1 S.B.CIVIL WRIT PETITION NO.3587/1994 M/s. Birla Corporation Limited Vs. Union of India & others Date of Order :: 29th June 2009 HON'BLE MR.JUSTICE DINESH MAHESHWARI Mr.Jagat Tatia for Mr.Manish Shishodia for the petitioner Mr.Vivek Shrimali for Mr.Ravi Bhansali for the respondents .... BY THE COURT: This writ petition has been preferred in challenge to the demand of extra freight as raised by the respondents towards transportation of the consignments booked by the petitioner. Shorn of unnecessary details, the basic facts and background aspects of the matter could be taken into comprehension thus: The petitioner Company, said to be engaged in the business of manufacture and sale of cement at Chanderiya District Chittorgarh, had been booking the consignments of cement manufactured by it for transportation through the wagons of the respondent-Railways. The controversy in the present writ petition relates to the consignments booked by the petitioner in the months of August and September 1991 under 17 Railway Receipts (RRs) bearing numbers 920516 to 920520, 920527 to 920532, 920544, and 920546 to 920550. The consignments so booked had, admittedly, been delivered at the destination station 2 Kotkapura. The petitioner maintains that the goods were loaded in the wagons for transportation under the said RRs in the supervision of the Railway Staff; the freight chargeable according to the prevalent tariff was charged and recovered at the time of booking of the goods; and thereafter, the goods were carried to the destination station and were duly delivered. The petitioner submits that though the freight is to be charged on the basis of carrying capacity of a particular wagon or bogie but then, if the consignor is not permitted to load the goods beyond a particular limit because of any reason referable to the respondents, the freight is to be charged only for the quantity the consignor has been permitted to load irrespective of the carrying capacity of a particular wagon or bogie. It is, however, submitted that so far the consignments in question are concerned, the petitioner had already been charged on the marked capacity of the wagon. The petitioner has stated the grievance in the manner that though the consignments under the aforesaid RRs had been delivered, a demand note dated 16.03.1994 (Annex.4) was received from the Chief Goods Clerk, Northern Railway, Kotkapura (the destination station), suggesting it to be a notice under Section 83-84 of the Indian Railways Act, 1989 ('the Act 3 of 1989' hereafter), and stating that an amount of Rs.84,333/- was required to be deposited by the petitioner in relation to the aforesaid 17 RRs and other RRs bearing numbers 947234, 236 and 237. It has been averred that such a demand was not acceded to being wholly illegal but then, another communication (Annex.5) was received in the second week of April 1994 whereby the petitioner was called upon to pay an amount of Rs.49,632/- towards the aforesaid 17 RRs, said to be the difference of the amount payable towards freight; and the said communication was followed by the reminder for payment in the form of final notice dated 23.07.1994 (Annex.6). Questioning the demand so raised by the respondents as being illegal and unauthorised, the petitioner has submitted in the first place that the aforesaid communications were not even specific as to on what count such extra freight was at all being demanded except that the notice Annexure-6 stated it to be the demand towards the so-called ''under charges''. It is submitted that the demand notices do not specify and indicate the basis of arriving at the figure of so-called ''weight should be charged'' and the entire demand remains baseless. The petitioner has further contended that in view of the fact that the consignments covered by the said 17 RRs had 4 been delivered long back and until delivery, none of the actions as contemplated by Section 78 of the Act of 1989 had ever been taken qua such consignments, the respondents had no right or authority to claim any amount towards the so-called “under charges”. The petitioner has further asserted that at the time of loading, the goods were not allowed to be loaded beyond the axle load restriction that had been provided by the respondents; and a note to that effect was put on the invoices. It is submitted that presumably with lifting of such restrictions, the booking authorities were empowered to have the wagon loaded to a certain extent beyond the marked capacity and the claim of extra freight has presumably been made with reference to such additional tonnage but such a claim remains entirely illegal and unjustified particularly when the petitioner had already been charged on the marked capacity of the wagon and it is not the case of the respondents that at any stage, did they allow the petitioner to load the goods beyond the extent actually loaded. While questioning the demand as raised without even a notice or opportunity of hearing being entirely unjustified, the petitioner has prayed for the following reliefs:- ''(i) quashing annexure 4,5 and 6, (ii) prohibiting the respondents from raising any demand under the guise of so called under charge of freight with respect to the goods booked by the petitioner in 5 accordance with the axle load restrictions and with respect to which note has been put on the respective RRs, (iii) Likewise prohibiting the respondents from claiming any freight on the goods to any extent beyond the marked carrying capacity of each individual wagon unless the goods are actually loaded beyond the marked carrying capacity of each individual wagon even in absence of any actual load restrictions, (iv) awarding costs of the writ petition to the humble petitioner, (v) granting such other relief as the petitioner may be found entitled to.'' In their reply, the respondents Nos.1,2 and 4 would submit that it was the duty of the consignor to load the consignments according to the loading instructions issued from time to time. It is submitted that the consignments of cement are loaded and charged on the carrying capacity plus tonnage; that prior to 01.05.1991, the consignments were being booked, loaded, and charged according to the load restrictions on the sections where such restrictions were applicable but from 01.05.1991, the consignments were booked and charged according to their weight conditions as provided in the Goods Tariff. It has repeatedly been asserted by the respondents that the destination station is empowered to recover any under charges on any consignments before or after delivery, according to the Tariff Rules; that under charges have been raised by the destination station as per Rule 115 of the Indian Railway Conference Association Goods Tariff No.41 6 Part-I (Vol.I); and that the Railway Administration had always reserved its right to recover any charges found due on any consignment even after the delivery of the goods. Learned counsel appearing for the petitioner has referred to the decisions of this Court in the case of M/s. Bajaj Hindustan Ltd. Vs. U.O.I.: S.B. Civil Writ Petition No.6202/1991, decided on 17.12.2002 and in the case of Maharaja Shree Umaid Mills Ltd. and another Vs. Union of India & others: S.B.Civil Writ Petition No.4330/1992, decided on 26.07.2006 to submit that the demand as raised in the present case remains unauthorised and deserves to be quashed whereas learned counsel for the respondents would maintain that having the right to recover any escaped amount of freight, they have rightly issued the demand notices to the petitioner. Having given a thoughtful consideration to the matter, this Court is clearly of opinion that the uncertain and baseless demand as raised by the respondents cannot be sustained. In the case of Maharaja Shree Umaid Mills Ltd. (supra) wherein demand of extra freight as under charges was made with reference to change of route, particularly because of change of transshipment point, this Court had the occasion to consider the said Rule 115 of Goods Tariff No. 41 as relied 7 upon in this case too. The said Rule 115 reads as under:- ''115. Right to Correct Charges.- The weight, description and classification of goods and quotation of rates as given in the Railway Receipt and Forwarding Note are merely for the purposes of estimating the Railway charges and the Railway reserves the right of re- measurement, re-weighment, re-classification of goods and re-calculation of rates and other charges and correction of any other errors at the place of destination and of collecting any amount that may have been omitted or undercharged. No admission is conveyed by a Railway Receipt that the weight as shown therein has been received or that the description of goods as furnished by the consignor is correct. '' This Court also considered the provisions as contained in Section 78 of the Act of 1989 that reads as under:- ''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; (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.'' After considering the scheme of the Tariff Rules and so also the provisions of the Act of 1989, this Court said,- ''On the question as to under which provision of law the so- called under charges were determined and demanded a long time after the consignments had already been delivered and about the authority under which the letter Annexure-12 was issued with the threat to recover the amount of under charges from the other claims of the petitioners, learned counsel Mr.Vyas referred to Section 78 of the Railways Act, Clause 1811 and 1820 of the Indian 8 Railway Commercial Manual Vol.II and Rule 113 and 115 of the Tariff Rules. Under Sec.78 of the Railways Act, the Railway Administration has a right before delivery of consignment to re-measure, re-weigh or re-classify any consignment, re-calculate the freight and other charges and correct any error or collect any amount that had been omitted to be charged. The Indian Railway Commercial Manual Vol.II has also been placed by the learned counsel for the respondents for perusal before the Court and Clause 1811 thereof also shows that the receiving stations have been held responsible for recovery of under charges but those are also with reference to the provisions of Sec.78 of the Railways Act and even under clause 1820 thereof, it is the duty of the Railways to recover the dues and other charges including under charges before delivery of goods. Rule 113 of the Tariff Rules merely shows that the Station Masters and Goods Clerks at several goods stations are authorized to demand and receive freight for conveyance of any articles or things by goods train and the charges incidental thereto. Rule 115 only relates to the exercise of powers of Section 78 for re-measurement, re- weighment, re-classification of goods and collecting amount that has been omitted or under charged. However, the said rules are required to be read as subject to the principal provision of Section 78; that is to say, such powers could be exercised before delivery of consignment. It could at once be noticed that if at all any such charges were to be demanded, the same ought to have been demanded before delivery of the goods.” The position of law as aforesaid squarely applies to the present case too. The consignments in question as booked in the year 1991 had been delivered at the destination station and the demand as raised in the year 1994, a long time after delivery of goods, could only be said to be fundamentally unauthorised. Apart from the above, noteworthy in the present case is the fundamental omission on the part of the respondents of even specifying as to on what basis and how the so-called under charges were sought to be demanded? The demand 9 note Annexure-4 merely refers to some audit comments but without stating the basis of such demand or even such alleged comments. The demand notice Annexure-5, though states it to be the difference between 'weight charged' and so-called 'weight should be charged' but then, what is the basis of arriving at the figure of this item called 'weight should be charged' has not been indicated. The other notice Annexure- 6 merely names the demand as that of ''under charges'' but again without stating the basis for arriving at the conclusion that there had been some deficiency in the charges already recovered. It is apparent that the respondents have chosen to toss up a demand in an entirely irresponsible, arbitrary, and whimsical manner without even specifying the reasons and basis thereof. In relation to such uncertain and incomplete demand notices, which are wanting in relevant particulars, all that could be discerned out of some cursory averments as taken in the reply that presumably it is in relation to the extra tonnage allowable on the particular wagons that the respondents had chosen to raise the demand. Apart that the respondents cannot be permitted to supply reasons by way of reply to the petition, noticeable it is that the petitioner has precisely pointed out that the goods were loaded in the supervision of 10 Railway Staff and then, it had not been the case of the respondent-Railways that they had called upon the petitioner to pack up the wagons even beyond the actual capacity to the extent of extra weight allowable. Raising of demand of so- called ''under charges'' on the alleged count of extra allowable tonnage cannot be said to be justified, whether under Tariff Rule 115 or Section 78 of the Act of 1989. Further, in the case of Maharaja Shree Umaid Mills Ltd. (supra), this Court has sustained even the ground of promissory estoppel as raised by the said petitioner against such claim of under charges while saying,- ''A comprehensive look at the scheme of the Tariff Rules and so also the provisions of the Railways Act makes it clear that the ground of promissory estoppel raised by the petitioner is also not baseless. The respondents having regularly not only transported the consignments but having delivered the same to the petitioner and having charged the petitioner regularly as per the rates of the cheapest route and having never notified the petitioner of charging at any other rate, in view of the scheme of the Railways Act and the Tariff Rules, stand estopped from claiming any so-called under charges now. The submission of the petitioners cannot be dubbed as incorrect that they had arranged all their affairs and adjusted the costs of production and finances on the basis of freight represented by the respondents to be chargeable and if now the respondents would be permitted to turn around and ask for additional amount in the name of under charges, the petitioners would suffer a substantial injury not warranted by law and for none of their fault.'' In the present case too, it appears that the consignments in question were delivered in the year 1991 with 11 the petitioner making payment of freight as demanded. The petitioner has obviously arranged its affairs on the basis of freight represented by the respondents to be chargeable; and if now the respondents would be permitted to recover extra amount in the name of ''under charges'' that too on an imaginary basis, the petitioner would suffer substantial injury not warranted by law. In the fact situation of the present case and in view of the decisions of this Court particularly in Maharaja Shree Umaid Mills Ltd. (supra), the impugned demand of extra freight by the respondents could only be said to be entirely unjustified. Illegal, and unauthorized; and deserves to be quashed. Accordingly, this writ petition is allowed and the demand of extra freight as made by the respondents in the demand notices Annexures 5 and 6 in relation to the aforesaid 17 Railway Receipts is quashed and set aside. However, in the circumstances of the case, the parties are left to bear their own costs. (DINESH MAHESHWARI), J. MK 12