TMI Blog1998 (4) TMI 538X X X X Extracts X X X X X X X X Extracts X X X X ..... of 1985 in the Delhi High Court and transferred to this Court by virtue of orders in T.P.(c) No.713. of 1995. On transfer it was numbered in this Court as T.C. No. 47 of 1997. The broad facts in all the cases are similar. The appellants/petitioners are all consignees of coal from the collieries. The issue relates to the right of the Railways to recover 'penal charges' relating to overloading of coal in goods wagons beyond the permissible carrying capacity' of each wagon, from the consignees. While the Railways claim that the said charges can be recovered from the appellants- consignees, the appellants, on the other hand, contend that the Railways ought not to have permitted overloading or, coal at the collieries railway-siding and that the consignor collieries and therefore the consignees cannot be made to pay these 'penal charges'. The petitioners/appellants not only seek refund of penal charges paid but a direction that in future, the Railways should be directed not to collect the same from the consignees. The broad facts of the case can be gathered from the Delhi case T.C. No. 47 of 1997. The paper book in this case contains exhaustive pleadings and doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vied and collected at the time of delivery of the coal from the consignee, or else the goods will not be released. Invariably, the consignees in all the cases before us have obtained delivery of the coal including the coal which is in excess of the permissible carrying capacity of the wagon and have paid - apart from the normal rate for carriage- the penal charges also. In none of the cases before us has the consignee - who had the choice of rejecting the overloaded coal at the destination point - rejected the excess coal so overloaded while taking at the destination point. The cases before us cover two periods, namely where the penal charges were levied and collected by the Railways when the Railways Act, 1890 was in force (upto 30.61990 ) and again where such charges were levied and collected after the Railways Act, 1989 came into force, i.e from 1.7.1990. There are certain difference in the respective provisions applicable under the old Act and the new Act which have been placed before us and we shall refer to them at an appropriate stage. It is contended for the consignees - as revealed, from the Judgments of the Allahabad High Court in appeal that the relevant Rule 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are compensatory charges though they are called 'penal' and that it is not necessary that there should be mens rea. Rule 161A of the Indian Railways Conference Association is not inconsistent with section 53 of the old Act. It is contended that the said Rule was issued by the Railway Board under the power delegated to it by notification issued by the Central Government on 24.3.1905 and 8.10.69(respectively with regard to power under section 54 and section 29) and that the letter dt. 7.5.1981 (Annexure-Q in TC No.47/97) shows that the Railway Board validity issued Rule 161A in Part (vol.1) of the Indian Railway Conference Association and that the said Rule is protected by sections 54(1) and 29(1) of the old Act. It is also contended that the Railways are entitled to Collect the penal charges from the consignee under Rule 161A inasmuch as in the second part of Rule 161A, there is no restriction as to the party from whom the penal charges are to be collected. So far as the new Act of 199 is concerned, it is contended that section 73 specifically permits the levy and collection of penal charge from the consignor, consignee or endorsee, as the case may be. In other words Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lative of Article 14 of the Constitution of India as they permit the Railways to recover the penal charges from the consignees who, according to the appellants/petitioners, are not responsible for the overloading of the coal beyond the permissible limits in the wagons at the colliery siding and are not 'delinquents'? (6) What is the effect of delivery of the Railway Receipt to the consignee under the Railways Act, 1890 and the Railways Act, 1989 and does it have the effect of transferring all the cosignee, including the liability to pay penal charges at the time of delivery of the overloaded goods to the consignee? (7) In any event, does the Railways not have a lien for collection of the penal charges from the consignee because of section 55 of the Railways Act, 1890 or section 83 of the Railways Act, 1989? (8) Can the consignees (except the appellant in CA No. 7514 of 1995 and CA No. 4266 of 1996) seek refund from the Railways without pleading and proving that they have not passed on the burden of the penal charges to their consumers? (9) Are the consignees entitled to any direction that the Railways should not, in future, collect these penal charges from the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capacity'. We shall next refer to Section 53. It reads as follows:- Section 53: Maximum carrying capacity for wagons: (1) The gross weight of every wagon or truck bearing on the axles when the wagon or truck is loaded to its maximum carrying capacity shall not exceed such limit as m ay be fixed by the Central Government for the class of axle under the wagon or truck. (2) Subject to the limit fixed under sub-section (1), every railway administration shall determine the normal carrying capacity for every wagon or truck in its possession and shall exhibit the words and figures representing the normal carrying capacity so determined in a conspicuous manner on the outside of every such wagon or truck. (3)................................ ......................... (4) Notwithstanding anything contained in sub-section (2) or sub-section (3), where a railway administration thinks it necessary or expedient so to do in respect of any wagon or truck carrying any specified class of goods or any class of wagons or trucks of any specified type, it may, by notification, vary the normal carrying capacity for such wagon or truck or such class of wagons or trucks and, subject to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at while Section 53(1) of the old Act (Section 72(1) of the new Act) uses the words 'maximum carrying capacity', and Section 53 (2) of the old Act (section 72 (2) of the new Act) uses the words 'normal carrying capacity', Rule 161A of the Indian Railway Conference Association an Section 73 of the new Act (which empowers levy capacity'. New inasmuch as penal charges under Rule 161A (or under Section 73 of the new Act) are leviable only for exceding the permissible carrying capacity , it is, therefore, necessary to understand the significance of these words. That, to a large extent, is explained by the Statement of Objects and Reasons of the 1954 Amendment of the old act set out above. Section 16 if the old act (and Section 27 of the new Act) deals with the u of rolling stock. What design or type of rolling ck is to be used is to be decided by the Central Government, Ministry of Railways (Railway Board), in consultation with its Research and Design Organisation. The maximum gross-weight bearing on the axles is determined by the Commissioner of Railway safety, when granting permission under section 16 of the old Act (Section 27 of the new Act). The Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carrying capacity' means the normal carrying capacity determined under sub-section (2) or (3) of section 72 or where a railway administration has determined a varied carrying capacity under sub-section (4) of section 72, such varied carrying capacity, whichever is higher. This permissible carrying capacity cannot, as already state, exceed the upper limits prescribed by the Commissioner of Railway Safety under Section 53(1) of the old Act (Section 72(1) of the new Act). (See also Johari's commentary on Railways Act, 1989 (1991 Ed.) pp.124,241,242). The above meaning of the words will be helpful in understanding the discussion under Points 2 to 8. Point 2: The first contention for the appellants is that Rule 161A is inconsistent with section 53(1) of the Act. It will be noticed that while section 53(1) prohibits overloading in excess of the maximum carrying capacity, Rule 161A permits loading beyond the permissible carrying capacity and the charging therefore. Obviously the contention is based upon a misconception of equating the permissible carrying capacity with the maximum carrying capacity, which words are distinct and different as explained by us under Point 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es shall apply. Under section 3(13) of the old Act, 'rate' is defined as including any fare, charge or other payment for the carriage of any passenger, animals or goods. In our view, 'other payment' could be by way of a penal charge as levied by Rule 161A. Again section 54(1) states that the railway administration may impose conditions not inconsistent with the Act or with any general rules made thereunder, With respect to the receiving, forwarding or delivery of any animal or goods. Thus both sections 29(1) and 54(1) in our view protect Rule 161A. But it is argued that Rule 161A is in Part 1(Vol.1) of the IRCA and that it is only Part 1(Vol.2) that is issued under the authority of the Central Government as stated on the cover page of the IRCA Rules. This point requires a deeper investigation. It is true the cover page of IRCA Rules states that only Rules in Part 1(Vol.2) are issued under the authority of the Central Government and not the rules in Part 1(Vol.1). We, however, find from the letter dated 7.5.1981 (Annexure-Q in T.C. 47/97 of Ashoka Silicate Glass Works i.e. W.P. No.864 of 1985) that the said Rule 161A was issued by the Railway Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants/petitioners on Rules 6 and 29 of Eastern Railway Coal Tariff Part 1, as impliedly excluding Rule 161A. Rule 6 carries the heading 'charges payable in respect of the overloading the excess coal and re-loading the same and the demurrage charges payable therefor. Therefore, it is clear that this rule does not cover penal charges for overloading coal beyond the permissible limits and cannot be said to exclude Rule 161A. Coming to Rule 29, it reads as follows: Rule 29: Wagons not be loaded in excess of maximum weight prescribed: Consignors in loading are required not to exceed the maximum weight prescribed for a wagon. Should overweight be ascertained on weighment, the load will be reduced. In case of consignments weighed in route, any overloading, however, detected at destination is liable in the same rate as the remainder of the consignment. It is true Rule 29 deals with coal but we may point out that Rule 161A also deals exclusively with coal and was specifically introduced to deal with overloading coal beyond the permissible carrying capacity. It will be noticed that Rule 29 deals with loading beyond the maximum weight prescribed by section 53(1)(see discussio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her because, during the relevant time when the goods in question before us were loaded, the Coal Commissioner was not in the picture so far as certain types of coal were concerned and, the collieries and the consignees were dealing with each other as principals i.e. as sellers and buyers. This clear from the subsequent notifications under the Coal Control Order, 1945 set out in the recent judgment of this Court in Coal India Ltd. another vs. Continental Transport and Construction Corporation Others [1997 (9) SCC 258]. Yet another endeavour was made by the learned counsel for the Railways to contend that the contract between the collieries and the consignees was not merely an F.O.R. contract but was F.O.R. - Railway Siding at the Colliery - what in English law is called Free Along Side (F.A.S.) contract and that title in regard to unascertained goods in such cases passed to the consignee as soon as the goods were brought to the private Railway siding at the colliery and were identified or earmarked for loading to the particular consignee in whose favour the wagons in question were allotted. Reference in this connection was made on behalf of the Railways to the meaning of FA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it-head or alongside the railway siding. As we had certain doubts about the actual terms of the individual contracts in the various cases before us, we felt that it would not be safe to go by the above contentions of the learned counsel for the Railways based on F.A.S. contract. We shall accordingly assume that in all these cases before us title remained with the collieries even at the time of the loading of the coal into the wagons and we shall deal with the respective rights and liabilities of the consignor and consignees on that basis. The discussion here can be split up into two periods the one covered by the old Act of 1890 and the other covered by the new Act pf 1989. Period covered by the new Act of 1989: We shall first deal with the Period covered by the new Act, i.e. after 1.7.1990. This period does not present much difficulty in view of the specific provision in Section 74 of the new Act which deals with passing of property in the goods upon delivery of the railway receipt. In this context, reference is also necessary to Section 73 of the new Act which corresponds to Rule 161-A, Section 73 of the 1989 Act reads as follows: Section 73:Punitive charge for ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the liabilities of the consignor to pay the penal charges under section 73 in respect of the overloaded goods covered by the railway receipt. Period covered by the old Act: So far as the period covered by the old Act is concerned, the provision corresponding to section 73 of the new Act is Rule 161A of the IRCA Rules. That Rule, which we have already extracted, came into force in 1981 and we have held that it has statutory force having been made by the Railway Board under powers delegated to it. Question is whether under Rule 161A, the Railways can collect the Penal charges from the 'consignee'. Sub-clause (1) of Rule 161A is in two parts. The first part says that the 'consignors' are required not to exceed the permissible carrying capacity of the wagon. The second part, which is important in this context reads as follows: Should overweight be discovered at the booking point or on route or at destination, such overweight beyond the permissible carrying capacity of the wagon used will, notwithstanding anything contained in this Tariff or in any other Rules or instruction, be charged at the normal wagon load rate if the overweight is upto one tonne (now tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat officers of the Enforcement Directorate were acting as adjudicators and not as judges of Criminal Courts and they determine the liability of the contravenor for breach of his 'civil obligations' laid down under the Act and impose a 'penalty' for the breach of the said obligations as laid down under the Act. In that context it was observed that the word 'penalty' is a word of Wide significance, sometimes it means recovery of an amount as a penal measure in civil proceedings, or an exaction which is not compensatory in character. Reference was made in that case to Corpu Juris Secundum, (Vol.85, p.580, para 1023), to the effect that a 'penalty' can be imposed for a tax delinquency which is a civil obligation, entailing remedial and coercive processes, and is far different from the penalty for a crime or a fine or forfeiture provided as punishment for violation of criminal or penal laws. Learned counsel also referred to N.K. Jain Others vs. C.K. Shah Others [1991 (2) SCC 495] and Pratibha Processors Others vs. Union of India Others [1996 (11) SCC 101], as to the meaning of penalty. The former case arose under Employees Provident Fund etc, Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se charges. There is therefore no violation of Article 14. Further, the question of reasonableness of the quantum of any such extra rate cannot be challenged before us and the appropriate forum therefor is the Railway Rates Tribunal. Rule 161A can therefore, be resorted to for collecting these penal charges from the consignee also. After all, the consignee had received delivery of the overloaded goods and used the same for their business, commercial or industrial purposes. For the above reasons, a statutory provision like section 73 or Rule 161A which permits levy on such a consignee cannot, in our view, be said to be arbitrary or unreasonable in the context of Article 14. In the Civil Appeal arising out of SLP(C) No.7766 of 1994 from Allahabad, it was contended that when the wagons were initially weighed at the colliery or focal point, there was no extra load and that the defective weigh bridges at those points were the real cause for this problem. We find from the pleading and from the SLP grounds that no such plea was raised in the High Court. Such a plea cannot be permitted to be raised for the first time by way of rejoinder in the SLP. In Civil Appeal No. 4266 of 1996 (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her charges due from him . In our view, the words other charges take in the penal charges leviable under section 73 of the new Act and, therefore, section 83 permits the Railways to recover the same from the abovesaid persons - which include the 'consignee' -as a condition precedent for the delivery of the goods. Position under the old Act: The corresponding provisions which deals with the 'other charges' used in section 55 or the word 'other payment' in the definition of 'rate' in section 3(13), they clearly include the 'penal charges' leviable under Rule 161A of the Rules. Thus, under section 55(1), it is permissible for the Railways to withhold the delivery of the goods from the consignee unless the consignee pays the penal charges also. That is the effect of the 'lien'. For the aforesaid reasons, we hold that the Railways had a lien for the penal charge under section 55(1) of the old Act and have a lien for the penal charges under section 83 of the new Act. Under both statutes, the said charges are recoverable from the consignee as a condition precedent for delivery of the goods. Point 7 is decided accordingly. Point ..... X X X X Extracts X X X X X X X X Extracts X X X X
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