Union of India v. M/S. Modi Industries Ltd.

B ### c D E F G H 8311 UNION OF INDIA v. M/S. MODI INDUSTRIES LTD. March 30, 1973 (A, N. G!lOVBll AND K. K, MATHEW, JJ,) _/mlian_ _Rai/wC<ys_ _Act,_ 1890 _Ss._ 26 _and 41-Compku'nt_ _In_ _rtsptct of past·_ _dues_ _cannot_ _be_ _made_ _under_ _s._ 41 _before_ _Railway_ _Rates_ _Trlbuna!-In_ _•uch_ _cases_ _s._ 26 _of Act_ _is_ _not_ _a_ _bar_ _to_ _a suit_ _In_ _civil_ _court_ _and_ _question_ _of_ _reasonableness_ _of_ _charges_ _can_ _be_ _gone_ _Into_ _by_ _civil_ _court._ By agreement dated July 4, 1933 the respondent company was liable. to pay charges for a railway siding at agreed rates. Clause 23 of the agreement laid down that it shall be open to the Railway Administration on giving six months notice of sum. ihtent, to revise the said charges. Clause 24 related to t\?rmination of the agreement in the event of nonpaxment of dues within one month Cl[ demand. On March 26, 1949 the railway authorities informed the respondent that the rates were proposed to be increased with effect from April l, 1949. The respondent objected to the increase as being against clause 23 of the agreement. By a subsequent letter in September 1951 the Divisional Superintendent of the Railway asked the respondent to pay the charges at much higher rates. There was prolonged correspondence between the parties without the respondent. agreeing to pay the higher rates demanded. On September 29, 1955 theDivisional Engineer addressed a letter to the respondent proposing revision of the siding charges with effect from April l, 1956 after the expiry of six months according to clause 23 of the agreement. These proposed charges were much lower than the charges demanded by the earlier letters. On May 17, 1957 the General Manager of the Railway sent a letter to the plaintiff for payment of Rs. 93,981-8-0 in respect of the period December I 19'49 to March 31, 1956. It was intimated that on failure to make the said payment within one month the supply of wagons would be stooped and steps to determine the agreement would be taken. In May 1957 the respondent served a notice under s. 80 Of the Code of Civil Procedure and· thereafter filed a suit. The trial .court partly decreed the suit. The High Court. decreed it _in_ _toto._ In the appeal by certificate to this Court, filed on behalf of the lJnion of India, the· questions that fell for. consideration were : (i) whether the civil court had jurisdiction in view of Ss. 26 and 41 of the Indian Railways Act, 1890, to detennine the reasonableness of the charges: (ii) whether the courts below if they had jurisdiction were justified in holding the charges to be unreasonable. Dismissing the appeal, HELD : (i) From the facts it appeared that the rates are being rev is-· ed and actually enhanced, but then the matter was kept pending and there was exchange of correspondence and discussion between the parties from time to time. No effort was made to enforce the demand made in the various letters and the· plaintiff was allowed to make payments according to the rates originally a~reed. It was only in May 1957 that the respondent wa. really threatened to mak<: payment of the outstanding amount calculated at the revised rates on pain of the supply elf wagons being stopped and the agreement being determined. According to the decisions of this Court it was hardly open to the respondent to file a complaint under s. 41 of the Act with regard to the 836 SUPREME COURT REPORTS (1973] 3 s.c.R. nasonableness or otherwise of the rates and charges which had already llecome due and payable. The plaintiff had no grievance whatsoe\·er with ·regard to the charges which had been fixed with effect from April 1, 1956. By means of the letter dated September 29, 1955, and therefore there ·was no question of its filing a complaint with regard to those charges. Its grievance was confined only to the amount which was being demanded ·On the basis of the revised enhanced rates between the period December t, 1949 and March 1, 1956. If that amount had actually been realised by ·the railway authorities the plaintiff could only file a suit for its refund and could not have laid a complaint under s. 4 J of the Act before the Railway Tribunal. By analogy the plaintiff could not have filed a com·plaint with regard to the past dues as the Railway Tribunal could not have given any relief in respect thereof 'following the law laid down by this Court. In this view of the matter apart from other questions involving the validity of clause 23 of the agreement as also of the notice or intimation of rates on the ground on non-compliance \vith its terms the suit cou1d not be held barred under s. 26 of the Act and the civil court could ·grant the relief claimed. [842H-843PJ _Union_ _of India_ v. _The Indian Sugar Mills Association, Calcutta ._ . f1967] 3 S.C.R. 219, _Raichand Amulakh Shah_ v. _Union_ _of India,_ [1964] _5_ S.C.R 148 and _Upper Doab Sugar Mills Ltd._ v. _Slwhdara (Delhi) Salwranpur_ _.Light Railway Company Ltd.,_ [1963] 2 S.C.R. 333 at p. 342, referred to. (ii) There was no serious infirn1ity in the reasoning of the High Court ·by which it arrived at the conclusion that the question of reason~bleness of the charges, keeping in mind the 'facts of this case, was justiciable. Nor had any justification been shown 'for rconening the concurrent finding of the two Courts below that the rates which were demanded for the period in question were unreasonable. The suit \\'as thus rightly de.:reed. f843EJ CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1616 of 1967. Appeal by cevtificate from the judgment and order da•ted September 30, 1966 of the Allahabad High Court in First Apoeal No. 198 of 1960. _Gobind Das_ and _B._ _D._ _Sharma,_ for the appellant. _C. B. Agarwala, Uma Mehta,_ _S._ _K._ _Bagga, Swreshta Bagga_ and _Rani Arora,_ for the respondent. The Judgment of the Court was delivered by GROVER, J .-This is an appeal by certificate from a judgment of the Allahabad High Court in a suit filed by the plaintiff-respondent for an injunction against the defendant-appellant restraining it from realizing the sum _ol_ Rs. 93,981-8-0 on account of the alleged siding charges for the period December 1, 1949 10 March 31, 1956 and from stopping 'the supply of wagons in the railway siding of the plaintiff and further from cancelling the agreement dated July 4, 1933 for the aforementioned reason. The facts necessary for deciding the appeal may be stated. By means _ol_ an agreement dated. July 4, 1933 the plaintiff entered into an agreement with the Secretary of State for India-in-Council through the agent of the North Western Railway _(now_ represented _Gobind Das_ and _B._ _D._ _Sharma,_ for the appellant. _C. B. Agarwala, Uma Mehta,_ _S._ _K._ _Bagga, Swreshta Bagga_ and _Rani Arora,_ for the respondent. The Judgment of the Court was delivered by GROVER, J .-This is an appeal by certificate from a judgment of the Allahabad High Court in a suit filed by the plaintiff-respondent for an injunction against the defendant-appellant restraining it from realizing the sum _ol_ Rs. 93,981-8-0 on account of the alleged siding charges for the period December 1, 1949 10 March A B ### c D E F G H A B ### c UNION _v._ MODI INDUSTRIES _(Grover,_ _!.)_ 83T by the Union of India) whereby it was agreed that the former shall Jay a railway siding from Begamabad Station Yard of that railway for enabling the plaintiff to carry on its business at its. premises. Clause 13 of the agreement was as follows: "Freight for all classes _al_ goods will be charged upto and from Begumabad Station. Railway Receipts and invoices shall be issued to and from the station only and in accordance with the rates from time to time published in the Goods Traffic Books of this Railway Administration will make the following charges in each direction from every wagon loaded or empty in or removed #### from the lines A and a mentioned in clause 15 below :- (J) Per 4 wheeled wagon (2) Per 6 wheeled wagon _(3)_ **Per 8 wheeled wagon** **Re.** **One.** **Re.** **One** **and** **annas** **eiaht** **Re.** **two."** **D** ·Clause 23 of the agreement provided : E F G H "Notwithstanding anything laid down in the foregoing clauses of this Agreement, it shall be open to the ##### Railway Administration on giving six months notice ot such intent, to revise the charges laid down in clauses 8, 12, 13 and 19 of this Agreement". Clause 24 related to termination of the agreement in the event of non payment of duc:S within one month of demand. On March 26, 1949 the Divisional Superintendent of the E.P. Railway (successor in interest of the North Western Railway) informed the plaintiff that the rates were proposed to be increased with effect from April 1, 1949, the increased charges being mentioned in that letter. As this intimation was not in accordance with clause 23 of the agreement the plaintiff refused to agree to the increase. Other objections were also raised, one _al_ the objections being that the charges were excessive. The Divisional Superintendent addressed another letter on May 18, 1949 informing the plaintiff that with effect from December 1, 1949 the charges mentioned therein would be made. A good deal of correspondence and discussions between the representatives of the plaintiff and the railway authorities took place and by a letter dated July 20, 1951 the Divisional Superintendent intimated that the revised· siding charges in force from December 1, 1949 were purely provisional and were subliect to revision. Meanwhile and subsequent to the above date the required tests were made to <!!:'!ermine the charges. In Septelllber 1951 the Divisional Superintendent wrote to the plaintiff that the siding charges should be paid with effect 838 SUPREME COURT REPORTS [1973] 3 s.c,:a.. from December 1, 1949 to September 30, 1951 at the following ## rates : **A** B ### c **D** E F G **H** (I) Per 4 wheeled waaon (II) Per 6 wheeled waaon (Ill) Per 8 wheeled wagon Rs. _S/·_ Rs. 7/8/Rs. 10/· The plaintiff protested against what was called the exorbitant nature of the charges and made it clear that the letter of September 1951 did not comply with clause 23 of the llireement and that the charges were unreasonable and could not be legitimately made. Another letter dated October 26/November 6, 1951 was sent by the Divisional Supetintenden1 saying that the siding charges to b\e .levied with effect from first October 1951 were being assessed and would be intimated to the plaintiff and meanwhile it should continue to pay the charges demanded in the letter of September 1951 provisionally. The Divisional Superintendent addressed another letter dated November 27, 1951 explaining the result of the test and the actual cost of the shunting etc. A demand was made that the revised siding charges should be paid from December 1949 to September 30, 1951 at Rs. 4/- per 4 wheeler, Rs. 6/per 6 wheeler and Rs. 8/- per 8 wheeler. The plaintiff, however, did not pay the increased rates demanded. On September 29, 1955 the Divisional Superintendent addressed a letter to the plaintiff proposing revision of the siding charges with effect from April 1, 1956 after the expiry of six months according to clause 23 of the agreement. The charges as demanded were as follows : **4 wheeled wagon** **6 wheeled wagon** **8 wheeled wagon** - Rs. 1 ·20/· Rs. 2 ·10/ Rs J. 50/· On May 17, 1957 the General Manager of the Railway sent a letter to the plaintiff for payment of the amount of Rs. 93,981-8-0 representing the difference between the amounts due from December 1, 1949 to March 31, 1956. It was intimated that on failure to make the said payment within one month ihe supply of wagons would be stopped ancl steps to determine the agreement would be taken. In May 1957. the plaintifi served a notice under s. ·so of the Civil Procedure Code to be defendant and thereafter in October 1958 the suit out of which the appeal has 'arisen was filed. Out of the issues framed by the trial court on the pleadings of the parties the following need be mentioned : ( 1 ) "Whether the enhancement of the siding charges by the defendant is unjustified, exorbitant and illegal ? ' A 8 ## c D E F G H UNION _v._ MODI INDUSTRIES _(Grover,_ J.) 839 (2) Whether the demand of Rs. 93,981-8·0 by the defendant is illegal ? (3) Whethe; the court has no .jurisdiction to try the suit ?" On issue No. 1 'the trial court held that the charges demanded were uniustified and exorbitant. It was held that out of the demand of Rs. 93,981-8-0 the demand for Rs. 22,111-3-0 was illegal. On issue No. 4 the trial court expressed the view that it had jurisdiction to try the suit in respect of that portion o[ the claim whereby the legality of the enhanced siding charges had been challenged on account of being in violation of clause 23 of the agreement but it had no jurisdiction to try the suit in respect of the second ground whereby the enhanced siding charges had been challenged as unjustified and exorbitant. The plaintiff appealed to the High Court and the defendant filed cross · ot~ections. The High Court affirmed the finding of the courts below thirt the enhancement made by the Railway Ad ministration was highly unjustified and exorbitant. But it did not accept i1s finding about the legali'ty of the enhancement and also on the question of the jurisdiction of the civil court. The appeal was consequently allowed _in_ _toto_ and the cross objections were dismissed. The principal question which has been -ai:itated before us relates to the jurisdiction of the civil court to determine the reasonableness of the charges. A subsidiary question has be~n raised that assuming the civil court had the jurisdiction, whether the courts below were justified in holding ·that to be unreasonable. For the purpose of determining the question of jurisdiction we shall have to examine ilie relevant provisions of the Indian Railways Act, 1890, hereinafter called the 'Act'. Section 3 contains the definitions. Clauses 11 and 13 defining the words "traffic" and ## "rates" are as follows : ment for the carriage ·of any passenger, animal **or goods";** Chapter V headed "traffic facilities" commences with s. 26. Ac· cording to that section except as provided in the Act no suit shall be instit\lted or proceedings taken for anything d<?ne or any omission made by the Railway Administration in violll;llon or con· travention of any provision of that Chapter. Section 27 ( 1) places a duty on every Railway Administration to afford a!I rea· sonable facilities for the receiving, forwarding and delivermg of traffic upon and from the several railways belonging to or worked " ( 11) "trafic" includes rolling stock of every descrip tion as well as passengers; animals and goods; ( 13) "rate" includes any fare, charge or other pay 840 SUPREME COURT REPORTS [1973] 3 S.C.R, by it and for the return of the rolling stock. Section 29 is ay ## follows : S.29 ( 1) "The Central Government may by general or special order fix maximum and minimum rates for the whole or any part of a railway and prescribe the conditions in which such rates will apply. B (2) The Central Government may, by a like order, fix the rates of any other charges for 'the whole or any part of a railway and prescribe the con ditions in which such rates of charges shall apply. (3) Any complaint that a railway administration is C contravening any order issued by the Central Government under sub-section ( 1) shall be determined by the Central Government". Section 34 relates to the constitution of the Railway Rates Tribunal for the purpose of discharging functions specified in Chapter V. Sections 39 ai:d 40 give the jurisdiction and powers of the Tribunal. I> ## Sectfon 41 to the extent it is material may be reproduced : S.41 (l) "Any complaint that a railway administration ( a) is contravening the provisions of s. 28 or ( b) _is_ charging for tile carriage or any commodity between two stations a rate which is unreason- E able c~ ( c) is levying any other charge which is unreason **cble,** may be made to the Tribunal, and the Tribunal shall hear and decide any such complaint in accordance with the provisions of this Chapter". #### '2) ......................... . _(_ 3) In the case of a complaint under clause (b) or clause ( c) of sulj-section (1), the Tribunal may fix such rate or charge as it considers reasonable : #### Provided that ............................. . (4) ...........................•..,, On behalf of the appellant the bar created by the s. 26 to the jurisdiction of ordinary courts has been .invoked. It has been argued that s. 29 (2) postulates the fixation of rates of charges #### other than those contemplated by sub-s. (l). II there is any grievance that the railway administration is levying a charge which is unreasonable it will be covered bys. 4l(l)(c) and there F G #### n A D ### c D E F H ##### UNION v. MODI INDUSTRIES (Grover, J.) s 41 fore, only a complaint can be made to the railway-administration in tha't matter. The jurisdiction of the civil court will be barred because exclusive jurisdiction has been conferred on 'the Railway !-lates Tribunal for determining whether the charge being levied is unreasonable. . According to the High Court Chapter V has nothing to do with charges which are payable under a contract. The validity and interpretation:of clause 23 of the agreement between the parties was a matter for the interpretation of the civil cour't and could not possibly be brarred by s. 26 of the Act. Section 41 (1) ( c) has no application to an enhancement already made in the purported exercise of the right under a contract. Now section 26 only bars the institution of a suit or proceedings for anything done or any omission made in violation or contravention of any provision of Chapter V. Section 29(2) empowers the Central Government to fix the rates _cf_ any other charges by a general or special order. In view of 1he language of s. 41 (1 )(c) if it is assumed that the rates cannot be unreason ##### ) [t957] 3 S. C.R. 219. (2\ [t9641 5 S, c: R. 148. (3\ [t963] 2 S. C. R. 333 at p. 342. 6-L797SuPCl/73 able and if the Central Government fixes unreasonable rates it may be possible to say that there Iias been a tontravention hr violation of s. 29(2). But such fixation of rates under that provision has to be ~ a general or special order. It has been suggested that a communication made under a contract cannot fall within the meaning of the word "order" as contemplated by s. 29. _Prima_ _facie,_ there may be some difficulty in acceding to the contention of the learned counsel for the appellant that any part c.f s. 29 will cover a revision of rates made by the railway authority in terms of a contract but the matter seems to s1and concluded by the decision of this Court in _Union of India_ v. _The Indian Sugar_ _Mills Association, Calcutta(')_ according to which it is immaterial that the charges being levied by the railway administration arise as a result of a voluntary agreement. The real difficulties in th~ way of the appellant are two fold; firstly, if any question arises about the validity of a clause _oi._ a contract that will be entertain able by a civil court. As laid down in _Raichiznd Amulakh Shah_ v. _Union_ _of India(_ _[2 ]_ _)_ the Railways Tribunal has no jurisdiction to decide whether the rules empowering the railway administration to levy a particular charge are _ultra vires_ or whether the railway administration collected amounts in excess of the charges which it can legally levy under a rule. In _Upper Doab Sugar Mills_ _Ltd._ v. _Shahadara (Delhi) Saharanpur Light_ _Railway_ _Com-_ _pany Ltd.(')_ two main points arose; one was whether the Railway Tribunal had jurisdiction to entertain the complaint as regards the reasonableness of the rates prior to the institution of the complaint 842 SUPREME COURT REPORTS [1973] 3 s.c.R. and the other was whether it had jurisdiction to 2rant refund for the aforesaid period. This is what was said by Das Gupta J. : #### ' "The words "charging" in cl. (b) and "levying" in cl. ( c) were used in the one and the same sense. We find it impos3ible to agree however that they were used to include "collecting". It appears to be clear that if the intention of the legislature was to give the Tribunal j urisdiC"tion over complaints in connection with charges already made the legislature would have used the words "has charged and is charging" and would not merely say "is charging". Special jurisdiction of such a nature would be given clearly and the very fact that the words "has charged" have not been .used is sufficient ground for thinking that it was not the legislature's intention to give the Tribunal jurisdiction over complaints in connec!ion with charges made in the past. In our opinion, the words "is charging" in cl. (b) and "is levying" in cl. ( c) must be construed to mean "is_ demanding a price at the present time for services to be rendered". Coming to the facts of the present case it· is apparent that one of the main questions involved was whether clause 23 of the contract between the parties was not void because it contravened s. 29 of the Indian Contract Aot. Another question which had to be investigated was whether a proper notice regarding the enhancement of rates had been given in accordance with the terms of the said agreement. From the facts which have been stated it appears that the rates were being revised and actually enhanced, but then the matter was kept pending and there was exchange _of_ correspondence and discussion between- the. parties from time to time. No effort was made to enforce the demand made in the various letters and the plaintiff was allowed to make payments according to the rates originally agreed. It was only in May 1957 that the plaintiff was really threatened to make payment of the outstanding amount calculated at the revised rates on pain of the supply of wagons being stopped and the agreement being determined. H is somewhat surprisin.e; that in September 1955 the rates which were revised were very much less. than those which were demanded for the prior period. The position thus remained in a ftexib)e state and there is a good deal of substance in the submission on behalf of the plaintiff-respondent that a complaint was not filed under s. 41 of the Act because the rates which were being-paid and actually accepted were the S311\e as the contractual rates and not the revised or enh~ rates. According to the decisions of this Court referred to before it was hardly open to the plaintiff to file a complaint with regard to the reasonabJeness or otherwise of the rates and charges which had already become due A B ### c D E F G H _I_ JI #### c D E UNION _v._ MODI INDUSTRIES _(Grover,_ _J.)_ 843 and payable. The plaintiff had no grievance whatsoever with regard to the charges which had been fixed with effect from April l, 1956 by means of the letter dated September 29, 1955 aqd therefore there was no question of its filing a complaint with regard to those charges. Its grievance was confined only to the amount which was being demanded on !he basis of the revised enhanced rales between the period Derember _1, 1949 and March I, 1956. If that amount had actually been realised by the railway authorities the plaintiff could orily file a suit for its refund and could not have laid a compaint under s. 41 of the _Apt_ be.fore the Railway Tribunal. By analogy the plaintiff could not have filed a complaint with regard to past dues as the Railway Tribunal could not have given any relief in respect thereof following the law laid down by this Court. In this view of the matter appart from other questions involving the validity of clause 23 of the agreement as also _cl_ the notice or inlimation of enhancemeilt of rates on the ground of non-compliance . with its terms the suit could not be held barred under s. 26 of the Act and the civil court could grant the relief claimed. We have not been shown any serious infirmity in the reason:ing of the High Court by which it arrived at the conclusion that the qu~stion of reasonableness of. the charges, keeping in mind the facts of this case, was justiciable. Nor has any justification been shown for reopening the concurrent finding o.f the two. courts below that the rates which were demanded for t]le period in question were unreasonable. The suit was thus rightly decreed. The appeal fails .and it is dismissed; but we make no order as to costs. F G.C. _Appeal dismissed._