sonia Dube and Ms. Priyanka Chaudhary, Advocates. versus UNION OF INDIA & ORS. ..... Respondents Through: Ms. Geetanjali Mohan with Mr. Ketan Madan, Advocate for Railways. CORAM: JUSTICE S. MURALIDHAR 1. Whether reporters of the local news papers be allowed to see the judgment? No 2. To be referred to the Reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes JUDGMENT 25.10.2010 1. Barring Writ Petition (Civil) No. 19958 of 2005 where the facts are slightly different, the facts in the other eight writ petitions are more or less W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 4 of 33 similar. All the writ petitions, however, involve similar questions of law, and are accordingly being disposed of by this common judgment. 2. The Petitioner, a public limited company having its corporate office in New Delhi, owns an integrated steel plant in Raipur in the State of Chhattisgarh where, inter alia, it produces pig iron. For this purpose, the Petitioner procures iron ore from Tata Iron & Steel Company (`TISCO‟) at Noamundi. There is a railway siding inside the Petitioner‟s steel plant called the Nacast/Mandhar siding. Two staff members of the Commercial Department of the Railways, Respondent No. 1 herein, are posted at the said siding. An office has been constructed with an FAS terminal facility that has a computerized all India wagon tracking system. 3. According to the Petitioner, the iron ore excavated from the mines is stored by TISCO in hoppers called SILO which are situated at a height above the wagon level. The wagons, one after another are placed below the SILO and loaded through a computer-controlled electronic system. There is a control cabin and the quantity of iron ore to be loaded in a wagon, according to the advance payment made by the customer, is fed into the computer by the loading operator at the control cabin and the exact quantity of iron ore is discharged through the chutes into the wagon concerned by a system called `Electronic Weight-o-meter‟. The Petitioner states that since the carrying capacity of a wagon is prescribed and printed on every wagon, W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 5 of 33 the Petitioner has advised its staff and loaders not to load iron ore in any wagon in excess of its carrying capacity. It is stated that this is also the practice followed by TISCO. It is stated that there is a wagon tippler at the said siding inside the Petitioner‟s steel plant. Each loaded wagon is weighed electronically and thereafter the wagon is tippled (overturned) by a hydraulic system and thereafter empty wagon is again weighed automatically and the entire weighment is recorded in the computer. It is stated that by this process the gross weight and tare weight of a wagon are ascertained. The difference between the two weights gives the weight of the discharged iron ore. The weighing system of the wagon tippler is certified as true and correct by the Railway authorities. 4. It is stated that the Petitioner on an average receives about ten rakes of iron ore per month over and above the rakes for coke and coal. It is stated that the Petitioner is a regular customer of the Railways. Earlier to the present writ petitions, there had been no allegation of overloading or undercharging. It is stated that on 13th March 2005, the Railways issued a demand for the sum of Rs.17,82,863/- on account of under charging. Railways alleged that three rakes which were booked and delivered in the months of January and February 2005 when re-weighed on route at Champa in Chhattisgarh were found to have been overloaded. The Petitioner states that it had earlier made a complaint/representation that the weighbridge at Champa was incorrect. However, the Railways did not respond to the said W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 6 of 33 complaint. The Petitioner states that by a further letter dated 28th April 2005 the Railways raised a further demand for an amount of Rs. 6,43,110/- alleging that three rakes delivered in the months of March and April 2005 to the Petitioners when reweighed en route at Champa were found to be overloaded. On 27th June 2005 the Railways demanded a total amount of Rs. 24,25,973/- including the earlier demands. 5. In the other cases, admittedly, similar demands were raised by the Railways after the delivery of the rakes alleging that consignments which had been delivered when re-weighed earlier at Champa were found to be overweight. Only in W.P. (C) 19958 of 2005 the admitted position appears to be that the consignment was delivered on 30th August 2005 whereas the demand notice was sent on 28th March 2005 under Section 83 of the Railways Act, 1989 („RA‟). The Petitioner is stated to have paid the amount demanded on 29th August 2005 before taking delivery of the consignment. 6. The common question raised by the Petitioner in all the other eight petitions is whether the penalty under Section 73 of the RA can be raised after the delivery of the goods by which time the right of the consignor, the consignee or endorsee under Section 79 of the RA to seek re-weighment is rendered meaningless. It is submitted that the words “before the delivery of the goods” occurring in Section 73 of the RA do not give the Railways any discretion as to the time at which the penalty could be levied and demanded. W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 7 of 33 It is further submitted that the reliance placed on Para 1744 of the Indian Railway Commercial Manual Vol-II (`IRCM‟) and Rule 3(1) of the Weighment of Consignments in Wagon-load or Train-load Rules, 1990 (`1990 Rules‟) is misplaced since in the instant case there was no loss of goods in transit and the Petitioner was not making any claim against the Railways for such loss. It is submitted that in any event, Para 1744 of the IRCM cannot negate the right under Section 79 of the RA and to that extent is ultra vires the RA. 7. As regards the claim of the Railways under Section 83 of the RA, it is submitted that in the present case barring W.P.(C) 19958 of 2005 the Railways has not exercised any lien under Section 83 of the RA. 8. Mr. Siddharth Bhatnagar, the learned counsel appearing for the Petitioners has while reiterating the above submissions also placed reliance upon the decisions in Jyoti Enterprises v. Union of India AIR 2003 Jharkhand 48 and Nirmal Traders v. Union of India AIR 2003 Gauhati 122. He submits that the Railways has the power to weigh or re-weigh any consignment en- route, and that it is not necessary for the Petitioners to be put on notice before such weighment or re-weighment. He however submits that the demand of penalty raised against the Petitioners in terms of the Section 73 of the RA is of punitive nature, and must be strictly in accordance with the terms of Section 73 of the RA. He submits that inasmuch as it is a penalty, W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 8 of 33 the provision admits of only a strict construction and not a purposive one. 9. Appearing for the Railways, Ms. Geetanjali Mohan, the learned counsel first submits that the wording of Section 73 RA indicates that it is the discretion of the Railways whether or not it should raise a punitive demand on the Petitioners. According to her, the use of the word `may‟ in the said provision would equally apply to raising a demand prior to the delivery. According to her, Section 73 read with Section 83 RA gives the Railways the power to exercise a lien over either the same consignment which was found to be of excess weight during in-motion weighment en route or re- weighment as the case may be or any other consignment for the purposes of recovery of the demands raised by the Railways. Obviously such lien as regards other consignments would be exercised only after the delivery of the consignments which were found to be of excess weight and this itself indicates that the penalty can be recovered from a consignor or consignee as the case may be even after the delivery of the goods. She placed reliance upon the decision of the learned Single Judge of this Court in Jayaswals Neco Ltd. v. Union of India 114 (2004) DLT 178. 10. Ms. Mohan submits that Para 1744 of the IRCM is consistent with Section 79 RA and is not ultra vires Section 79 RA. She submits that the proviso to Section 79 RA indicates the circumstances under which the Railways can decline the request for re-weighment. Para 1744 of the IRCM, W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 9 of 33 according to her, only further elaborates on what these circumstances are. She further points out that Section 79 RA itself indicates that where the consignment has been delivered at owner‟s risk rate (`OR‟), no re- weighment shall be allowed and this is what Para 1744 indicates. 11. Referring to Rule 3(1) of the 1990 Rules, Ms. Mohan submits that even when the consignment is delivered at the Railway‟s risk rate (RR), the request for re-weighment could be refused, and this rule is consistent with Section 79 RA. It is submitted that where the RA makes no provision for the consignor or the consignee, as the case may be, to demand as a right the re- weighment of the consignment, such a right can be exercised subject to certain conditions. It is submitted that there is a possibility of manipulation of the weights by the consignors in connivance with the Railway staff. The Rates Circular No. 49 of 2005 and the General Rule 117 of the Goods Tariff clarifies that a 1% error margin in weighbridges is acceptable. It is submitted that overloading of the wagons can result in the weakening of the railway tracks which in turn can result in avoidable accidents with loss of life and railway property. Therefore, it is absolutely essential for Railways to be permitted to exercise the power of weighment and re-weighment in terms of Section 78 read with Section 83 of the RA. 12. Reliance is placed by Ms.Mohan on the decisions in Jagjit Cotton Textile Mills v. Chief Commercial Superintendent N.R. AIR 1998 SC W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 10 of 33 1959; Action Committee v. Union of India 2005 (1) Gujarat Law Reporter 889 and Bhagaban Dey v. Union of India AIR 2010 Calcutta 13. Reliance is also placed on the judgment in State of Maharashtra v. Prabhu 1994 SCC (2) 481 to submit that the impugned demand of the Railways should not be interfered with if such interference would result in a greater harm to the society which, according to Ms. Mohan, is likely in the present cases. 13. First, the statutory provisions may be examined. Sections 73, 78, 79, 83 and 97 of the RA which are relevant for the present cases read as under: “73. Punitive charge for overloading a wagon. Where a person loads goods in a wagon beyond its permissible carrying capacity as exhibited under sub section (2) or sub-section (3), or notified under sub-section (4), of section 72, a railway administration may, in addition to the freight and other charges, recover from the consignor, the consignee or the endorsee, as the case may be, charges by way of penalty at such rates, as may be prescribed, before the delivery of the goods: Provided that it shall be lawful for the railway administration to unload the goods loaded beyond the capacity of the wagon, if detected at the forwarding station or at any place before the destination station and to recover the cost of such unloading and any charge for the detention of any wagon on this account. 78. Power to measure, weigh, etc. Notwithstanding anything contained in the railway receipt, the railway administration may, before the delivery of the consignment, have the right to-- (i) re-measure, re-weigh or re-classify any consignment; W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 11 of 33 (ii) re-calculate the freight and other charges; and (iii) correct any other error or collect any amount that may have been omitted to be charged. 79. Weighment of consignment on request of the consignee or endorsee. A railway administration may, on the request made by the consignee or endorsee, allow weighment of the consignment subject to such conditions and on payment of such charges as may be prescribed and the demurrage charges if any: Provided that except in cases where a railway servant authorised in this behalf considers it necessary so to do, no weighment shall be allowed of goods booked at owner's risk rate or goods which are perishable and are likely to lose weight in transit: Provided further that no request for weighment of consignment in wagon-load or train-load shall be allowed if the weighment is not feasible due to congestion in the yard or such other circumstances as may be prescribed. 83. Lien for freight or any other sum due. (1) If the consignor, the consignee or the endorsee fails to pay on demand any freight or other charges due from him in respect of any consignment, the railway administration may detain such consignment or part thereof or, if such consignment is delivered, it may detain any other consignment of such person which is in, or thereafter comes into its possession. (2) The railway administration may, if the consignment detained under sub section (1) is-- (a) perishable in nature, sell at once; or (b) not perishable in nature, sell, by public auction, W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 12 of 33 such consignment or part thereof, as may be necessary to realise a sum equal to the freight or other charges: Provided that where a railway administration for reasons to be recorded in writing is of the opinion that it is not expedient to hold the auction, such consignment or part thereof may be sold in such manner as may be prescribed. (3) The railway administration shall give a notice of not less than seven days of the public auction under clause (b) of sub-section (2) in one or more local newspapers or where there are no such newspapers in such manner as may be prescribed. (4) The railway administration may, out of the sale proceeds received under sub-section (2), retain a sum equal to the freight and other charges including expenses for the sale due to it and the surplus of such proceeds and the part of the consignment, if any, shall be rendered to the person entitled thereto. 97. Goods carried at owner's risk rate. Notwithstanding anything contained in section 93, a railway administration shall not be responsible for any loss, destruction, damage, deterioration or non-delivery in transit, of any consignment carried at owner's risk rate, from whatever cause arising, except upon proof, that such loss, destruction, damage, deterioration or non-delivery was due to negligence or misconduct on its part or on the part of any of its servants: Provided that-- (a) where the whole of such consignment or the whole of any package forming part of such consignment is not delivered to the consignee or the endorsee and such non-delivery is not proved by W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 13 of 33 the railway administration to have been due to fire or to any accident to the train; or (b) where in respect of any such consignment or of any package forming part of such consignment which had been so covered or protected that the covering or protection was not readily removable by hand, it is pointed out to the railway administration on or before delivery that any part of that consignment or package had been pilfered in transit, the railway administration shall be bound to disclose to the consignor, the consignee or the endorsee how the consignment or the package was dealt with throughout the time it was in its possession or control, but if negligence or misconduct on the part of the railway administration or of any of its servants cannot be fairly inferred from such disclosure, the burden of proving such negligence or misconduct shall lie on the consignor, the consignee or the endorsee.” 14. Para 1744 of the IRCM reads as under: “1744. Reweighment at the request of owners. –(a) As laid down in the I.R.C.A. Goods Tariffs, railways do not undertake to weigh consignments at the destination station as a matter of course. Such weighments can only be considered in exceptional cases, when the condition of the consignment or package warrants this. (b) Requests for such reweighment of goods booked in wasgonloads should be referred to the Divisional Commercial Superintendent, who may permit the reweighment at his discretion provided that facilities for reweighment exist at the destination. (c) The consignee or the endorsee of a wagon load or a train load consignment booked at Railway Risk Rate may, if it has reason to W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 14 of 33 believe that the wagon offered to him for delivery at destination, does not contain the quantity of goods entrusted for carriage, make a request in writing to the Divisional Commercial Superintendent or any other Railway servant authorised in this behalf for the weighment of such consignment at destination station such Railway servant may allow request for weighment on a railway weighbridge on payment of charges prescribed and demurrage charge if any, such request may be disallowed in the following cases if :- 1. The consignment is received in covered wagon and the seals of the loading station are intact and there is no other evidence of the consignment having been tampered in transit, 2. The consignment has been received in open wagon but there is no sign of tampering with the original packing. 3. the consignment is of perishable nature and is likely to lose weight in transit, 4. weighment is not feasible due to congestion in the yard, 5. weighment done on request shall be without prejudice to the rights of the railway administration to disclaim liability under the Railways Act or under any other law for the time being in force.” 15. Rule 3(1) of the 1990 Rules reads as under: “3. Weighment of Wagon load or Train load Consignments-(1) The consignee or the endorsee of a wagon load or train load consignment booked at Railway Risk Rate may, if he has reason to believe that the wagon offered to him for delivery at destination does not contain the quantity of goods entrusted for carriage, make a request in writing to the Divisional Commercial Superintendent W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 15 of 33 or any other Railway servant authorized in this behalf for the weighment of such consignments at the destination station.” 16. A plain reading of the above provisions shows that the Railways are not bound to accept the weight depicted in a Railway Receipt. In terms of Section 78, the Railways have the discretion, before the delivery of a consignment, to re-measure, re-weigh or re-classify the consignment, re- calculate the freight and other charges and correct any other error or collect any amount that may have been omitted to be charged. There is no requirement in any of the above provisions that before such re-weighment the Railways should give prior notice to the consignor or consignee. In the present cases, for the in-motion weighment of the consignment at Champa prior to the delivery of the goods, there was no requirement of putting the consignee or the consignor on advance notice. 17. One consequence of re-weighment is that under-weighment at the point of dispatch is detected. A second possible result is that the weight is found to be less than what the consignment weighed at the point of dispatch. 18. The consequence of overloading a wagon at the point of origin, which is detected subsequently, has been stipulated in Section 73 RA. Under Section 73, the Railways “may, in addition to the freight and other charges, recover from the consignor, the consignee or the endorsee, as the case may be, W.P.(C) Nos.10480,10930,13144,19958,20189 of 2005, 2103,2177 of 2007, 3125 of 2008 and 9930 of 2009. Page 16 of 33 charges by way of penalty at such rates, as may be prescribed.” The condition for raising such punitive demand for overloading is that it should be raised “before the delivery of the goods.” The proviso to Section 73 gives Railways the power to unload the goods “loaded beyond the capacity of the wagon, if detected at the forwarding station or at any place before the destination station and to recover the cost of such unloading and any charge for