UNION OF INDIA v.

WEST COAST PAPER MILLS LTD: AND ANR.

FEBRUARY 25, 2004

[R.C. LAHOTI AND ASHOK BHAN, JJ.]

Railways Act, 1890; Section 28/Limitation Act, 1963; Sections 14 and 15/Code of Civil Procedure, 1908; Section BO/Constitution of India, 1950; C Article 136:

Transport of goods to certain destination by rail-Benefit of telescopic system of rates denied-Complaint-Tribunal Held that Railways contravened Section 28 of the Railways Act-However, it did not direct ; efund of freight charges collected illegally and unreasonably-Challenge to-Dismissed by D Supreme Court-Writ petition for refund of the freight charges-High Court holding that Court could not decide money claim in writ petition-Suit for money claim-Limitation-Notice period and time spent in writ proceedings- Exclusion of-Held: No malafides/want of good faith in instituting the writ proceedings-Cause of action arose when the dispute was finally adjudicated by Supreme Court-Two months' Notice period mandatory before filing a E suit-Period during which writ petition for identical relief on same cause of action remained pending and notice period could be excluded from computing period of limitation as per provisions in the Limitation Act-Thus, suit is not barred by limitation .

Railways Act, 1890-Section 78B.

Illegal charges, vis-a-vis overcharges-Distinction between-Discussed.

Words and Phrases:

'over charges '-Meaning of in the context of Limitation Act.

Respondent-Mills had been transporting their goods to certain destination by Railways and Railways charged freight for transportation of the goods at a flat rate irrespective of the kind of the goods being transported thereby denying them benefit of telescopic system of rates in respect of

• r

U.0.1 v. WEST COAST PAPER MILLS LTD. 643

different kinds of goods as being allowed by the Railways to others. Thus, A they had to pay freight in respect of certain kind of goods at a higher rate.

One of the Mills filed a complaint against Railways under the provisions of the Indian Railways Act, 1890. Railway Tribunal held that Railways had contravened the provisions of Section 28 of the Act However, it did not direct refund of freight charges, as the Tribunal was not competent to grant the B consequential relief in view of the Judgment of this Court in Upper Doab Sugar Mills Ltd v. Shahdara (Delhlj Saharanpur Light Railway Company Ltd., (1963) 2 SCR 333. The Union of India challenged the order by preferring an appeal under Article 136 of the Constitution of India. Upholding the order of the Tribunal, Supreme Court dismissed the appeal on October 14, 1970. In the meanwhile, another complaint was filed by the respondent against Railways C on the same issue in respect of certain other commodities and a complaint on the similar issue was filed by the other respondent. Following the Judgment dated 14th October, 1970, Tribunal allowed these complaints as well.

Respondent filed writ petition for refund of the amount of freight collected by the Railways in excess and in contravention of the provisions of the Act.

Writ petition was dismissed by the High Court holding that it would not be D appropriate to invoke writ jurisdiction for money claim and that the petitioner may file a civil suit for the claim. During pendency of the writ petition, Respondent served a notice under Section 80 CPC on the Union of India and the Railways and later filed suits for money claim, which were decreed by the frial court. On appeal, High Court upheld the order of trial court. Hence E the present appeals filed by the Union of India.

It was contended for the appellant-Union of India that the suits were time-barred; and that since suits were not preceded by notification of claim under Section 78B of the Railways Act, these could not have been entertained.

Expressing its doubts as to the .correctness of the decision of a 2-Judge Bench of this Court on the issue of limitation in the case of P.K. Kutty Achuta Raja and Anr. v. State of Kera/a and Anr., [1996) 2 SCC 496, this Court directed the matter to be placed before a 3-Judge Bench. 1he3-Judge Bench overruled

the earlier decision of 2-Judge Bench holding that the earlier order .of the Tribunal dated April 18, 1966 had merged into Supreme Court's Judgment G dated October 14, 1970; (Union of India and Ors. v. West Coast paper Mills Ltd. and Anr., (2004) 2 SCALE 285), and so the limitation would run from October 14, 1970, and referred back the matter to 2-Judge Bench for disposal.

Appellant-Union of India contended that since the suit was filed on H

A December 12, 1973, it was still barred by limitation; and that since Respondent had already served a notice earlier, by repeating the notice, they could not claim exclusion of notice period for the purpose of limitation under Section 15(2) of the Limitation Act.

, . Dismissing the appeals, the Court

HELD: 1.1. The period of limitation even though commenced on 14th

Oct.oer, 1970, the suit filed on 12th Decer_nber, 1973 cannot be held to be barred by limitation, since the notice period of two months as req1;1ired by Section 80 C.~.C. wher.eunder notice is mandatorily requird to e given C befre filing te ci~H suit, has to be excluded .fr?m computing te period of limitation under sub-section (2) of Section 15 of the Limitation Act, besides the period during which the civil writ petition remained pending for the identical relief based on the same cause of action is also liable to be excluded from calcl~ion:under Section 14 of the Limitation Act, 1963. The.cause of action rse to the plaintiff on lth Ocober, 19?0 when the dispute came to D b~ finally adjudicated upn by this Court and in viw of the 3-Judge Bench

deciion date~ 5h February, 2004 in the case of Union of India v. West Coast Paper Mills Ltd*. There is no anner of doubt that the decision of the Tribun~I has merged withthe decision of this _Court pronounced on 14th October, 1970.

The Respondent wasjustified in staking its clajm based on the decision of E this Court and serving a notice under Section 80 C.P.C. The. notice .so served squarely attracts the applicability of. sub-section (2) of Section 15 of the Limitation Act. [649-B-C; 649-E-FJ

. *Union oflndia.v .. West Coast Paper Mills Limited, .[1970) 3 SCC 60~, referred to. , . . ,

1.2. It is true that the. writ petition was not dimissed , by the. High Court on the ground of defect of jurisdiction. However, Se<:tion 14 of the Limitation

Ac~ is \Vie in its .application, inasmuch it is not confined in its applicability only to cases of defect of jl!risdictiQn b1,1t it is applicable also to cases where the prior , proceeings have , failed on a<:count of other causes of like nature.

G '

[650-C-D)

Roshanlal Kuthalia and Ors. v. R.B. 'Mohan Singh Oberai, AIR (1975) SC 824 = [1975i 4 sec 628~ relied on.· . .

1.3. The issue as to the legality and reasonability of the rates charged H by the' Railways having been finally adjudicate(I pon by this Court, there is

U.0.1 v. WEST COAST PAPER MILLS LTD. 645

nothing wrong in the respondent having proceeded on an assumption that A what had remained to be done was a simple direction to Railways to refund the amount of freight to which it had already been adjudged not entitled to recover. However, the High Court was not inclined to grant such relief in exercise of its writ jurisdiction and, therefore, left open the remedy of civil suit available to the respondent-Mills. By no stretch of imagination, it can be B said that the respondent-Mills was actuated by malajides or want of good faith in instituting the writ proceeding. Hence, the period lost during the pendency of the writ proceedings is liable to be excluded from computing the period of limitation under Section 14(2) of the Limitation Act (650-F-H; 651-Al

2. The term overcharge is not defined in the Railways Act. In its C dictionary meaning "overcharge" means a charge of a sum more than as permitted by law. In the instant case, the freight rates notified by the Railways 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 any one 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 D 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 E 'overcharge' and does not attract the applicability of Section 788 of the Act.

[652-B; 652-D-FJ

Mis. Shah Raichand Amulakh (DJ by his heir v. Union of India and Ors.,

(1971) 12 GLR 93, referred to.

The law laxicon by P. Ramanatha Aiyar, 1997 Edition, Page 1389, ref erred to.

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1061-62 of 1998.

From the Judgment and Order dated 26.2.96 of the Karnataka High Court in R.F.A. Nos. 450-451 of 1986.

P.P. Malhotra, S. Wasim A. Qadri and Shreekant N. Terdo\ for Arvind Kumar Sharma for the Appellants.

A Kailash Vasdev, Nikhil Nayyar and Ms. V.D. Khanna, for the Respondents.

The Judgtilent of the Court was delivered by

LAHOTI, J; The two appeals which are being disposed of by this B common judgment have a chequered history of litigation. The West Coast

Paper Mills Limited, Dandeli and Dandeli Ferro Alloys Limited, Dandeli, the two plaintiffs arrayed as respondents in the two appeals (and which would include their predecessors) have their mills situated at Dandeli in the State of Karana(ka. They were requ'ired to transport their goods between Alnavar and C Dandeli by railways. They were being charged at a flat rate from Alnavar to Dandeli irrespective of the commodity carried and they were not given the benefit of telescopic system of rates which was allowed by the Railways to others and in respect of other goods. The effect of the benefit of telescopic system of rates being denied to the respondents was that they had to pay freight on certain goods at three times compared to what would have been D payable in case the benefit of telescopic system of rates was allowed to them.

On 24th June, 1963, West Coast Paper Mills Limited filed a complaint (registered as Complaint No. 4/1963) against the Railway Administration complaining of illegality of account of contravention of the provisions of Section 28 of the Indian Railways Act, 1890 (hereinafter referred to as "the E Act") and of unreasonability on the part of the Railway Administrations in charging the freight at the impugned rates. The period for which the complaint related was 26th April, 1963 to I st October, 1966 (both dates inclusive and inclusive of the period introduced into the complaint by way of amendment).

By order dated 18th April, 1966, the Tribunal held that in devising the freight F rates the Railway Administration had contravened the provisions of Section

28 of the Act and the complainant i.e. the respondent West Cost was treated with discrimination and unreasonableness. In spite of holding so, the Tribunal did not direct the amount of freight illegally and unreasonably collected by the Railway Administration, to be refunded in view of the holding of this Court in Upper Doab Sugar Mills Ltd v. Shahadara (Delhi) Saharanpur G Light Railway Company Ltd., [1963] 2 SCR 333 wherein this Court has taken the view that the Tribunal is competent only to grant declaratory relief and there is no provision which authorises the Tribunal to grant the consequential relief also.

The Union of India preferred an appeal by special leave to this Court H laying challenge to the decision of the Tribunal dated 18th April, 1966 under

U.0.1 v. WEST COAST PAPER MILLS LTD. [LAHOTI, .I.] 64 7

Article 136 of the Constitution of India. By judgment dated 14th, October A

1970 (reported as Union of India v. West Coast Paper Mills Limited, ( 1970) 3 SCC 606, the appeal preferred by the Union of India was dismissed and the decision of the Tribunal was affirmed. During the course of its judgment, this Court also recorded a finding that the freight charges levied by the Railway Administration were in contravention of Selection 28 of the Act and were unreasonable.

Another complaint under Section 41 of the Act (registered as Complaint No.411966) came to be filed before the Railway Rates Tribunal by the West Coast Paper Mills Limited and this related to the period 2nd October, 1966

to 14th August, 1972 and included certain commodities which were not the C subject matter of Complaint No. 4/1963. This complaint came to be decided on 12th November, 1972. By that time, the decision of this Court dated 14th October, 1970 was available which was followed by the Tribunal and the complaint was allowed granting a declaration sought for by the complainant.

A similar complaint was filed by Dandeli Ferro Alloys Limited registered D as Complaint No. 2/1967 which too came to be decided on 12th November, 1972 following the decision of this Court as abovesaid and granting the dedaration sought for by the complainant therein. Thus the three decisions by the Tribunal in the three complaints holding the freight rates applied by the Railway Administration to be illegal and unreasonable achieved a finality.

The issue is no more res integra.

On 5th January, 1972, West Coast Paper Mills Limited filed a writ petition under Article 226 of the Constitution of India seeking a writ of mandamus commanding the Railway Administration to refund the amount of freight collected by the Railway Administration to the extent it was in violation F of the declaration given by the Tribunal. This writ petition, related to the period 26th April, 1963 to l st October, 1966 and the freight realised by the Railway Administration during this period. This petition came to be dismissed on 29th October, 1973 by the High Court forming an opinion that for a money claim of the nature made in the writ petition, writ jurisdiction was not appropriate forum and the writ petitioner was at liberty to file a civil suit for G the claim. The merits of the claim were not adjudged by the High Court and rightly so.

During the pendency of the writ petition, on 5th October, 1973, West Coast Paper Mills Limited served a notice under Section 80 of the Code of Civil Procedure, 1908 (for short "the Code") on the Union of India as also H

A on the General Manager; of the Railways stating the Cause of action and the relief for the period referable to 26th April, 1963 to 14th August, 1972 i.e. the periods covered by complaint Nos. 4/1963 and 4/1966, both.

Dandeli Ferro Alloys also filed a suit on 18th April, 1974 in respect of their claim basing the cause of action on the judgment dated 12th November, B 1972 delivered by the Tribunal.

Both the suits have been decreed by the Trial Court and the decrees have been upheld by the High Court. The Union of India has come up in appeals by special leave.

C Two contentions were principally advanced by Mr. P.P. Malhotra, the

learned senior counsel for the appellant-Union of India: firstly, that the suits were barred by limitation and secondly, the suits could not have been entertained unless preceded by notification of claims under Section 78B of the Railways Act.

When we heard the matter earlier, Shri P.P. Malhotra the learned senior counsel for the appellants placed reliance on a 2-Judges Bench decision of this Court in P.K. Kutty Anuja Raja and Anr. v. State of Kera/a and Anr., [1996] 2 SCC 496 wherein this Court has held that the limitation would commence from the date of decision by the Tribunal and unless and until the E operation of the impugned judgment was stayed by any superior forum the plaintiff could not take shelter behind the plea that the decision of the Tribunal was put in issue in appeal. Indeed, this Court in the earlier round of litigation had not stayed the declaration given by the Tribunal and the submission of learned senior counsel for the appellants was that the commencement of period of limitation and running there of was not stalled. In his submission, F the period of limitation shall have to be calculated by reference to 18th April, 1966, the date on which declaration was made by Tribunal and if the 'period of limitation was calculated by reference to that date, the suit instituted by West Coast Paper Mills. Limited on 12th December, 1973 was hopelessly barred by time. We entertained a doubt about the correctness of the view G taken in P.K. Kutty 's case (supra) and, therefore, directed the matter to be placed for consideration before a 3-Judges Bench. The decision by 3-Judges Bench is available reported as Union of India and Ors. v. West Coast Paper Mills Limited and Anr., (2004) 2 SCALE 285. The 3-Judges Bench has laid down the law that the order of the Tribunal dated 18th April, 1966 has merged into the judgment of this Court dated 14th October, 1970 and, H therefore, the limitation would run from 14th October, 1970 and .not from

U.0.1 v. WEST COAST PAPER MILLS LTD. [LAHOTL J.] 649

18th April, 1966. The 2-Judges Bench decision in P. K. Kutty's case (supra) A has been overruled as not laying the correct law. Having decided the question of law, the 3-Judges Bench has referred the matter back to the present 2- Judges Bench for decision on facts and other Please, if any.

Mr. P. P. Malhotra, the learned senior counsel for the appellants has submitted that even if it is assumed that the period of limitation commenced B on 14th October, 1970, still the suit should have been filed on or before 14th October, 1973 and, therefore, the suit filed on 12th December, 1973 is barred by limitation. The plea cannot be upheld for two reasons. Firstly, the period of two months required by Section 80 of the Code where under notice is mandatorily required to be given before filing the civil suit has to be excluded C from computing the period of limitation under sub-section (2) of Section 15 of the Limitation Act, 1963. Secondly, the period between 5th January, 1972 and 29th October, 1973 during which the civil writ petition remained pending for the identical relief based on the same cause 1bf action but which came to be dismissed by the High Court forming an opinion that civil suit was an appropriate remedy, is liable to be exclu.ded from calculation under Section D 14 of the Limitation Act, 1963. However, Mr. Malhotra, the learned senior counsel for the appellants would not agree with such propositions and made his submissions. According to him, the West Coast Paper Mills limited had given a notice even before 14th October, 1970 and by repeating the notice under Section 80 of the Code for the second time the West Coast Paper Mills E Limited cannot claim its exclusion from computing the period of limitation under Section 15(2) of the Limitation Act. We cannot agree.

The cause of action arose to the plaintiff on 14th October, 1970 when the dispute came to be finally adjudicated upon by this Court and in view of the ~-Judges Bench decision dated 5th February, 2004 referred to hereinabove p there is no manner of doubt that the decision of the Tribunal has merged with the decision of this Court dated 14th October, 1970. The plaintiff was justified in staking its claim based on the decision of this Court dated 14th October,

1970 and serving a notice under Section 80 of the Code. The notice so served squarely attracts the applicability of sub-section (2) of Section 15 of the Act.

In the submission of Mr. Malhotra, placing reliance on The Commissioner of Sales Tax, UP., Lucknow v. Mis Parson Tools and Plants, Kanpur, [1975) 4 SCC 22, to attract the applicability of Section 14 of the Limitation Act the following requirements must be specified.

"(l) both the prior and subsequent proceedings are civil proceedings H

A prosecuted by the same party;

(2) the prior proceedings had been prosecuted with due diligence and in good faith;

(3) the failure of the prior proceedings was due to a defect of jurisdiction or other case of a like nature;

(4) both the proceedings are proceeding in a Court."

In the submission of the learned senior counsel, filing of civil writ petition claiming money relief cannot be said to be a proceeding instituted in good faith and secondly, dismissal of writ petition on the ground that it was C not an appropriate remedy for seeking money relief cannot be said to be 'defect of jurisdiction or other cause of a like nature' within the meaning of Section 14 of the Limitation Act. It is true that the writ petition was not dismissed by the High Court on the ground of defect of jurisdiction. However, Section 14 of the Limitation Act is wide in its application, inasmuch it is not

D confined in its applicability only to cases of defect of jurisdiction but it is applicable also to cases where the prior proceedings have failed on account of other causes of like nature. The expression "Other cause of like nature" came up for the consideration of this Court in Roshanlal Kuthalia and Ors.

v. R.B. Mohan Singh Oberai, AIR (1975) SC 824 = (1975) 4 SCC628 and it was held that Section 14 of the Limitation Act is wide enough to cover E such cases where the defects are not merely jurisdictional strictly so called but others more or less neighbours to such deficiencies. Any circumstances, legal or factual, which inhibits entertainment or consideration by the Court of the dispute on the merits comes within the scope of the Section and a liberal touch must inform the interpretation of the Limitation Act which deprives the remedy of one who has right.

F The issue as to the legality and reasonability of the rates charged by the Railways Administration having been finally adjudicated upon by this Court; there is nothing wrong in the respondent West Coast Paper Mills Limited having proceeded on an assumption that what had remained to be done was G a simple direction to the Railway Administration to refund the amount of freight to which it had already been adjudged not entitled to recover. However, the High Court was not inclined to grant such relief in exercise of its writ jurisdiction and, therefore, left open the remedy of civil suit available to the respondents. By no stretch of imagination, it can be said that the West Coast Paper Mills Limited was actuated by malafides or want of good faith in H instituting the writ proceedings. In our opinion, the period lost during the -

U.0.1 v. WEST COAST PAPER MILLS LTD. [LAHOTI, .I.] 651

pendency of the writ proceedings is liable to be excluded from computing the A period of limitation under Section 14(2) of the Limitation Act. Not only we have independently arrived at the finding on the submissions made by the learned counsel for the appellant, but we may also refer to the finding recorded by the 3-Judges Bench vide paragraphs l 7 and 18 of the judgment dated 5th February, 2004 wherein it has been specifically held that the respondents were also entitled to get the period during which the writ petition was pending B excluded from computing the period of limitatiun and in that view of the matter, the civil suit was filed within the prescribed period of limitation. The finding recorded by the Trial Court as also the High Court that the respondents were entitled to the benefit of Sections 14 and 15 of the Limitation Act, 1963 has been expressly upheld by the 3-Judges Bench holding, "We have no C reason to take a different view".

We are clearly of the opinion that the suit filed by the respondent West Coast Paper Mills Limited was within the period of Limitation.

So far as the suit filed by Dandeli Ferro Alloys limited is concerned, D Mr. Malhotra, the learned senior counsel for the appellants very fairly conceded that in view of the decision dated 12th November, 1972 which was given by the Tribunal in favour of the respondent Ferro Alloys Limited the suit filed on 18th April, 1974 was certainly within limitation.

So far as the plea based on Section 788 of the Act is concerned, we E find no merit therein as well. Section 788 provides as under:

78B. Notification of Claims to refunds of overcharges and to compensation for losses: A person shall not be entitled to a refund of an overcharge in respect of animals or goods carried by railway or to compensation for the loss, destruction, damage, deterioration or non- F delivery of animals or goods delivered to be carried unless his claim to the refund or compensation has been preferred in writing by him or on his behalf -

(a) to the Railway administration to which the animals or goods were delivered to be carried by railway, or G

(b) to the railway administration on whose railway the destination station lies, or the loss, destruction, damage or deterioration occurred,

within six months from the date of the delivery of the animals or goods for carriage by railway: H

xxx xxx xxx

The crux of the controversy is whether the claim preferred by the respondents can be said to be a claim for refund of. an 'overcharge'.

The term overcharge is not defined in the Act. In its dictionary meaning B "overcharge"· means "a charge of a sum more than as permitted by law" [see, The Law Lexicon, P. Ramanatha Aiyar, 1997 Edition, Page 1389]. The tenn came up for the consideration of the High Court of Gujarat in Mis Shah Raichand Amulakh (D) by his heir v. Union of India and Ors., (1971) 12 GLR 93, Chief Justice P.N. Bhagwati (as His Lordship then was) interpreted the term by holding that "Overcharge" is not a term of art. It is an ordinary C word of the English language which according 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 or class as a charge. it cannot be any other kind of money" such as money recovered where nothing is due. Overcharge D is simply a charge in excess of that which is due according t~ law.

1n 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 lllegal and unreasonable by the Tribunal under Section 41 of the Act, were legal and any one carrying the goods by rail was liable to E pay the freiht 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 ?d the decision of the Tribunal having been upheld by this Cot.rt. A case of' illegal charge' is distinguishable F from the case of 'overcharge' and does not attract the applicability of Section

78B of the Railways. Act.

For the foregoing reasons, we find th~ appeals devoid of any merit and liable to be dismissed. The appeals are dismissed accordingly and the decree G of the Trial Court as upheld by the High Court is affirmed.

S.K.S.

Appeals dismissed.