IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.13263 of 2002 1. M/S HAZARILAL BAIDYANATH PD.,Agent Indian Oil Corporation Ltd.,Dighwara, District- Saran (Chapra). 2. Arbind Kumar, son of late Ramchandra Prasad, proprietor and partner of petitioner No.1 aforesaid, resident of Dighwara, P.S. Dighwara, District- Saran(Chapra)….. Petitioners Versus 1. THE UNION OF INDIA, through the Divisional Engineer, Sonepur of North Eastern Railway. 2. The Divisional Rail Manager(Engineering),North Eastern Railway, Sonepur. 3. The Divisional Engineer, North Eastern Railway, Sonepur… Respondents. ----------- For the petitioner: Mr. Birju Prasad, Advocate For the Railways: Mr. Parashuram Singh, Advocate. ---- 5. 16.4.2010 Heard learned counsel for the petitioners and learned counsel for the respondent Railways. The petitioners seek quashing of the memorandum issued by the Divisional Rail Manager( Engineering), Sonepur by his letter dated 30.7.2002/6.8.2002, by which the licence fee of the petitioner determined for 12,000 sft. of Railway land already given to petitioner No.1 for operating Petrol Pump has been enhanced to Rs. 21,287/- per month from 1.4.2002 and revised retrospectively from 1.4.1986 raising a further demand of Rs.1,26.632/- on account of the difference in the licence fee from 1.4.1986 to 31.3.2003. The petitioners entered into the agreement dated 8.10.1980 with the respondents ( N.E.Railway ), by which they were permitted to use the piece - 2 - of Raillway land at Dighwara already handed over to them on 20.5.1980 measuring 12,000 sft. for the purpose of establishing a filling Station of the Indian Oil Corporation at annual licence fee of Rs.3600/-. Paragraph No.8 of the licence agreement provides that the licence fee is liable to be revised at any time at the discretion of the Railway Administration after the service of one month’s notice on the licensees of the Administration’s intention to revise the licence fee, and the licensees shall be bound to pay the licence fees at the revised rate, from the date mentioned in the said notice. The licensee continued to occupy the land on the same licence fee for many years when he was served with a letter dated 30.7.2002/6.8.2002 (Annexure-2) by which the licence fee was fixed from 1.4.2002 in which it was stated that in terms of the guidelines issued in the Railway Board’s letter dated 29.8.1995, his licence fee was enhanced from 1.4. 2002 to Rs. 21,287/- per annum and further in terms of para 4.2 of the said directions, the licence fee will continue to increase at the rate of 10% every year. It was further stated in the said letter that the - 3 - revision of licence fee having been made with effect from 1.4.1986, the difference of licence fee till 31.3.2003 amounting to Rs.1,26,632/ has also to be deposited, which includes the regular licence fee. Aggrieved by the aforesaid letter enhancing the licence fee retrospectively from 1.4.1986, the petitioners have approached this Court. It is submitted by learned counsel for the petitioner that the retrospective revision of the licence fee by enhancing the same from a period going back to 16 years, i.e., from 1986 is contrary to all canons of law. It is alleged that there is no provision in the licence agreement authorizing the Railway authorities to enhance the licence fee from a retrospective date. It is urged by learned counsel for the petitioner that under clause 8 of the licence agreement there was stipulation of giving one month’s notice to the licensee of the Railwlay Administration’s intention to revise the licence fee but the revision has been made in the present case without such notice. Learned counsel further submits that the licence fee has been enhanced only with respect to - 4 - the petitioner and other licensees in different places in the State of Bihar, have not been subjected to said increase. It is also contended that the enhancement of the licence fee is excessive, arbitrary and fit to be struck down. Learned counsel for the Railways, on the other hand, relies upon the letter dated 29.8.1995 issued by the Railway Board. It is submitted that the petitioners have not been singled out for the enhancement of licence fee, rather directions have been issued by the aforesaid letter regarding the fixation of annual licence fee all over the country and various guidelines have been laid down therein for fixing the base value as on 1.1.1985 on the basis of various parameters laid down therein including information obtained from different authorities. After fixing the base value it was to be increased notionally every year starting from 1.4.1986, the direction being to enhance the value at the rate of 10% over the previous year’s value. Learned counsel urges that the impugned letter dated 30.7.2002/6.8.2002 has merely complied with the aforesaid directions of the - 5 - Railway Board after treating the licence fee fixed on 1.1.1986 at Rs.3,600/- and thereafter enhancing the same at the rate of 10% per annum every year in terms of the Railway Board Circular dated 29.8.1995. It is, thus, submitted that the action of the Railway authorities is fair and rational and the directions for enhancement of the licence fee have been issued throughout the country and the petitioners have not been singled out for unusual enhancement. Learned counsel also relies upon the aforesaid clause 8 of the licence agreement under which the Railway Administration has discretion of revising the licence fee from the date mentioned in the notice and the licensees are bound to pay the said licence fee. He however admits that one month’s notice on the licensee of the Administration’s intention to revise the licence fee was not given to the petitioners, as the said impugned order was in accordance with the directions of the Railway Board and in terms of the licence agreement. I have considered the submissions of the parties and the materials available on the record. It is evident that the petitioners are occupying - 6 - the commercial Railway land on the basis of the licence agreement dated 8.10.1980 as the licencee for the said land. They are therefore, bound to comply with the terms and conditions laid down in the licence agreement which also binds the Railway Administration. In terms of the said licence agreement, the Railway authorities had the right to enhance the licence fee from the date as they may fix in the notice of their intention to revise the licence fee. However, the requirement was to give one month’s notice to the licensee of the Administration’s intention to revise the licence fee. The terms of clause 8 of the licence agreement that the licensee shall be bound to pay the licence fee at the rate revised from the date mentioned in the notice cannot at all be interpreted as a right to enhance the licence fee from retrospective date. This Court had earlier specifically directed the respondent Railway to satisfy this Court as to under what authority of law they can revise the licence fee with retrospective effect. The respondents have failed to show any authority of law except falling back upon clause 8 of the agreement. According to this Court, the said clause does not give any authority - 7 - to Railway Administration to fix retrospectively any date with effect from which the revised licence fee shall operate. Even under the general principles of law, it would be contrary to the principles of fairness for State under Article 12 of the Constitution, which the Railway is, to enhance the licence fee from retrospective date, as the same would be unreasonable, arbitrary and whimsical and cause undue hardship upon the licensee. Unless there is any such statutory power to revise the licence fee from a retrospective date that too from a date which may be reasonable, proximate and not excessive like the period going back to 16 years, it is not at all possible for this Court to hold any such revision of licence fee with retrospective effect as reasonable and rational and the same is wholly impermissible. So far as the enhancement of licence fee is concerned, this Court finds that the authorities have acted in terms of the guidelines contained in the Circular dated 29.8.1995 issued by the Railway Board and the same does not appear to be irrational or contrary to law. By providing for notional increase every year from 1.4.1986 it - 8 - is evident that there was no intention to provide for actual increase of licence fee from a retrospective date. However, if the Railway authorities have slept over the matter for seven years before they woke up and issued notice revising the licence fee, then they themselves are to be blamed for the same and they cannot be permitted to revise retrospectively only on the basis of the said Circular of the Railway Board. Thus, in the light of the aforesaid discussions, this Court is of the view that the letter dated 30.7.2002/6.8.2002 can only have effect prospectively that too after at least one month’s notice on the licensee of the Administration’s intention to revise the licence fee in terms of clause 8 of the licence agreement dated 8.10.1980. Accordingly, that part of the letter which directs the payment of enhanced licence fee for a period prior to 6.9.2002 is fit to be quashed. It is accordingly quashed to that extent. The petitioners have already paid the difference of licence fee along with the interest in terms of clause 9 of the agreement as demanded by the Railway authorities. However, the - 9 - petitioners would be entitled to refund of excess amount paid for the period from 1.8.2002 to 6.9.2002, after which date alone the said enhanced rate shall take effect. The Railway authorities are directed to adjust the said amount in the future licence fee. The petitioners also submit that the figure of Rs. 21,287/- per month arrived at with effect from 1.4.2002 is not correct in terms of the base value of Rs. 3600/- per annum taken on 1.4.1986. It would be open to them to file a representation before the Railway authorities in the matter and if there is any arithmetical error, the same may be rectified by the respondent- authorities within a period of three months from the date of filing of the representation by the petitioners, and consequential refund shall be adjusted against future licence fee. The writ application is, accordingly, partly allowed subject to the aforesaid observations and directions. VPS ( Ramesh Kumar Datta, J. )