# JAGJIT COTTON TEXTILE MILLS v. CHIEF COMMERCIAL SUPERINTENDENT N.R. AND ORS

- **Citation:** [1998] 2 S.C.R. 1065
- **Court:** Supreme Court of India
- **Decided:** 1998-04-21
- **Bench:** S.B. Majmudar, M. Jagannadha Rao
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/jagjit-cotton-textile-mills-v-chief-commercial-superintendent-n-r-and-ors-16078
- **Pages:** 32

## Headnote

B
'<:
,,r
Indian Railway Conference Association Rllles :
Rllle 161-A Held: Not inconsistant with S.53(1) of the Railways Act,
1890. Rllle 161-A Held: Not ultra vires of the Railways Act, 1890. Rule161- C
A-Stallls of-R. 161-A contained in Part I (Vol.I) and the cover page of
/RCA Rules stated that only Rllles in Part I (Vol.2) were issued under the
authority of the Central Government-Held: R.161-A is statutory-Merely
because R.161-A contains in Part I (Vol.I) does not lead to a contrary
inference-Rules in Part I (Vol.I) have been issued by the Railway Board D
under S. 29 or S. 54 of the Railways Act, 1890 delegated to ii by the Central
;:
Government-Govt. of India Notification Nos. 14-21, No. 81 dated 24-31905-Govt. of India Notification No. TRC/1079169/// dated 8-10-1969Jndia Railway Board Act, 1905-Administrative law. Rule 161-A-Exclusion
of-Held: Neither exc!Z1ded by Rules 6 nor by Rule 29 of Eastern Railway
Coal Tari.ff Part /-Eastern Railway Coal Tari.ff Part I, Rr. 6 and 29 Rules E
I 61-A-Wagons-Permissible can)1ing capacity of-Loading of coal beyondPenalty for-Recovery-From consignee-Permissibility-Held: R.161-A
permits recovery of the renal charges ''ji-om the consignor of consignee or
endorsee, as the case may be ".
Rule 161-A-Providedfor recovery of the penal charges from consignees F
for overloading of coal beyond permissible limits-But consignors not
consignees responsible for such overloading-Validity of-Held: Rule 161A is not violative of Art. 14 and is neither arbitrary nor unreasonable.
Rule 161-A-Penal charges-levy of -Under R.161-A and S.73 of
Railways Act, 1989-Nature of-Held: No principle of "delinquency" is G
ingrained in this levy.
Rule 161-A-Dual purposes of R.161-A-s. 73 of Railways Act, 1989,
stated.
Rule 161-A-Extra rates-Charged under R. 161-A or S. 73 of the H
1065
1066
SUPREl\lE COURT REPORTS
[ 1998] 2 S.C.R.
A Railways Act, 1989·-Quantum of-· Reasonableness--He/d. Cannot be
challenged before 1he Supreme Courl, the appropriate jornm heing the Railway
Rates Tribunal.
Railways Act, 1890 :
B
Sections 53( /), (2), (4) and (16)--Words ·'maximum atr1Jing capacity'·
and "normal ca,.,:ving capacity" occurring in S.53 of 1890 Act and S. 72 of
1989 Act and words "permissible canying capacity" occurring in R. I 61A of /RCA Rules -Distinclion between, exp/ained--Railll'ays (Amendment)
Act, 1854-Statements of Objects and Reasons-Railways (Punitive Charges
C for Overloading of Wagons) Rules. 1990.
D
E
F
Sections 55(/) and 3(13)-Penal charges-Under R.161-A of /RCA
Rules-Recove1)' fi'om consignee--lien for-Held: Railll'ays possess such a
lien-Word "a person" in S.55( I) include consignee and words "other
charges'' include penal charges leviable under R. I 6 I -A. Railways Act. I 989:
Section 73-Wagon---Overloading of-Penal charges--Recove1J' a/-
From consignee-Permissibility of-Held: Penal charges liable to he recovered
fi'om consignee, as the case may be.
Sections 73 and 74-Railway receipt-Delivery' of-To consigneeEjfect of-Held: Once railway receipt is delivered lo the consignee not only
the rights of the consignor hut also the liabilities of the consignor including
the liability to pay penal charge under S. 7 3 pass on to the consignee.
Sections 73 and 83-Penal charges--Col/ection of-From consigneeUnder S. 7 3-Lien for-Held: Railways possess such a lien-Words "other
charges" occurring in S.83 include penal charges leviable under S. 7 3.
Section 7 3-Provided for recovery of penal charges from consigneesHeld: Neither arbitrary nor unreasonable.
G
Sections 73 and 74--Collieries and consignees-Contract betweenFOR or FAS contract-Question left npen-Respective rights and liabilities
of consignor and consignee dealt with on the assumption that title had
r2111ained with the collieries even at the time of loading of coal 111to the
wagons.
H
Constitution of India, 1950 :
...
'
r
J.C.T. MILLS v. CHIEF COMMER. SUPERINTENDENT
1067
Article 136-P/eadings-New plea-Raising of-In rejoinder- A
Permissibility of-Consignees raised

## Text

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JAGJIT COTTON TEXTILE MILLS
A
v.
CHIEF COMMERCIAL SUPERINTENDENT N.R. AND ORS.
APRIL 21, 1998
[S.B. MAJMUDAR AND M. JAGANNADHA RAO, JJ.]
B
'<:
,,r
Indian Railway Conference Association Rllles :
Rllle 161-A Held: Not inconsistant with S.53(1) of the Railways Act,
1890. Rllle 161-A Held: Not ultra vires of the Railways Act, 1890. Rule161- C
A-Stallls of-R. 161-A contained in Part I (Vol.I) and the cover page of
/RCA Rules stated that only Rllles in Part I (Vol.2) were issued under the
authority of the Central Government-Held: R.161-A is statutory-Merely
because R.161-A contains in Part I (Vol.I) does not lead to a contrary
inference-Rules in Part I (Vol.I) have been issued by the Railway Board D
under S. 29 or S. 54 of the Railways Act, 1890 delegated to ii by the Central
;:
Government-Govt. of India Notification Nos. 14-21, No. 81 dated 24-31905-Govt. of India Notification No. TRC/1079169/// dated 8-10-1969Jndia Railway Board Act, 1905-Administrative law. Rule 161-A-Exclusion
of-Held: Neither exc!Z1ded by Rules 6 nor by Rule 29 of Eastern Railway
Coal Tari.ff Part /-Eastern Railway Coal Tari.ff Part I, Rr. 6 and 29 Rules E
I 61-A-Wagons-Permissible can)1ing capacity of-Loading of coal beyondPenalty for-Recovery-From consignee-Permissibility-Held: R.161-A
permits recovery of the renal charges ''ji-om the consignor of consignee or
endorsee, as the case may be ".
Rule 161-A-Providedfor recovery of the penal charges from consignees F
for overloading of coal beyond permissible limits-But consignors not
consignees responsible for such overloading-Validity of-Held: Rule 161A is not violative of Art. 14 and is neither arbitrary nor unreasonable.
Rule 161-A-Penal charges-levy of -Under R.161-A and S.73 of
Railways Act, 1989-Nature of-Held: No principle of "delinquency" is G
ingrained in this levy.
Rule 161-A-Dual purposes of R.161-A-s. 73 of Railways Act, 1989,
stated.
Rule 161-A-Extra rates-Charged under R. 161-A or S. 73 of the H
1065
1066
SUPREl\lE COURT REPORTS
[ 1998] 2 S.C.R.
A Railways Act, 1989·-Quantum of-· Reasonableness--He/d. Cannot be
challenged before 1he Supreme Courl, the appropriate jornm heing the Railway
Rates Tribunal.
Railways Act, 1890 :
B
Sections 53( /), (2), (4) and (16)--Words ·'maximum atr1Jing capacity'·
and "normal ca,.,:ving capacity" occurring in S.53 of 1890 Act and S. 72 of
1989 Act and words "permissible canying capacity" occurring in R. I 61A of /RCA Rules -Distinclion between, exp/ained--Railll'ays (Amendment)
Act, 1854-Statements of Objects and Reasons-Railways (Punitive Charges
C for Overloading of Wagons) Rules. 1990.
D
E
F
Sections 55(/) and 3(13)-Penal charges-Under R.161-A of /RCA
Rules-Recove1)' fi'om consignee--lien for-Held: Railll'ays possess such a
lien-Word "a person" in S.55( I) include consignee and words "other
charges'' include penal charges leviable under R. I 6 I -A. Railways Act. I 989:
Section 73-Wagon---Overloading of-Penal charges--Recove1J' a/-
From consignee-Permissibility of-Held: Penal charges liable to he recovered
fi'om consignee, as the case may be.
Sections 73 and 74-Railway receipt-Delivery' of-To consigneeEjfect of-Held: Once railway receipt is delivered lo the consignee not only
the rights of the consignor hut also the liabilities of the consignor including
the liability to pay penal charge under S. 7 3 pass on to the consignee.
Sections 73 and 83-Penal charges--Col/ection of-From consigneeUnder S. 7 3-Lien for-Held: Railways possess such a lien-Words "other
charges" occurring in S.83 include penal charges leviable under S. 7 3.
Section 7 3-Provided for recovery of penal charges from consigneesHeld: Neither arbitrary nor unreasonable.
G
Sections 73 and 74--Collieries and consignees-Contract betweenFOR or FAS contract-Question left npen-Respective rights and liabilities
of consignor and consignee dealt with on the assumption that title had
r2111ained with the collieries even at the time of loading of coal 111to the
wagons.
H
Constitution of India, 1950 :
...
'
r
J.C.T. MILLS v. CHIEF COMMER. SUPERINTENDENT
1067
Article 136-P/eadings-New plea-Raising of-In rejoinder- A
Permissibility of-Consignees raised a plea in rejoinder that they had to pay
'penal charges' on account of defective weighbridges and not on accou/1/ of
extra load-No such plea raised either in the High Court or in the SLPHeld: Such a plea not permilled to be raised for the first time in Supreme
Court in rejoinder to SLP.
Article I 36-P/eadings-New plea-Raising. of-In additional
affidavit-Permissibility of-Consignees raised a plea in additional affidavit
that when they did not pay the 'penal charges' the Railways diverted a
certain number of rakes belonging to the consignees and not only adjusted
B
the penal freight but also realised interest-No such plea raised in the High C
Court or in SLP-Held: Such a plea not permilled to be raised for the first
time in Supreme Court in an additional affidavit.
Words and Phrases :
"Maximum carrying capacity" and "normal carrying capacity"- D
Meaning of-Jn the context of S.53 of the Railways Act, 1890.
"A person" and "other charges"-Meaning of-In the context ofS.55(/)
of the Railways Act, 1890.
"Other payment"-Meaning of-Jn the context ofS.3(13) of the Railways E
Act, 1890.
"Permissible carrying capacity"-Meaning of-In the context of R.
161-A of the Indian Rm/ways Conference Association Rules.
"As the case may be "-Meaning of-Jn the context of Ss. 7 3 and 7 4 of F
the Railways Act, 1989. "Liabilities "-Meaning of-Jn the context of S. 7 4 of
4-.
the Railways Act, 1989.
,... ,
"Other charges "-Meaning of-In the context of S.83 of the Railways
Act, 1989.
The appellanUpetitioners were all consignees of coal from the collieries.
The respondent-Railways had recovered 'penal charges' relating to
overloading of coal in goods wagons beyond the 'permissible carrying capacity'
G
of each wagon from the consignees under Rule 161-A ofthe Indian Railway
Conference Association (IRCA) Rules framed under the Railways Act, 1890
(Old Act) and the Railways Ao:t, 1989 (New Act) The appellants/petitioners H
1068
SUPREME COURT REPORTS
(1998] 2 S.C.R.
A filed a writ petition before the High Court challenging the aforesaid recovery
of 'penal charges', which has dismissed.
....
On behalf of the appellants/petitioners it was contended that Rule 161A of the IRCA Rules was inconsistent with Section 53 of the 1890 Act and
hence ultra vires of the 1890 Act; that Rule 161-A was traceable to the ruleB making power under Section 47(l)(g) and was limited by the punishment
provided in Section 47(2) r·ead with Section 93 of the 1890 Act; that, therefore,
no penalty under Rule 161-A could be imposed; that Rule 161-A was not
y
published in the Gazette as required by Section 47(3); that Rule 161-A was
"
in Part I (V ol.l) of the IRCA Rules and that only Partl (Vol. 2) was issued
c under the authority of the Central Government as stated on the cover page
of the IRCA Rules and, therefore, Rule 161-A was not protected by the 1890
Act that Rule 161-A was not protected by the 1890 Act; that Rule 161-A was
excluded by Rules 6 and 29 of the Eastern Railway Coal Tariff Rules; that
the "delinquent" in respect of overloading of wagons was the consignor and
not the consignee and, therefore, Rule 161-A or Section 73 of the 1989 Act
D were violative of Article 14; that the appellants had to pay 'penal charges'
on account of defective weigh bridges and not on account of extra load; and
'y
that when the appellants did not pay the 'penal charges' the respondent
diverted a certain number of rakes belonging to the appellant and not only
adjusted the penal freight but also realised interest.
E
On behalf of the respondent-Railways it was contended that the contract
between the collieries and the appellants-consignees was not merely Free on
Rail (FOR) contract but Free Along Side (FAS) contract and the title of the
goods passed to the consignees and therefore, the respective rights and
liabilities should be decided on that basis.
F
Dismissing the appeal, this Court
b
HELD : I. While Section 53(1) of the Railways Act, 1989 prohibits
overloading in excess of the maximum carrying capacity, Rule 161-A of the
Indian Railway Conference Association (IRCA) Rules permits loading beyond
G the permissible carrying capacity and the charging therefor. Obviously the
contention is based upon a misconception of equating the permissible carrying
capacity with the maximum carrying capacity. 11083-E]
" '
2.1. Section 29(1) of the 1989 Act states that the Central Government
may fix maximum and minimum charges. Under Section 3(13) of the 1989
H Act, 'rate' is defined as including "any fare, charge or other payment for
-
'
,f
,
-f
tI
J.C.T MILLS v. CHIEF COMMER. SUPERINTENDENT
\069
the carriage of any passenger, animals or goods". It has, therefore, to be held A
that 'other payment' could be by way of a penal charge as levied by Rule 161A of the !RCA Rules. 11084-FI
2.2. Again Section 54(1) states that the railway administration may
impose conditions not inconsistent with the Act or with any general rules B
made thereunder, "with respect to the receiving, forwarding or delivery of
any animal or goods." It has, therefore, to be held that one such 'condition'
could be by directing the penal charges to be collected before delivering the
goods. Thus both Sections 29(1) and 54(1) protect Rule 161-A. 11084-G]
2.3. It is true that the cover page of IRCA Rules states that only Rules c
in Part I (Vol. 2) are issued under the authority of the Central Government
and not the rules in Part I (Vol. I) and Rule 161-A is no doubt contained in
Part 1 (Vol. I) However, the said Rule 161-A was issued by the Railway
Board in the Ministry of Railways, Government of India, and communicated
to all General Managers in the Railways and all Non-Government Railways D
(including Port Trust Railways). 11085-A-B]
2.4. The notification of the Government of India (No. 14-21, No. 81)
dated 24-3-1905 published under Section 2 of the Indian Railway Board Act,
1905 and issued in the name of the Governor-General shows that the Railway
Board was invested with powers of the Central Government under various E
Sections including SectiOR 54 of the 1989 Act. Again Notification (No. TRC/
1079/69/11) dated 8-10-1969 issued by the Central Government under Section
2 of the Indian Railway Board Act, 1905 delegates to the Railways Board the
powers under Section 21.> of the old Act of 1890 (published in Gazette on 1810-1969) of the Central Government.11085-C-D]
F
2.5. The effect of the above delegation is that Rule 161-A of IRCA
Rules, Part 1 (V-01.1)--Which is traceable to Section 29 or Section 54 of the
1989 Act-is clearly issued by the Railway Board as per its lctte.t dated
7.5.1981 in exercise of powers delegated to it by the Central Government.
In other words, thoui:h it may be true from the cover page of IRCA Rules G
that Part 1 (Vol. 2) alooe is issued under authority of Central Government,
it is established that Rule 161-A Part 1 (Vol. 1) has the authority of the
Railway Board, the delegate of the Central Government. Therefore, the
contentions of the appellants/petitioners that Rule 161-A is traceable to
Section 47(1)(g), that the Rule is not published in the Gazette as required
by Section 47(4) and that only fine or penalty as stated in Section 47(2) or H
1070
SCPREME COURT REPORTS
[1998] 2 S.C.R.
A Section 93 of the old Act could be imposed, are wholly unsupportable.
(1085-F-GI
3.1. Penal charges under Rule 161-A of the !RCA Rules (or under
Section 73 of the Railways Act, 1989) are leviable only for exceeding the
"permissible carrying capacity". The significance of these words, to a large
B extent, is explained by the Statement of Objects and Reasons of the 1954
Amendment of the 1890 Act. Section 16 of the 1890 Act (and Section 27 of
the 1989 Act) deals with the use of rolling stock. What design or type of
rolling stock 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
C determined by the Commissioner of Railway Safety, when granting permission
under Section 16 of the old Act (Section 27 of the new Act). The Railways
submit to the CQmmissioner the complete design particulars indicating the
'gross weight' and the 'gross weight bearing on each axle'. The 'gross
wtight' for which sanction is given by the Commissioner of Railway Safety
on behalf of the Central Government, is the maximum and can in no case be
D exceeded by any executive order of the Railway Board, without reference to
the &mmissioner. On the other hand, the 'normal' or 'marked' carrying
capacity determined by the Railway Administration under Section 53(2) is
subject to the maximum referred to in Section 53(1). The normal carrying
capacity specified in Section 53(2) can be varied by the Railway Administration
in exercise of powers granted under Section 53(4) (inserted by the 1954
E Amendment) but subject again to the maximum limited by Section 53(1) as
stated in the proviso below Section 53( 4). Any variation of the normal capacity
as permitted by Section 53(4) is "subject to such conditions as it ( the
Central Government) may think fit to impose" and even these conditions
cannot override the limits prescribed under Section 53(1). (1082-B-Gf
F
3.2. The words "permissible carrying capacity" which occur in Rule
161-A of the IRCA Rules and Section 73 of the new Act are concerned, the
said words obviously refer to the 'average carrying capacity' mentioned in
Section 53(2) (Section 72(2) of the new Act) or such enhanced permissible
limits of carrying capacity as may be fixed under Section 53(4) of the old
Act (or Section 72(4) of the new Act). This view is clearly strengthened by
G the definition of "permissible carrying capacity" in Rule 2(d) of the Railways
(Punitive charges for overloading of wagons Rules, 1990. This permissible
carrying cannot exceed the upper limits prescribed by the Commissioner of
Railway Safety under Section 53(1) ofold Act (Section 72 (l) of the new Act.)
[1082-H; 1083-C]
H
Johari 's Commentary on Railways Act, (1989) 1991 Edu. pp. 124, 241
.-
...
J.C.T MILLS v. CHIEF COMMER. SUPERINTENDENT
1071
and 242, referred to.
4. Rule 6 of Eastern Railway Coal Tariff Rules, Part I carries the
heading 'charges payable in respect of the overloading of coal'. It deals with
the charges for unloading the excess coal and re-loading the same and the
demurrage charge payable therefor. Therefore, it is clear that the Rule does
A
not cover penal charges for overloading coal beyond the permissible limits B
and cannot be said to exclude Rule 161-A. It is true that Rule 29 of the Coal
Tariff deals with coal but Rule 161-A also deals exclusively with coal and was
specifically introduced to deal with overloding coal beyond the permissible
carrying capacity. Rule 29 deals with loading beyond the maximum weight
prescribed by Section 53(1), while Rule 161-A deals with penal charges for
loading in excess of the permissible carrying capacity as stated in Section C
53(2) and Section 53(4). Rule 29 was introduced to clarify that for carriage
of the excess coal the rate to be charged is the normal rate. The Rule was
not intended to deal with the penal charge. Further, Rule 161-A contains a
non-obstante clause, which would, in any event, override Rules 6 and 29 of
the Coal Tariff even if they are to cover the same field. Therefore, it has to
be held that Rule 161-A is neither excluded by Rule 6 nor by Rule 29 of the D
Coal Tariff. [1086-B-C; E-FJ
5.1. Section 73 of the Railways Act, 1989 gives power to the Railways
to levy and collect the penal charges from the consignor, consignee or the
endorsee, as the case may be, if the goods are overloaded beyond the
'permissible carrying capacity'. The words 'as the case may be' occurring
in Sections 73 and 74 have also to be explained. The 'consignor' shall be E
liable for the penal charge even at the stage of delivery of goods at the
destination if he has booked the goods for 'selr. The 'endorsee' will be liable
if the delivery is applied for at the destination by the endorsee. The 'consignee'
will be liable if the delivery is applied for at the destination by the consignee.
[1090-B)
5.2. Further, under Section 74, once the railway receipt is delivered
to the consignee, not only the rights of the consignor but also the liabilities
of the consignor pass on to the consignee. The word 'liability' in Section 74
includes the liability of the consignor to pay the penal charges under Section
73 in respect of the overloaded goods covered by the railway receipt.
F
[1090-D[ G
6.1. Rule 161-A is in two parts. The first part prohibits the 'consignors'
from exceeding the permissible carrying capacity of the wagon. The second
part speaks of discovery of the overweight at the booking point or en route
or at the destination and recovery of the penal charge therefor for the entire
distance from the booking point to the destination. The rule-making authority
must be deemed to have been aware that title in the goods might have passed H
1072
SUPREME COURT REPORTS
[1998] 2 S.C.R.
A to the consignees in several cases after the loading or after the weighment
and the before the actual delivery of the goods to the consignee such as
where the railway receipt is delivered to the consignee against the receipt
of price. The second part of Rule 161-A is quite wide and unrestricted and
can be created as permitting recovery of the penal charges from the consignor
B or consignee or the endorsee, as the case may be, though these words are
not expressly used in Rule 161-A. That is how the Railway becomes entitled
to recover the penal charges from the consignee also even under the old Act.
(1091-C-D)
6.2. Section 73 of the new Act and Rule 161-A of the old Rules permit
loading in excess of the permissible carrying capacity without any penal
C charge, now up to a limit of 2 tonnes. (Earlier it was up to 1 tonne). What
is now subjected to a penal charge, is the excess over and above the permissible
level above stated which is always b.elow the maximum limit,. This levy under
Section 73 of the new Act and the old Rule 161-A is intended for dual
purposes-one is to see that the gross weight at the axles is not unduly heavy
D so that accidents on account of the axles breaking down could be prevented.
The other reason behind the collection is that, inasmuch as the wagon has
carried such excess load up to the destination point at the other end, the
'ireplacement cost of the coaches, engines or rails or of repairs to the bridges
be covered. The extra rate is a higher rate i.e. something like a surcharge
for the excess load, to meet the said expense. Therefore, no principle of
E 'deliquency' is ingrained in this levy as in the case of breach of civil
obligations under FERA or Customs act or Employees Provident Fund Act.
Obviously the Railway Board has kept these aspects in mind while collecting
these charges. There is, therefore, no violation of Article 14 and the collection
is neither arbitrary nor unreasonable. (1092-E-H)
F
Director of Enforcement v. MCJM Corporation Pvt. Ltd, (1996) 2 SCC
471, NK Jain v. CK Shah, (1991) 2 SCC 495 and Pratibha Processors v.
Union of India, [1996) 11 SCC 101, held inapplicable.
Corpus Juris Secundum, (Vol. 85, p. 580 para 1023), referred to.
G
6.3. Further, the quantum of reasonableness of the quantum of any
such extra rate cannot be challenged before this Court and the appropriate
forum therefore is the Railway Rates Tribunal.
7.1. It is not possible to accept the contention of the appellants/
petitioners that the appellants had to pay the 'penal charges' on account of
H defective weigh bridges and not on account of extra load because no such plea
\
J.C.T. MILLS v. CHIEF COMMER. SUP.
1073
was raised either in the High Court or in the Special Leave Petition (SLP). A
Such a plea cannot be permitted to be raised for the first time in this Court
by way of a rejoinder in the SLP. 11093-C]
7.2. Again it is not possible to accept the contention of the appellants/
petitioners that when the appellants did not pay the 'penal charges' the
respondent diverted a certain number of rakes belonging to the appellants B
and not only adjusted the penal freight but also realised interest because no
such plea was either raised in the High Court or in the SLP. Such a plea
cannot be permitted to be raised for the first time in this Court in an
additional affidavit. [1093-F-G]
8.1. Section 83(1) of the new Act permits enforcement of'lien' in case C
of failure on the part of the consignor, consignee or endorsee to pay the
freight and "other charges due from him". The words "other charges"
occurring in Section 83(1) 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 above said persons-which include the 'consignee'-as a D
condition precedent for the delivery for the goods. [1094-D-E]
8.2. The words 'a person' in Section 55(1) of the old Act must be
understood to mean 'consignor', 'consignee' or 'endorsee'. lfthat be so, the
words 'due from him' in Section 55(1) would mean due from 'consignor'
consignee, or endorsee'. So far as the words 'rates and other charges' used E
in Section 55(1) are Nncerned, Section 3(13) says 'rate' includes "any fare,
charge or otller paymell( for the carriage of any passenger, animal or
goods". Therefore, whether one goes by the words '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 161-A of F
the IRCA 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'. [1095-B-C]
9. As there are certain doubts about the terms of the individual contracts
whether they are free on Rail (FOR) or Free Along Side (FAS) contract the G
respective rights and liabilities of the consignor and consignee is dealt with
on the assumption that title had remained with the collieries even at the time
of loading of coal into the wagons.
CIVIL APPELLATE JURISDICTION_: Civil Appeal No. 7196 of
1993 Etc.
H
1074
SUPREME COURT REPORTS
[1998] 2 S.C:.R.
'· A
From the Judgment and Order dated 7.2.92 of the Allahabad High Court
in C.M. W.P. No. 11381of1985.
B. Sen, S.K. Dholakia, M.N. Krishnamani, J.P. Goyal, A.B. Rohtagi, P.P.
Malhotra, Praveen Kumar, Rajiv K. Garg, N.D. Garg, P.K. Jain, R.P. Goyal, K.K.
Gupta, Ranjit Kumar, Ms. Mala Narain, Ms. Lekha Mathur, Ms. Meenakshi
B Arora, K.K. Lahiri, Gaurav Kumar, Ms. Geeta Bhandari, Rajesh Kumar, P.N.
Misra, S. Mishra, A. Mohapatra, A.O. N. Rao, Harish Chander K.C. Kaushik,
~
Ms. Indra Sawhney, Wasim A. Qadri, Rajiv Nanda, Ms. Sushma Suri, Ravinder
Narain, D.N. Mishra, Anip Sachthey, Anupam Lal Das, H. Munshi, Kailash
'-
Vasdev, C.V. Subha Rao, N.N. Dhingra, Balraj Dewan, Deepak Dewan, N.D.
C Garg, Pankaj Kalra, B.K. Sharma and Vijay Kumar for the appearing parties.
D
The Judgment of the Court was delivered by
M. JAGANNADHA RAO, J. Leave granted in S.L.P (C) No. 7766 of
1994.
These Civil Appeals and Transferred Cases raise common questions
and can be disposed of together. The Civil Appeals arise out of judgments
of the High Court of Allahabad and Rajasthan High Court. The transferred
cases arise from the Delhi High Court and from Railway Claims Tribunal
(Lucknow Bench). Counsel have referred to the documents contained in T.C.
E No.47 of 1997 (Eastern coalfield Ltd. v. Ashoka Silicate & Glass Works,
Delhi) for convenience, apart from the pleadings and documents in the other
paper books. T.C. No 47of1997, referred to above, is a case filed as C.W.P.
No.864 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
F as T.C. No. 47of1997.
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,
G 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 of coal
at the collieries railway-siding and that the consignor collieries and the Railways
are responsible for such over loading and therefore, the consignees cannot
H be made to pay these 'penal charges'. The petitioners/appelllnts not only
--·
-
J.C.T. MILLS v. CHIEF COMMER. SUP. [M. JAGANNADHA RAO. J.]
1075
seek refund of penal charges paid but a direction that in future, the Railways A
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. 4 7 of 1997. The paper book in this case contains exhaustive pleadings
and documents. The T. C. was initially filed as a writ petition in the Delhi High B
Court. The writ petitioner, Ashoka Silicate & Glass Works, Delhi is a consignee
of coal. It obtained a letter of identification or sponsorship from the
Commissioner of Food & supply, Delhi recommending the allotment of a
particular quantity of coal year after year as per the petitioner's requirements.
Thereafter the petitioner completed 'financial arrangements' through its agent
M/s Ramsaran Das & Bros, who have their office in New Delhi. The said C
agent obtained a Form, which is basically a form for approval of the sponsored.
quantity of coal either for every month in the year or for a particular month.
The said programme was then submitted to the Collieries ( The Eastern
Coalfields Ltd. which is a subsidiary of Coal India Ltd.) for their approval so
that the Colliery could agree to supply accordingly. After receiving the approval D
from the Collieries, the said programme was submitted to the Director of
Movements (Railway) who works under the Railway Board so that the requisite
number of wagons could be allocated for supply of coal by the Collieries to
the petitioner. Once the Programme is approved as above, the wagons would
be brought and kept at the private railway siding of the Collieries for loading
the coal. After the completion of loading, a forwarding note would be prepared E
by the Colliery. The wagons would be earmarked for different consignees and
they move from the colliery to a focal point or booking point where the weigh
bridge of the Collieries or Railways is located. The wagons constitute a 'rake'
at the focal point and then each wagon would pass across the weigh bridge
and the weight of the wagon loaded with coal would be verified and noted
in the forwarding note and in the railway receipt. The Railways Act, 1890 and F
the Railways Act, 1989 contain provisions which require that the "average
carrying capacity" of each wagon be marked on the wagon. Section 53 of the
old Act refers to (i) the maximum carrying capacity, (ii) normal carrying
capacity (and its variations ) and (iii) Rule 161 A of the !RCA refers to the
permissible cairying capacity. As of now, weight upto and excess of2 tonnes G
(previously it was I tonne) - over and above the permissible carrying capacity
of each wagon - is not subject to any penal charge. But beyond that, penal
charges are levied 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 H
1076
SUPREME COURT REPORTS
[ 1998] 2 S.C.R.
A 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
i.-..:;;
consignee - who had the choice of rejecting the overloaded coal at the
destination point -rejected the excess coal so overloaded while taking delivery
B
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 30.6.1990 ) and again where such charges were levied and
~
collected after the Railways Act, 1989 came into force, i.e from 1.7.1990. There
c are certain differences 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' 161A of the
D !RCA (Indian Railway Conference Association) in force during the period of
the old Act of 1890 is in consistent with section 53 of the old Act and hence
liable to be declared void. It is in addition contended in this Court that Rule
' .,....
161 A is ultra-vires of the old Act inasmuch as under the old act, there is no
provision corresponding to section 73 of the new Act, which permits such
E
penal charges to be levied and collected for overloading, - from the consignor,
consignee or endorsee, as the case may be. It is also contended that Rule 6
and 29 of the Special Tariff for Coal in the Eastern Railway permit only
ordinary rate of tariff to be levied and hence Rule 161 A is impliedly excluded.
Reliance is also placed on c:lause 1877 of the Manual to infer that the liability
for the penal charges is only on the consignor. Yet another contention raised
F before us is that Rule 161A of the Indian Railway Conference Association and
Section 73 of the new Act, in so far as they permit recovery of the penal
charges from the consignee - who it is said is not a 'delinquent' - are arbitrary
. ..
and violative of Article 14 of the Constitution oflndia. The submission is that
for no fault of the consignee, Rule 161 A of the Indian Railways Conference
G
Association and section 73 of the new Act permit recovery of penal charges
from the consignee, and therefore they are arbitrary and violative of Article
14. It is also contended for the appellant that the title to the goods has not
passed to the consignee at the time when the colliery overloaded the goods
--=
into the wagons. The contract between the colliery and the consignee, no
doubt, was' F.O.R. - Railway Siding' but it is contended that inasmuch as title
H passed only after ihe overloading, and after Railway receipt is prepared later,
J.C.T. MILLS v. CHIEF COMMER. SUP. [M. JAGANNADHA RAO, J.]
1077
the consignor alone is the 'delinquent' and is responsible to pay the penal A
charges. The consignee, it is said, has no choice except to take delivery of
-·
the overloaded goods. The consignee also contend that apart from directing
refund of penal charges already collected, there should be a direction that in
future the same should not be collected from the consignees.
On the other hand, it is contended for the Railways that the petitioners B
---------
must go for a civil suit as held by the 1 & K High Court in Darshan Kumar
'
v. Station Master, AIR (1988) 1. & K. p.74. It is contended that these charges
.
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. c
It is contended that the said Rule was issued by the Railway Board under
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 validly issued Rule 16!A in Part (vol.I) of the Indian
Railway Conference Association and that the said Rule is protected by sections D
T
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 161 A
inasmuch as in the second part of Rule 16 IA, there is no restriction as to the
party from whom the penal charges are to be collected. So far as the new Act
of 1989 is concerned, it is contended that section 73 specifically permits the
levy and collection of penal charges from the consignor, consignee or endorsee, E
as the case may be. In other words Rule 161 A of the Indian Railway conference
Association is now replaced by a statutory provision in the new Act. It is
pointed out that the penal charges are not by way of penalty but are charges
levied to compensate the Railways for the deterioration or damage done to
the rails, bridges, wagons and the engines which are made to carry extra load F
over and above the permissible carrying capacity, consequent to the
overloading. The penal charges are payable by the consignee, inasmuch as
the consignee has taken delivery of the overloaded goods and benefited by
using the same in its consumption processes. It does not lie in the mouth of
such a person who is beneficiary of the overloading, to contend that it is G
liable only for the normal charges and not for the penal charges. Again under
---.._
section 55 of the old Act and section 83 of the new Act, there is a lien in
favour of the Railways which extends to the collection of the penal charges.
It is also to be presumed that the consignee has passed on the burden to its
consumers. (Mr. B. Sen, learned senior counsel, appearing in CA No. 7514
of 1995 arising from the Judgment of the Rajasthan High Court, however, H
1078
SUPREME COURT REPORTS
(1998) 2 S.C.R.
A contended that his clients are manufacturers of cement and that cement is a
controlled commodity so as price is concerned and his clients could not have
passed on the extra burden to consumers, similar argument was raised in C.A.
No. 4266of1996).
B
On the above contentions, the following points arise for consideration:
(I) What is the d.istinction between the words 'maximum carrying
capacity' used in section 53(1) ofold Act (section 72(1) of new Act), 'normal
carrying capacity used in section 53(2) (section 72(2) of new Act' and
'permissible carrying capacity' used in Rule 161A of the Indian Railway
C Conference Association (section 73 of the new Act)?
D
(2) Whether Rule, l61A of the Indian Railway Conference Association
is inconsistent with section 53 of the old Act?
(3) Whether Rule 161A is ultra-vires of the Railways Act, 1890?
(4) Do Rules 6, 29 of Eastern Railways Coal Tariff confer any right on
the consignees which excludes or overrides Rule 161A?
(5) Are the charges levied under Rule 161A of the Indian Railway
Conference Association or under section 73 of the new Railways Act, 1989
E (read with Railway (punitive charges for overloading of Wagons) Rules, 1990
penal in nature or are also compensatory? Are they arbitrary and violative of
Article 14 of the Constitution oflndia 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'?
F
(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 liabilities of the consignor to the cosignee,
including the liability to pay penal charges at the time of delivery of the
G 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?
H
(8) Can the consignees (except the appellant in CA No. 7514of1995 and
J.C.T. MILLS v. CHIEF COMMER. SUP. [M. JAGANNADHA RAO. J.]
1079
CA No. 4266 of 1996) seek refund from the Railways without pleading and A
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 consignees?
Point 1:
B
At the outset, it is necessary to understand the distinction between the
words 'maximum carrying capacity', 'normal carrying capacity' and
'permissible carrying capacity' used in various provisions. The penal charges C
under Rule 161 A and section 73 of the new Act are leviable only for exceeding
the 'permissible carrying capacity'.
Now Rule 161A which deals with overloading of coal was introduced
w.e.f. 7 .5.1981 and is contained in !RCA (Indian Railway Conference
Association) Goods Tariff. )he said rule was in force till the new Rules called D
"The Railways (Punitive charges for overloading of wagons) Rules, 1990 were
framed under section 87 of the new Act (published in Gazette on 7 .6.1990).
Since 1981, Rule 161 A has undergone minor changes concerning the extent
to which extra-free-load is permissible etc. For the purposes of the point
involved, these minor variations are not relevant and it is sufficient to refer
to the Rule 161 A as it was originally introduced in 1981. It reads as follows: E
"Rule 161 A: Penalty for loading coal beyond permissible canying
capacity of the wagons:
(I) In loading coal, consignors are required not to exceed the
permissible carrying capacity of the wagon used or any reduced F
carrying capacity that may be required in the circumstances referred
to in Rule 163. Should overweight be discovered at the booking point
or en-route or at destination, such overweight beyond permissible
carrying capacity of the wagon used will, notwithstanding anything
contained in this Tariff or in any other Rules or instruction, be G
charged at the normal wagon load rate if the· overweight is upto one
tonne and at smalls rate applicable to coal traffic, if the overweight is
more than one tonne, for the entire distance from the booking point
to the destination.
(2) The Railway Administration may issue separate instructions in H
1080
A
SUPREME COURT REPORTS
[1998] 2 S.C.R.
re~ard to limits of weight beyond which over-loaded wagons could
not be carried. Such instructions may also specify the charges, penalties
and other consequences that would ensue from loading beyond such
limits" .
Rule 161A is, it will be noticed in two parts. The first part deals with the
B prohibition while the second part concerns the levy and collection of penal
charges and does not specifically say from whom. The Rule uses the word
'permissible carrying capacity'.
c
D
E
F
G
We shall next refer to Section 53. It reads as follows:-
"Section 53: Ma'Cimum carrying capacity for wagons: (I) 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 may 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 (!), 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 subsection (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.