PETITIONER: THE UNION OF INDIA, REPRESENTED BY THE GENERAL MANAGER, Vs. RESPONDENT: THE INDIAN SUGAR MILLS ASSOCIATION, CALCUTTA & ANOTHER DATE OF JUDGMENT: 21/03/1967 BENCH: BHARGAVA, VISHISHTHA BENCH: BHARGAVA, VISHISHTHA WANCHOO, K.N. CITATION: 1968 AIR 22 1967 SCR (3) 219 CITATOR INFO : RF 1969 SC 630 (2,11) RF 1973 SC1281 (8) ACT: Indian Railways Act, 1890, ss. 29 and 41--Charges made by Railways for maintenance, etc. of "assisted siding" constructed to facilitate goods traffic and for shunting wagon to and from companys' mill-Services rendered by Railways not under any statutory duty but under private agreement-Railways giving notice of enhancement of charges--Whether such charges fall within expression 'any other charge' in ss. 29(2) and 41 (1) (c). Therefore whether complaint alleging charges unreasonable can be entertained by Railway Rates Tribunal under s. 41(1)(c). HEADNOTE: The predecessor of the appellant Railway entered into an agreement in November, 1933, with the respondent company, which bad a large sugar mill, for the construction of two "assisted sidings" to facilitate the movement of goods traffic to and from the sugar mill. Under the agreement, part of the expenditure was met by the company and it was provided that the company would pay an annual contribution to the Railways for the use of the Railway portion of the siding and in lieu of paying separately the interest and maintenance cost of the siding. It was further provided that in the event of the contribution not being sufficient to meet the cost of the working of the siding, the Railway was entitled, on giving six months' notice, to modify the contribution and charge the company such higher amount as it may consider necessary. By virtue of another arrangement between the Railway and the Company, at the company's request, the Railway would arrange for the shunting of wagons from the Company's factory yard to the Railway lines and for doing so, the Railway would charge the company -a shunting engine charge calculated at a fixed rate per hour. 'In February 1958, the Railway gave notice of increased charges to be paid instead of the fixed contribution. It also demanded an increased shunting engine charge. The company thereupon filed a complaint under s. 41( 1) (c) of the Indian Railways Act, 1890 before the Railway Rate,-. Tribunal at Madras, claiming that the charges claimed by the Railway were unreasonable and requesting the Tribunal to fix reasonable charges in exercise of its powers under s. 41(3) of the Act. The complaint was contested by the Railway on the grounds (i) that the charges to which the complaint related were in respect of services that the Railway was not under any statutory duty to render to the company and was rendering them under private agreement with the company; consequently, such charges did not fall within the expression any other charge' in s. 41 (1) (c) and therefore no complaint could be filed under s. 41 challenging them on the ground of being unreasonable; (ii) that the burden of proving the charges were unreasonable was on the company which had not been discharged and the Tribunal was not competent to call upon the Railway to prove the reasonableness of the charges and to -reduce the charges only on the ground that the Railway had failed to establish their reasonableness; and (iii) that the charges demanded by the Railway were 220 in fact reasonable and should not be reduced. The Tribunal rejected the Appellants' contentions and revised the charges on the basis of the evidence adduced before it. On appeal to this Court. HELD : (i) The charges in question were covered by the expression "any other charges" in s. 41 (1) (c) and the complaint in the present case 'was rightly entertained by the Tribunal. The only charges which could be said to relate to the discharge by the Railway of its statutory duties would be those fixed under s. 29(1) of the Act in respect of a commodity carried by the Railway over its own lines. It is clear that a complaint under s. 41(1)(b) 'relates to fixa- tion of a rate relating to charges mentioned in s.29(1), while s. 41(1)(c) relates to a complaint in respect of any other charges mentioned in s. 29(2). The expression "any other charge" used in ss. 29(2) and 41(1)(c) cannot be given the narrow meaning of covering a charge in respect of the statutory duty of the Railway so as to exclude charges made or levied for all other services. It must necessarily cover charges which are not included in s. 29(1 ) and s. 41 (1 ) (b). It was immaterial that the charges being levied by the Railway arose only as a result of a voluntary agreement which the Railway, at its option, might have refused -to enter into. [226H; 227B, E-F] Halsbury's Laws of England, 2nd Edn,. Vol. 27, Paras 434 and 436 at p. 196; referred to. (ii) The figures of the proposed increase in charges given on behalf of the company,, which were challenged in the complaint, did prima facie indicate that the rates fixed and demanded were unreasonable. It could not therefore be held that the Tribunal committed any error in going into the evidence given on behalf of the Railway and arriving at reasonable rates after a full consideration of that evidence and the evidence tendered on behalf of the company. [229E, F-G] (iii) It was necessary to include a margin of profit in the "shunting engine charge" fixed by the Tribunal and (upon an examination of the evidence to revise the siding charges. the Court therefore itself fixed the rates for the charges to be levied by the Railway. JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 610 of
1965.
Appeal by special leave from the judgment and order dated
December 31, 1963 of the Railway Rates Tribunal, Madras in
Complaint No. 1 of 1962.
N. S. Bindra, R. H. Dhebar for R. N. Sachthey, for the
appellant.
A. K. Sen, B. P. Maheshwari and R. K. Chaudhary, for the
respondents.
The Judgment of the Court was delivered by
Bhargava, J. Belsund Sugar Co. Ltd., Riga, (hereinafter
referred to as “the Company”) was incorporated in the year
1932. Soon after the incorporation of the Company, the
Company established a fairly large sugar mill near railway
station Riga. This
221
station was on the railway line of the Bengal and North
Western Railway which, at that time, was owned by a limited
Company known as the Bengal and North Western Railway
Limited. At Riga railway station, the Railway had two main
lines running one along the passenger platform, and another
forming a loop against it running parallel to the first line
with points on both sides of the platform for -taking the
railway trains to line 2 when arriving from either direction
at Riga railway station. For the sake of convenience, the
line along the passenger platform will be referred to as
line 1, and the other main line forming the loop as line 2.
In addition, there was a goods platform and a line was run
connecting line 1 to the line along the goods platform from
both directions. That line is to be referred to hereinafter
as line 5. Since the sugar factory of the Company was
established close to Riga station, considerable goods
traffic started being received for the Company and, at the
same time, goods traffic was also booked by the Company for
outward transmission from this station. During the crushing
season, a large number of wagons loaded with sugarcane used
to be received and, under the existing constructions of the
Railway, delivery of the sugarcane had to be taken from the
goods wagons on line 5 at the goods platform. Since the
traffic was considerable, it became inconvenient and,
consequently, an arrangement was entered into between the
Railway and the Company for construction of two sidings,
described as assisted sidings. In pursuance of this
arrangement, two further lines (hereinafter referred to
lines 3 & 4) were laid between lines 2 and 5 running
parallel to these lines. Trains from line 1 could be taken
to lines 3 and 4 from both directions in the same manner as
they could be taken to line 5. At the time of construction
of these assisted sidings represented by lines 3 and 4, an
agreement was entered into between the Railway and the
Company on 21st November, 1933. Under that agreement, part
of the expenditure on the construction of these assisted
sidings was met by the Company, while part of the
expenditure was incurred by the Railway. It was agreed in
that agreement that the Company will pay in advance, in two
equal half-yearly installments on the first day of April and
the first day of October respectively in each half-year, a
fixed contribution of Rs. 709/8/- per half-year to the
Railway for the use of the railway portion of the siding.
The agreement proceeded to lay down that the payment of this
contribution by the Company was to be taken in lieu of
paying separately for interest on, and cost of maintenance
of, the permanent-way, points and crossings and interlocking
connected therewith and for freight on the traffic over the
siding. It was further agreed that, in the event of the
above contribution not being sufficient to meet the cost of
the working of the siding, the Railway was entitled, on
giving six months’ notice of its intention to do so, to
modify the above contribution and charge the Company such
higher amount as it may
222
consider necessary to meet the increased cost of working.
Further railway lines were also laid from Riga railway
station up to the factory of the Company. A line ran from
the junction of lines 3 and 4 on the western side of the
station in a semi-circular loop and then entered the factory
of the Company where the line was connected to four
different lines. This line, running from the junction up to
a point where there was further bifurcation of lines, will
be referred to as line 6. At the end of line 6, this line
was connected to two lines, one situated to the south, and
the other to the north. There was also a loop formed by
connecting the northern line to the southern line by another
connecting line. This loop is to be referred to as line 7.
Lines 6 and 7 were laid at the cost of the Company. The
arrangement was that the Company was to take delivery of its
sugarcane wagons as well as all other goods on lines 3 and 4
at the assisted sidings. Thereafter, it was the duty of the
Company to unload the wagons there, or to have them rolled
into their own factory yard. It appears that the Company
purchased a railway engine and used it for taking the loaded
wagons to the factory and bringing back the unloaded wagons
to these lines 3 and 4. For outward traffic also, the empty
wagons often used to be loaded in the factory yard and
brought by the factory engine to Riga railway station. On
some occasions, the wagons were taken by being pushed by
manual labour instead of using the engine. A third
alternative was that the Company would request the Railway
to arrange for the shunting of their wagons from lines 3 and
4 to the factory yard. Whenever this arrangement was
adopted, the Railway charged the factory for this service
rendered. It appears that between the years 1956-57 to
1958-59, the Railway used to charge the Company at the rate
of Rs. 18/per hour, computing the time taken by the shunting
engine in completing the work of the Company. The time
computed began when the shunting engine came to lines 3 and
4 to take away the Company’s wagons, and ended when the
engine returned to the railway station after completing the
work of shunting the wagons. Sometimes, on return, the
engine brought empty wagons, but this was considered
immaterial, because the charge was made from the Company by
the Railway on the basis of the time actually taken by the
shunting engine calculated @ Rs. 18/- per hour. This rate
of Rs. 18/- per hour will be described hereafter as the rate
of the shunting engine charge. It may be mentioned that, in
the year 1942, the Bengal and North Western Railway was
taken over by the Indian Government and, at the relevant
time in the year 1958, the Railway was owned by the Union
Government and was run under the name of North Eastern
Railway, which is the name it continues to bear at present.
The arrangement, mentioned above continued up to 8th
February, 1958. On this date, a notice was given by the
Railway
223
to the Company proposing enhancement of the charges to be
levied in pursuance of the agreement which had been entered
into on 21 St November, 1933, under which the Railway was
empowered to enhance the charges, if it considered it
necessary to meet the increased cost of the working of the
assisted sidings. By this letter dated 8th February, 1958,
the Railway gave six months’ notice of enhancement of the
charges, after mentioning that the fixed contribution of Rs.
709/8/- per half-year for use of the Railway portion of the
siding in lieu of paying separately for interest on, and
cost of maintenance of, the permanent-way, points and
crossings and interlocking connected therewith and for
freight on the traffic over the siding was not considered
sufficient to meet the cost of present-day working of the
siding. The charges to be levied in lieu of existing fixed
contribution were mentioned as a sum of Rs. 603.7nP per
half-year in respect of interest on the capital and cost of
maintenance of the permanent way, points and crossings and
interlocking connected therewith, while for the freight on
the traffic over the siding, described as the siding charge,
the Railway demanded Re. 1/- per 4-wheeled wagon hauled over
the siding, subject to a minimum of Rs. 7/- per shunt. The
new rates were to come into force with effect from 10th
August, 1958. Though the Company did not agree to these new
rates, the Railway demanded payment at these rates and,
ultimately, the Company was informed by the Railway that, if
payments at new rates were not made, the facility of the
assisted siding would be withdrawn. The Company made
payments under protest. Further, the Railway also enhanced
the rate for the shunting engine charge. The rate was
enhanced to Rs. 28/- per hour for the year 1959-60 and to
Rs. 30/50nP per hour for the year 1960-61.
The Company, being dissatisfied with these charges, filed a
complaint under section 41(1)(c) of the Indian Railways Act,
1890 (hereinafter referred to as “the Act”) before the
Railway Rates Tribunal at Madras (hereinafter referred to as
“the Tribunal”) against the enhancement of the shunting
engine charges from Rs. 18/- per hour to Rs. 28/- and
subsequently Rs. 30/50nP per hour, as well as the
enhancement of the siding charges by prescribing a scale of
payment @ Re. 1 /- per wagon with a minimum of Rs. 7/- per
shunt. It appears that there were a large number of sugar
mills situated along various railway stations served by the
North Eastern Railway, and with them also there existed
similar arrangements as the one arrived at between the
Railway and the Company in 1933 under the agreement
mentioned above. All these sugar mills were members of the
Indian Sugar Mills Association. This Association also
joined as a complainant in the complaint of the Company
representing all its constituent sugar mills. In the
proceedings before the Tribunal, however, the Indian Sugar
Mills Association did not take any active part and the case
was
224
actually fought out by the Company. It was urged in the
complaint that both the shunting engine charges and the
siding charges at the enhanced rates claimed by the Railway
were unreasonable and the Tribunal was requested to fix
reasonable charges in exercise of its powers under s. 41(3)
of the Act.
The complaint was contested by the Railway on three grounds.
The first ground was that the charges, to which the
complaint related, were in respect of services which the
Railway was not bound to render to the Company and was
rendering under private agreements with the Company and,
consequently, no complaint could be filed under s. 41 of the
Act challenging them on the ground of being unreasonable.
This plea was taken on the basis that the expression “any
other charge” in s. 41(1)(c) of the Act could only cover a
charge made by the Railway in discharge of its duties under
the statute and could not cover a charge made by the Railway
for voluntary services which the Railway might render under
a private agreement of a commercial nature to any other
party. The second ground was that the complainants had not
succeeded in showing that the charges demanded by the
Railway were unreasonable and, that burden of proof not
having been discharged by the complainants, the Tribunal was
not competent to call upon the Railway to prove the
reasonableness of the charges and to reduce the charges only
on the ground that the Railway had failed to establish their
reasonableness. The third point of contest was that the
rates, at which the charges were demanded by the Railway,
were, in fact, reasonable and should not be reduced.
The Tribunal held that the complaint was competent and that
the expression “any other charge” in s. 41(1)(c) of the Act
did cover both these charges to which the complaint related.
The Tribunal did not, in specific words, hold that the
complainants had established that the charges were
unreasonable, before proceeding to examine the
reasonableness of the charges. On the other band, the
Tribunal proceeded to examine the evidence of the parties
adduced before it and came to the finding that, in both
cases, the charges being demanded were unreasonable.
Further, after examining in detail the evidence given on
behalf of the Railway, and on making its own computation,
the Tribunal held that a sum of Rs. 20/- per hour was a
reasonable rate for the shunting engine charge. In respect
of the siding charge, the Tribunal rejected the plea of the
Railway that this charge should also be levied on the basis
of the time taken in shunting the wagons of the Company to
lines 3 and 4, after taking into account the shunting engine
charge. It was held that, in the original agreement of
1933, parties, had agreed to a lumpsum in respect of various
services, and the subsequent conduct of the Railway
established that. out of the total sum of Rs. 1,419/- per
year, a sum of Rs. 1,206/14nP per year represented-
225
sented charges in respect of interest on the capital and
cost of maintenance of the permanent way, points and
crossing and interlocking connected therewith. The
remaining sum of Rs. 212 and odd was held to represent the
freight on the traffic over the assisted sidings and was
treated as the siding charge. In the absence of reliable
material provided by the Railway for arriving at a reason-
able figure on any other basis, the Tribunal held that the
only amount which the Railway could be permitted in respect
of the siding charge would be double the amount originally
chargeable. under the agreement of 1933 and, consequently,
allowed the Railway siding charge at a fixed rate of Rs.
424/- per year. It is against this decision of the Tribunal
that the Railway has come up in this appeal to this Court by
special leave, and, in the appeal. has taken all the three
points, mentioned above, on the basis of which the complaint
before the Tribunal was resisted.
Dealing with the first question, which was the only question
of law raised in this case, learned counsel appearing for
the Railway drew our attention to the definition of
“railway” in s. 3(4) of the Act and, in particular, to
clause (b) thereof under which the “railway” is defined to
include all lines of rails, sidings or branches worked over
for the purposes of, or in connection with, a railway. It
was urged that the assisted sidings, comprised of lines 3
and 4, were not worked over for the purpose of, or in
connection with, the work of the railway and, consequently,
these assisted sidings could’ not be held to be a part of
the railway. Attention was also drawn L to S. 11 of the
Act, which lays down the duty of the Railway to make and
maintain certain works, to show that there was no duty on
the Railway to maintain the permanent way, points and cross-
ings and interlocking connections existing for the service
of these, assisted sidings, lines 3 and 4. The duties of the
Railway in respect of goods traffic are laid down in s. 27
which requires the Railway to afford all reasonable
facilities for the receiving, forwarding and delivering of
traffic upon and from the several railways belonging to or
worked by it and for the return of rolling stock. Under
this provision also, there was no duty on the Railway to
give delivery of’ goods to the Company on lines 3 and 4. The
duty was to carry goods of the Company and to deliver them
on line 5 which was the line maintained by the Railway
itself for delivery of goods. It was urged that, in these
circumstances, it must be held that the charges levied by
the Railway for taking the wagons, containing the goods of
the Company, to lines 3 and 4, as well as the charges for
tendering- the service of taking the wagons of the Company
to the premises of its factory over lines 6 and 7 cannot be
held to be charges levied for tile purpose of performing any
duty cast on the Railway by the Act. Section 29 of the Act
lays down how rates are to be fixed. Under s. 29(t), the
Central Government is empowered, by general or special
order, to fix maximum and minimum rates.
for the whole or any part of a railway, and prescribe the
conditions in which such rates will apply. Under sub-s.
(2), the Central Government is empowered, by a like order,
to fix the rates of any other charges for the whole or any
part of a railway and to prescribe the condition in which
such rates of charges are to apply. It was urged that the
charges now in dispute will not be ,charges -covered by s.
29(1) or s. 29(2) of the Act, and, on the same basis, they
will not be charges covered by s. 41(1)(b) or s. 41(1)(c) of
the Act
We are unable to accept this submission made on behalf of
the Railway. It is correct that s. 29(1) of the Act will
apply to rates of charges for carrying goods from station to
station over the railway itself, in such a case, the Central
Government can fix the maximum and minimum rates, whereas
the actual rates to be charged can be fixed by the Railway
Administration itself. If any person has a grievance that
the rate being charged by the Railway is excessive, he can
complain to the Tribunal, and the complaint would be covered
by the provisions of s. 41(1)(b) of the Act. This charge
for carriage of goods over the railway or part of a railway
is the only charge in respect of goods which can be the
subjectmatter of a complaint under s. 41(1)(b) of the Act.
The language of s. 41 (1)(b), by itself, excludes its
applicability to passenger fares. ,Charges are often made by
the Railway for wharfage and demurrage, but the jurisdiction
of the Tribunal to deal with the fixation of these charges
is expressly taken away by s. 45(1)(b) of the Act.
Consequently, it appears that, in respect of a commodity
carried by a railway over its own railway lines, the only
charge that the Railway can levy, and which can be the
subject-matter of a complaint under s. 41(1)(b), will be the
charge for carriage of the ,commodity between two stations
and it would be in respect of the discharge by the Railway
of its statutory duty of carrying goods between stations
maintained by it. There does not appear to be any other
statutory duty in respect of which any other charge could be
levied by the Railway, and, consequently, if the inter-
pretation sought to be put on behalf of the Railway is
accepted, the result would be that s. 29(2) will become
ineffective and redundant, because there would be no other
charges in respect of which fixation of rates by the Central
Government would be required. Similarly, the provision
contained in s. 41(1)(c) would also be redundant, as there
would be no other charges in respect of which a complaint
could be filed under this provision. It is clear that a
complaint under s. 41(1)(b) relates to fixation of a rate
relating to charges mentioned in s. 29(1), while s. 41(1)(c)
relates to a complaint in respect of any other charge
mentioned in s. 29(2). It appears to us, in these
circumstances, that the expression “any other charge” used
in s. 29(2) and s. 41(1)(c) cannot be given the narrow
meaning of covering a charge in respect of the
227
Statutory duty of the Railway so as to exclude charges made
or levied by the Railway for all other services. In this
connection, the language used in clauses (b) and (c) of S.
41(1) is significant. Section 41(1)(b), as has been
mentioned earlier, covers a complaint in respect of a charge
for carriage of any commodity between two stations at a rate
which is unreasonable, while S. 41(1) (c) relates to the
levy of any other charge which is unreasonable. The
expression “any other charge” in clause (c) must, therefore,
cover charges which are not included in clause (b). Clause
(b) specifically mentions charges for carriage of a
commodity between two stations, and, hence, the expression
“any other charge’ in clause (c) must necessarily include
within it a charge for carriage of any commodity between
places other than two stations. In the present case, the
shunting engine charge and the siding charge are both being
levied by the Railway for carrying goods from the railway to
sidings not forming part of the railway. In bringing goods
from other stations to Riga station on lines 1, 2 or 5, the
railway would only be carrying the goods between stations.
It is only thereafter, when the wagons are shunted by the
railway to lines 3 and 4 or over lines 6 and 7 to the
factory of the Company, that the railway will be carrying
goods between a station and another place or between two
different places which cannot either of them be described as
stations. ‘This charge for carriage of the commodity in the
context in which the expression “any other charge” is used
in s. 29(2) and s. 41(1)(c), must be covered by this
expression. It appears to us to be immaterial that the
charge being levied by the Railway for taking the wagons to
the assisted sidings or to the factory of the Company arises
only as a result of a voluntary agreement by the Railway
which the ,Railway, at its option, might have refused to
enter into. It is correct that the Railway was not bound to
agree to carry the goods of the Company to the assisted
siding or to the factory of the Company; but it seems to us
that, once the Railway did, in fact, agree and decide to
charge the Company for it, the Railway became bound to make
-the charge in accordance with s. 29 (2) of the Act. If a
rate of charge is prescribed by the Central Government under
S. 29(2) for such voluntary service and the person receiving
the service feels aggrieved, he can complain to the Tribunal
under S. 41(1)(c) of the Act and have the reasonable rate
determined. Even if no rate is prescribed by the Central
Government under S. 29(2) and the Railway levies such a
charge, it will be competent for the person aggrieved to
file the complaint against the rate of charge before the
Tribunal under S. 41(1)(c).
In this connection, it was urged by learned counsel that the
expression “any other charge” should not be given a very
wide meaning and he cited before us instances of various
other charges being made by the Railway, such as charges for
advertisement on L5 Sup. C. 1.167-2
228
railway premises, catering charges, retiring room charges
and time-table charges, to urge that at least these charges
would not be covered by the expression “any other charge” in
s. 41(1)(c) of the Act. It seems that, in this case, it is
not at all necessary for us to examine whether charges of
this nature mentioned by learned counsel will or will not be
covered by the expression “any other charge”. In fact, we
do not think it to be advisable that we should try to define
the full scope of the expression “any other charge” in this
case. It is enough to hold for the purposes of this case
that at least the charges for carriage of goods from parts
of the railway to points or places, not forming part of the
railway, will certainly be covered by the expression “any
other charge” used in s. 41(1)(c), so that the complaint in
the present case was competently entertained by the
Tribunal.
This view that we have arrived at is in line with the
principles laid down in England as noted in Halsbury’s Laws
of England, 2nd Edn., Vol. 27, in paras 434 and 436 at p.
196. In para 434, the principle noted is that “loading and
unloading, covering and uncovering in classes 7 to 21,
though performed at the private siding, are services
otherwise provided for in the standard charges, and the
company must charge for these either the standard or an
exceptional rate. And where the Railway Rates Tribunal have
by order fixed charges for services not included in
conveyance and terminals, as long as the order stands
unchallenged the company may only exact the charges fixed by
the Tribunal and not what the company thinks are reasonable
charges”. Then, in para 436, it is said : “So, even when
the carriage charges are paid by a siding owner who has
entered into an express agreement to pay a fixed or
ascertainable sum for the private siding services, he may
still refer the matter to the Railway Rates Tribunal……
The Tribunal may consider from a business point of view what
is the money value of the services rendered or they may
ascertain the total cost of the services over a year and
divide it by the number of tons carried during the same
period to give an addition to the Rates Tribunal if
competentto determine the reasonableness of charges for
services bya railway even on private sidings. The same
principle is incorporated in s. 41(1)(c) of the Act in
India by empowering a complaint to complain to the Tribunal,
if any charges, other than acharge for carriage of
commodity between stations, is found tobe unreasonable. The
preliminary legal objection raised on behalf of the Railway
was, therefore, rightly rejected by the Tribunal.
On the second question, we find that, in the pleadings taken
before the Tribunal,-the Railway did not in so many words
specifically raise the issue that, before proceeding to
examine the rea-
229
sonableness of the rates demanded by the Railway, the
Company should be called upon to show that those rates were
unreasonable, though the issues, which were framed both with
regard to the siding charges as well as the shunting engine
charges, were couched in language enquiring whether the
rates demanded by the Railway were unreasonable. It appears
that, in the complaint, the Company had mentioned figures on
the basis of which the Company requested the Tribunal to
hold that these charges were unreasonable. In respect of
the shunting engine charges, the pleading was that the
Railway had been charging the Company at a rate of Rs. 18/-
per hour for the years 1956-57 to 1958-59 and had, then,
suddenly raised the charges to Rs. 28/- per hour without any
justification. This sudden enhancement from Rs. 18/to Rs.
28/- per hour in the year 1959-60 was alleged to be un-
reasonable. In the case of siding charges, the pleading was
that the Company had been paying earlier a fixed sum of Rs.
212/per year, while, after the enhancement by the notice
dated 8th February, 1958, the charges were so fixed that the
burden on the Company rose to amounts in the next three
years varying between Rs. 7,752/- to Rs. 9,676/-. According
to the Company, thus, the siding charges were fixed in such
a manner that, after enhancement, the charges payable became
70 to 80 times the charges originally payable under the
agreement of 1933. These figures, given on behalf of the
Company did, prima facie, indicate that, the rates fixed and
demanded, which were challenged in the complaint, were
unreasonable. Further, the new rate of Re. 1/- per wagon
was, per se unreasonable inasmuch as the cost incurred by
the Railway on shunting the wagons could not be in propor-
tion to the number of wagons shunted and could not, in any
case, be so high as to justify this rate even in cases when
a large number of wagons were shunted together in one single
shunt. Consequently, it was competent for the Tribunal to
call upon the parties to adduce evidence and to determine
what would be the reasonable rates according to the Tribunal
itself. That being the factual position, we cannot hold
that the Tribunal committed any error in going into the
evidence given on behalf of the Railway and arriving at the
reasonable rates, after a full consideration of that
evidence and the evidence tendered on behalf of the Company.
It is to be noted that the necessary facts for determining
what expenses the Railway must be incurring in order to
render the services for which they were demanding charges at
the impugned rates were in the special knowledge of the
Railway authorities only and, consequently, When,
subsequently, the Tribunal examined this question, it
proceeded rightly in carefully scrutinising the evidence
tendered on behalf of the Railway.
On the merits, it appears to us that, so far as the shunting
engine charges are concerned, the decision given by the
Tribunal
for arriving at the figure of Rs. 20/- per hour as the cost
incurred by the Railway does not suffer from any such error
as would justify interference by us. The Tribunal took into
consideration, the figures, provided by the Railway, of
expenditure incurred per hour on the running of all types of
engines, and noticed the fact that the cost in the case of
shunting engines must be lower due to the inferior quality
of coal consumed in them, when compared with the coal
consumed in engines attached to passenger trains or even
engines pulling the regular goods trains. It also took into
account the fact that the calculation was based on the
assumption that a shunting engine would be running, on an
average, @ 5 miles an hour for 12 hours a day, while, when
calculating depreciation, the documents provided by the
Railway itself showed that the average run of a shunting
engine was calculated at 90 miles a day. The basis of a run
of 60 miles a day of the shunting engine adopted by the
Railway for calculating shunting charges could not,
therefore, be accepted as correct. There was also the
circumstance that, in making the calculation, certain
expenses had been included which were in no way connected
with shunting ,operations, such as expenses on ticket
checking staff. Taking those circumstances into account on
the one side, and keeping in view on the other side the fact
that, in the year 1959-60, there must have been a rise in
the cost of running the shunting engine, as compared with
the rate which was fixed in the year 1956-57, the Tribunal
estimated that a reasonable rate for the shunting engine
charges will Rs. 20.00 per hour. We do not think that the
principles adopted by the Tribunal are in any way incorrect
or suffer from any such error as would justify our examining
the whole evidence considered by the Tribunal for ourselves
and making fresh detailed calculations in order to find out
whether this figure of Rs. 20 per hour arrived at by the
Tribunal should be varied to some extent. In these
circumstances, we do not think it necessary to discuss in
detail the evidence given by the Railway which was placed
before us by learned counsel for the Railway to challenge
the finding arrived at by the Tribunal. The finding of fact
recorded by the Tribunal does not suffer from any such error
as could induce us to go into this question as a regular
Court of fact. Consequently, we think that the figure of
Rs. 20/per hour arrived at by the Tribunal, as representing
the cost of the Railway for running the shunting engine must
be accepted.
There is, however, one aspect which the Tribunal seems to
have lost-sight of. According to the admitted case of the
parties, there is no obligation on the Railway to render the
service of carrying the wagons of the Company from lines 3
and 4 to their factory premises, nor is there any obligation
to bring back the empties or wagons loaded with outward
traffic goods from the Company’s yard to the railway
station. In fact, the Company had an engine
231
of its own for a number of years and a second engine was
purchased by the Company in the year 1962. Apart from
carrying out these operations itself by the use of these
engines, the Company also, on occasions, had the wagons
hand-shunted. The Railway undertook the work only on
occasions when the Company made a specific request to the
Railway to do so. In thus agreeing to undertake the work,
the Railway voluntarily entered into transactions with the
Company partly to assist the Company and partly with the
object of expanding its commercial activities. In fact, the
charges were levied by the Railway, because the Railway is
run as a commercial undertaking for the purpose of earning
profits and, consequently, the Tribunal, in fixing the
reasonable rate for shunting charges, should have taken into
account the profit-making motive of the Railway also and
should not have confined the charges to the actual cost
incurred by the Railway in rendering this service. We think
that, in these circumstances, there is full justification
for increasing the rate chargeable for rendering the service
of shunting the wagons from lines 3 and 4 to the yard of the
Company over its private lines and it should be fixed at Rs.
22/- per hour, giving a margin to the Railway of 10% over
its actual cost.
On the merits of the rate fixed by the Tribunal for the
siding charges, we find that the criterion adopted by the
Tribunal is not justified. As has been mentioned earlier,
the case of the Company was that the fixed contribution of
Rs. 709/8/- per half-year, or Rs. 1,419/- per year
represented the consolidated charges in lieu of the
Company’s paying separately for interest on, and cost of
maintenance of, the permanent way, points and crossings and
interlocking connected therewith and for freight on the
traffic over the siding, and that a sum of Rs. 603/7nP per
half-year, or Rs. 1,206/14nP per year out of this
consolidated amount represented charges in respect of other
items, besides the freight on the traffic over the siding.
It was on this basis that the Company pleaded in the
complaint that the freight on the traffic over the siding
under the agreement amounted to Rs. 212/- per year only. We
however, find that, in the complaint, this break-up of Rs.
1,419/- was not specifically pleaded. The pleading was
that, by the notice dated 8th February, 1958, the Railway
had itself levied the charge in respect of interest on and
cost of maintenance of, the permanent way, points and
crossings and interlocking connected therewith at Rs. 603/7
nP per half-year, and that Rs. 212/per year was the original
charge in respect of freight on the traffic over the siding.
How this figure of Rs. 212/- was arrived at was not
specifically indicated in the pleadings. The result was
that, in the counter-pleadings put forward by the Railway,
no specific pleas were taken challenging the correctness of
the break-up of the sum of Rs. 1,419/- now claimed by the
Company. All that was
232
stated was that, with effect from 10th August, 1958, a sum
of Rs. 603/7nP per half-year was levied in respect of
charges for interest on, and cost of maintenance of the
permanent way, points and crossings and interlocking
connected therewith and that the levy for siding charges was
fixed at Re. 1/- per wagon with a minimum of Rs. 7/- per
shunt. In these circumstances, we do not think that any
inference can be justifiably drawn, as was done by the
Tribunal, that the Railway, had itself pleaded the break-up
of Rs. 1,419/- as containing within it the sum of Rs.
1,206/14nP per year in respect of the fixed charges for
interest on, and cost of maintenance of, the permanent way,
points and crossings and interlocking connected therewith,
and the balance of Rs. 212/represented what was initially
fixed as the amount chargeable for freight on the traffic
over the siding. The sum of Rs. 603/7nP per half-year was
shown in the pleadings as the levy to be in force from 10th
August, 1958, and was not accepted as being the amount at
which the levy for the same items had been included at the
initial stage at the time of the agreement in 1933. The
Tribunal was not, in these circumstances, justified in
proceeding on the basis that the charge in respect of
freight on the traffic over the assisted siding was only Rs.
212/- per year from 1933 up to 1958. In fact, the charge in
respect of maintenance of the permanent way, points and
crossing and interlocking connected therewith, as originally
estimated in 1933, must necessarily have gone up with the
rise in price index from 1933 to 1958, and the sum levied
for these items in 1958 must have been much higher than the
sum which was included for these services in the original
agreement. No doubt, one of the witnesses of the Railway,
R.W. 5, C. R. Guha, Assistant Engineer of the Railway, in
his evidence made some statements which might lend some
support to the plea of the Company that the sum of Rs. 603/-
and odd per half-year represented the levy in respect of
interest and maintenance charges, etc., after excluding the
freight on the traffic over the assisted siding; but we do
not think that those admissions can be held to be binding on
the Railway so as to lead to the conclusion that this was
the amount for such charges even at the inception of the
agreement in 1933. The Tribunal, therefore, committed an
error in proceeding on the basis that the original charge in
respect of freight on the traffic over the assisted siding
was a sum of Rs. 212/and odd per year only in the original
agreement is 1933.
In any case, it appears to us that this aspect of the case
is not very material, because, under the agreement itself,
the Railway was given the right to enhance the charges in
order to meet its actual cost on the working of the assisted
sidings. The appropriate course, in these circumstances was
to find out what was the cost being incurred by the Railway
in taking the wagons of goods of the Company to these
assisted sidings.
233
The Tribunal did not adopt this method and rejected the plea
of the Railway that this method should be adopted, on the
ground that it was not possible to work out with reasonable
accuracy the time that Would be taken by the shunting engine
in doing the work of carrying the wagons of the Company to
lines 3 and 4 which represented the assisted sidings. For
this view, the Tribunal relied on two aspects. The first
and the main reason was that, according to the Tribunal, if
these assisted sidings had not been constructed, a certain
amount of shunting of the wagons of the Company would have
been necessary in order to give delivery at the goods
platform on line 5, and it was not possible to estimate what
was the extra time that would be needed in shunting the
wagons to lines 3 or 4 instead of line 5. The evidence on
the record, however, shows that a certain amount of extra
shunting is bound to be necessary, if the wagons of the
Company are to be delivered on lines 3 and 4 instead of
being delivered on line 5. It would appear to be correct
that if, on any particular train, the wagons received for
the Company were all loaded with sugarcane and no other
wagons were received at Riga station containing other goods
of the Company, or goods of other consignees, the amount of
shunting needed to take those wagons to line 3 would not be
more than that needed to take them to line 5. However, if
even one wagon of goods for any other consignee were
received with those sugarcane wagons, the shunting work
would be doubled, because sugarcane wagons would have to be
taken to line 3 and that wagon of the other consignee to
line 5. Similarly, if the sugarcane wagons of the Company
were to be received with a wagon of the Company itself
containing other goods, the, shunting involved would again
be doubled because the sugarcane wagons would have to be
taken to line 3, and the wagon containing other goods to
line 4. Further, if the wagons containing other goods of the
Company or goods of other consignees be not attached at one
end of the sugarcane wagons, the amount of shunting required
would increase very considerably because of the sorting
needed in order to take the wagons of other goods either to
line 4 or line 5, while taking the sugarcane wagons to line
3. The witnesses, no doubt, admitted that a certain amount
of marshalling was being done by the Railway at the
despatching stations, but it is also clear that, in that
marshalling, all that the Railway did was to place all
wagons meant to be detached at Riga in one block in the
train. The marshalling at the despatching stations did not
include in it the sorting out of wagons of sugarcane, the
wagons of other goods of the Company, or the wagons of other
consignees inter se. In these circumstances, it is clear
that the agreement entered into by the Railway to deliver
sugarcane wagons of the Company on line 3 with the
arrangement that wagons of the Company of other goods would
be delivered on line 4 necessarily involved a considerable
amount of extra shunting because of the different lines on
which delivery had to be taken and
even further shunting if there, was need for sorting out of
wagons. On behalf of the Company, it was urged before us
that most of the sugarcane received by the Company used to
be brought to Riga railway station by cane specials or cane
shuttles which would consist exclusively of wagons loaded
with sugarcane. Learned counsel was, however, not able to
point out to us that there was any evidence to show that the
majority of sugarcane wagons received for the Company were
brought to Riga station by cane specials or cane shuttles.
He relied on the evidence of A.W. 2, Yognandan Jha, an
employee of the Company, working as Rail Cane Inspector.
He, in his evidence, tried to support the case of the Com-
pany by stating that, during the season, a number of cane
specials were run and they contained only sugarcane wagons.
The evidence of this witness was not accepted in full by the
Tribunal, nor are we inclined to place complete reliance on
it. On the other hand, witnesses examined on behalf of the
Railway have stated that, even when cane specials or cane
shuttles were run for the purpose of bringing the sugarcane
of the Company, they did not invariably consist of sugarcane
wagons only and, often enough, wagons of other types were
also attached to them. They gave figures showing that,
during the busy season, the number of sugarcane wagons
received per day for the Company used to be about 50, while,
on an average, one wagon per day was received for other
consignees, and one wagon per day was received which con-
tained other goods of the Company. Whenever these wagons
were received, it is clear that the amount of shunting
needed would be much more than the shunting, which would
have been required if delivery of all the goods could be
given on line 5 at the goods platform, without having to
sort out the wagons and without having to place different
wagons on different lines. In these circumstances, we do
not think that the Tribunal had justification for rejecting
the principle of calculation, suggested on behalf of the
Railway, of working out the cost on the basis of the time
taken in shunting required for placing the wagons of the
Company on the assisted sidings, when a calculation was
already available showing the cost incurred by the Railway
per hour for working a shunting engine.
Another aspect that has to be kept in view is that,
according to the terms of the agreement of 1933, under which
the Railway is demanding the enhanced charges, the Railway
was entitled to charge for freight on the traffic over the
assisted siding. This charge for freight on the traffic
over the assisted siding was to be levied irrespective of
the fact that, in some cases, the Railway may not be
incurring extra expenditure over and above what it would
have incurred if the delivery had been given at the goods
platform on line 5. Since the claim is made under the terms
and conditions of the agreement, we hold that the Tribunal
was wrong in rejecting the mode of calculation put forward
by the Railway, on the ground that
235
it was not possible to estimate the difference in time
required for shunting wagons to lines 3 and 4, as compared
with the shunting to line 5.
On behalf of the Railway, evidence was tendered to show
that,. in the busy season, the shunting operations required
to bring the sugarcane wagons of the Company to line 3, on
an average, took 18 to 20 minutes, while, in the slack
season, the time would be about 10 minutes. It is to be
remembered that the majority of’ sugarcane wagons must be
received by the Company in the busy season and very few in
the slack season. It was on this basis that the Railway put
forward the plea before the Tribunal that the average amount
of time taken for shunting should be 15 minutes per shunt.
The Tribunal was not inclined to accept this figure and, for
rejecting it, relied mainly on the evidence of R.W. 6,
Umeshwar Prasad, a Traffic Inspector of the Railway, who had
made a test-check of the shunting time on 10th October,
1959. According to the report submitted by this witness,
the shunting operation at the time of the test-check, on the
whole, took 13 minutes. This shunting operation consisted
of taking wagons from line 1, placing them on lines 3 and 4,
and bringing back the engine with empties to line 1.
According to him, the first operation of taking the loaded
sugarcane wagons from line 1 to line 3 took seven wagons
fromline 3 to line 4, and another four minutes were taken
in shuntingthe empties from line 4 back to the train.
This whole operation of one shunt thus required 13 minutes.
The Tribunal, in considering the evidence of this witness,
laid emphasis on the, fact that the time taken in shunting
the engine on its return from line 4 to line I was only 4
minutes, while, according to the Station, Master, R.W. 3, B.
L. Das, on whose evidence the Railway relied, this time must
be at least 5 minutes. This difference was, on, the face of
it, not very material. In his evidence, R.W. 6, Umeshwar
Prasad, also stated that the average time for placement on
lines 3 and 4 for both up and down trains should be in the
vicinity of 18 to 20 minutes for the complete operation.
Owing to the mention of both up and down trains, the
Tribunal held that this evidence given by the witness led to
the inference that only 9 to 10 minutes would be taken for
placing the wagons from either up. or down train alone on
lines 3 and 4. We think the Tribunal committed a clear
error. When the witness stated that the time for the
placement on lines 3 and 4 for both up and down trains
should be in the vicinity of 18 to 20 minutes for the
complete operation, he clearly meant that this would be the
time taken whether the train be an up train or a down train.
It is, on the face of it, impossible that there should be
simultaneous shunting for two different trains, one up train
and the other down train, and that the witness should be
required to estimate the time which would be,
236
taken in simultaneous shunting from two trains. In fact,
simultaneous shunting from two trains is not possible. The
use of the conjunctive “and” between up and down in the
question put to him did not mean that he was being asked to
estimate the time for simultaneous shunting from two
different trains. The halving ,of the period 18 to 20
minutes by the Tribunal, in order to hold that the estimate
of average time of 15 minutes by the Railway, is too high,
was, therefore, not at all justified. On the other hand,.
the evidence of this witness, Umeshwar Prasad, as well as
the figures given by him from the test-check, appear to bear
out the case. put forward by the Railway that the average
time taken will certainly be 15 minutes per shunt or more.
In the test-check itself, the complete shunting operation
took 13 minutes. In his evidence, Umeshwar Prasad has
stated that this test-check was carried out in ideal
conditions of visibility and the time taken was also less,
because the train was a non-vacuumed one. Further, the test
was -carried out on 19th October, 1959, which was clearly
slack season, and the case of the Railway itself was that,
in the slack season, the ,average time taken for a shunt was
10 to 12 minutes. The Tribunal, in these circumstances, was
not justified in making the comment that the time of 18 to
20 minutes per shunt given by the Railway as the time taken
during the busy season was due to inefficiency. In any
case, the Railway, in calculating the charges, has itself
very reasonably suggested 15 minutes as the average time per
shunt, and the difference of 2 minutes between this
suggested, -time and the time of 13 minutes taken in the
test carried out under ideal conditions will not justify the
rejection by the Tribunal of the figures suggested by the
Railway. It is also to be noted that in the test carried
out no sorting operations were involved and that, if some
sorting had also been necessary, the time taken would
certainly not have been less than 15 minutes, completely
justifying the average figure put forward by the Railway.
It was’, therefore, clearly a case where the Tribunal could
have and should have arrived at a finding on the evidence
that, on an average, the time taken per shunt, in order to
work over the assisted sidings consisting of lines 3 and 4,
will be 15 minutes; and, since such a figure could be
arrived at, the siding charges representing the freight on,
the traffic over the assisted sidings should have been
calculated on this basis. We have already held earlier that
there is no reason to vary the figure of Rs. 20/- per hour
as the cost incurred by the Railway over a shunting engine
carrying out shunting operations. At this rate, the cost
incurred by the Railway per shunt for rendering service on
the assisted sidings consisting of lines 3 and 4 works out
to Rs. 5/-.
This cost that has been worked out is, according to the
Railway -itself, the average cost, taking into account the
circumstance that, in some of the shunting operations, there
may be only one or two
237
wagons, and, in others, the number of wagons may be large
and as many as 20 or 25. Since the cost of the Railway
depends on the time during which the shunting engine has to
operate in order to complete the shunting of the wagons, and
the average time has been calculated by the Railway after
considering shunts which included any number of wagons,
there is clearly no justification for the Railway levying a
charge on the basis of the number of wagons shunted. the
average cost worked out will not exceed Rs. 51per shunt,
though, of course, in some particular shunts where the
number of wagons may be large and the shunting operations
required may be more complicated, the cost may work out at
more than Rs. 51-. On the other hand, there would also be
some shunting operations in which, there being no wagons
except sugarcane wagons, or the number of wagons being
small, the cost per shunt would be less than Rs. 5/-. This
circumstance justifies the view of the Tribunal that the
Railway could not reasonably fix a rate for siding charges
on the basis of a particular amount per wagon. The only
proper way of fixing the rate would be the amount of cost
incurred by the Railway per shunt. Learned counsel
appearing for the Railway, in these circumstances, himself
stated that he will not press in this appeal the demand of
the Railway for a charge based on the number of wagons, and
that the rate may be fixed only per shunt. That rate has to
be Rs. 5/- per shunt.
As a result, the appeal is partly allowed. It is directed
that the rate for the shunting engine charge is fixed at Rs.
22/- per hour. The siding charges in respect of freight on
the traffic over the assisted sidings shall be payable by
the Company at the rate of Rs. 5/per shunt, irrespective of
the number of wagons included in any shunt, a shunt
consisting of the operation starting with the moment when
the engine moves from the main lines 1 or 2 in order to take
the wagons to lines 3, 4 or 5, and ending with the time when
the engine returns to the train and is again attached to it.
In the circumstances of this case, we direct parties to bear
their own costs of this appeal.
R.K.P.S. Appeal allowed
in part.
338