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Judgment
Heard Mr. M. P. Sarma, learned counsel for the appellant and Mr. C. K. S. Baruah, learned CGC, for the respondent.
This appeal, under Section 23 of the Railway Claims Tribunal Act, 1987, is directed against the Judgment and Order, dated 29.10.2025, passed by the learned Railway Claims Tribunal at Guwahati Bench, Guwahati, in Review Application No. 06/2025, arising out of Original Application No. III 22/2024.
Background facts:
The background facts, leading to the filing of the present appeal, are adumbrated herein below:-
“The appellant herein, namely, M/s RDS Logistics & Agencies Pvt. Ltd., was the consignee of goods, booked from HDCG to SCA RR No. 282000727, dated 23.02.2024, and it took delivery of goods on submission of original Railway Receipts at destination point SCA (Goods). The respondent herein, the Union of India, represented by the General Manager, N.F. Railway, Maligaon, also collected demurrage charge from the appellant, amounting to Rs. 2,00,183/- at destination point, which was paid vide Money Receipt No. SCA/2024/00097, dated 02.03.2024, and as such, the appellant holds all legal titles and entitlements to demand and claim refund of demurrage charge from the respondents, in terms of Section 74 of the Railways Act, 1989.
The respondent herein collected the demurrage charges from the appellant without any fault on the part of the appellant. Thereafter, a claim application was filed for recovery of purported Demurrage/Penal Demurrage Charge of Rs. 2,00,183/-. The appellant herein, was authorised by the consignor/consignee, to take delivery and act on behalf of the consignor/consignee for the consignment booked from HDCG to SCA RR No. 282000727, dated 23.02.2024, vide letter dated 29.02.2024.
It is the case of the appellant that no notice was served upon the consignor/consignee prior to imposition of penal demurrage and in terms of Railway Board Letter no. TC-I/2022/201/e-file/2(3394909) dated 19.09.2022, the modalities for implementation of penal demurrage charge are given for compliance as:-
(a)'Issue of notice' for imposition of penal demurrage and 'imposition of penal demurrage' may be treated as two separate activities;
(b)Notice period for imposition of penal demurrage (which is for duration of 48 hours at present) may be reduced to 24 hours;
(c)Notice for imposition of penal demurrage may be issued via a 'numbered control message' of commercial control with the verbal approval of the competent authority (PCCM/PCOM/DRM);
(d)Immediate intimation of the notice for imposition of penal demurrage shall be sent automatically via system- generated SMS and e-mail to all concerned customers as per the goods shed profile; and
(e)Imposition of penal demurrage, 24 hours after the issuance of notice as mentioned in the sub-paras, shall be with formal approval of the competent authority.
However, the respondent did not follow any of the aforesaid procedure, prior to imposition of penal demurrage. Also, there are no goods covered shed at Salchapra Station and the said notice could not have been served in absence of goods covered shed profile at Salchapra Station. Also, there was continuous rainfall and thunderstorm at Salchapra Station, since past three days and on 29.02.2024 also, and due to continuous rainfall, the approach road of Salchapra Station was covered with mud and slush and there was disruption of power and no lights were available at Salchapra Station on 29.02.2024, when the rake was placed in part for unloading at 2.10 hrs., on 29.02.2024.
Then, being aggrieved, the appellant had preferred OA No. OA(III)/GHY/22/2024, before the learned Railway Claims Tribunal Guwahati, at Guwahati. The respondent herein entered appearance and filed written statement. Then upon hearing both the parties, the learned Railway Claims Tribunal, Guwahati, vide Judgment, dated 26.06.2025, has dismissed the claim of the appellant herein.
Thereafter, the appellant had preferred one review application, being Review Application No. 06/2025, but said review application was dismissed vide Judgment and Order dated 29.10.2025. Being aggrieved, the appellant has preferred this Miscellaneous First Appeal on the following grounds ꟷ (1) The Learned Tribunal has misconstrued the guidelines for levying of demurrage charge/penal demurrage charge, including the provisions of corrigendum No. 32, dated 13.09.2022, and Railway Board's Letter No. TC-1/2022/201/efile/2(3394909), dated 19.09.2022, thereby, committing miscarriage of justice in passing the impugned Judgment and Order dated 29.10.2025. (2) For that paragraph 3.4.2 (a) of the compendium of Demurrage, Stabling, Wharfage, Stacking, waiver and Write Off, it is clearly being stated that ‘Issue of notice' for imposition of penal demurrage and 'imposition of penal demurrage' may be treated as two separate activities. And it is the admitted position that no wide publicity and notice of imposition of penal demurrage was given to the appellant prior to imposition of penal demurrage charge upon the appellant. The appellant was never intimated at any point of time that penal demurrage would be imposed upon him prior to and/or after arrival of consignment booked vide Railway Receipt no. 282000727. Even the demurrage charge bill statement against the appellant, wherein, the total amount was calculated as Rs. 2,00,183/-, the calculation was shown to be based upon demurrage charge and not penal demurrage charge. Subsequently, in the money receipt, dated 02.03.2024, in the remarks column, it is reflected as, "FOR COLLECTION OF DEMURRAGE AGAINST INVC NO 15 DATED 22-02-2024". Although, demurrage charge was collected, the amount so collected was much higher, in contravention of the provisions holding the field. Later on, the respondents stated that they collected penal demurrage charge from the appellant by showing it as demurrage charge, in the manner stated above. And the learned Tribunal has failed to take note of the rejoinder filed by the appellant on 10.02.2025, to the detriment of the appellant, wherein, a plea was taken that no wide publicity and notice at terminal was given to the appellant, prior to imposition of penal demurrage, in terms of the letter dated 27.11.2024. The learned Railway Claims Tribunal, at paragraph Nos. (x) and (xi) of the Judgment, dated 29.10.2025, has recorded that the issue of penal demurrage charge and lack of notice was raised only in the hearing stage and not in the claim application. But, in paragraph No. 10 of the OA(III)/GHY/22/2024, the appellant has claimed Demurrage Charge/ penal demurrage charge totalling Rs. 2,00,183/- and the learned Tribunal erred in law as well as in facts while dismissing the Review Application No. 06/2025 and ignored the provisions holding the field and upheld the levy of Rs. 2,00,183/- as penal demurrage, without prior notice to the appellant.
(3)The Judgment & order dated 29.10.2025, is in clear violation of the law laid down in this connection by the Hon'ble Apex Court as well as the provisions of corrigendum No. 32 dated 13.09.2022, and Railway Board's Letter No. TC-1/2022/201/efile/2(3394909) dated 19.09.2022 and it is well established principle of natural justice that prior to imposition of penalty, one is to be put to notice, but the same was not complied with.
(4)The appellant in Review Application No. 06/2025 and OA(III)/GHY/22/2024, had categorically stated that the delay in unloading the consignment by 11 hours was beyond their control. There was lack of infrastructure at Salchapra Station and due to thunderstorm and rainfall on the previous day, there was no electricity and no alternative light facility at Salchapra Station and there was complete darkness during the night hours and the approach road was covered with mud and slush. The appellant raised the said issues before the respondent on 08.03.2024, claiming waiver of Rs. 2,00,183/- imposed as demurrage charge from appellant. But, the respondent has rejected the claim of the appellant vide communication dated 31.03.2024, without assigning any reason and as such, the Judgment and Order, dated 29.10.2025, is not sustainable and therefore, it is contended to allow this appeal by setting aside the impugned judgment passed by the learned Railway Claims Tribunal.”
Mr. Sarma, learned counsel for the appellant, has reiterated the grounds mentioned in the memo of appeal at the time of argument. He submits that no notice was served upon the appellant by the respondent before imposing penal demurrage.
Referring to Page No. 35 of the memo of appeal, he submitted that the said notice was not served upon him and he also pointed out that the said notice was furnished by way of written statement before the learned Tribunal.
Mr. Sarma has also pointed out that at the time of deduction, it was simply demurrage charge and in support of his submission, he referred to para No. 9 at page No. 70, and that the appellant came to know about imposition of penal demurrage charge only after filing of W.S. by the respondent and earlier, it was collected as demurrage charge, as indicated in the receipt. He also pointed out that the impugned order passed by the learned Tribunal, both in the claim application and also in the review application, are illegal and arbitrary and are liable to be set aside and quashed. In support of his submission, Mr. Sarma has referred to a decision of a Division Bench of Allahabad High Court, in Writ-C No. 8906 of 2019, dated 04.04.2019.
Per contra, Mr. Baruah, learned CGC, referring to a decision of the Hon’ble Supreme Court in the case of Union of India & Ors. Vs. Megha Technical and Engineers Pvt. Ltd., Civil Appeal No. .... of 2025 (Arising out of SLP(C) No. 8024 of 2018) submits that the impugned order passed by the learned Railway Claims Tribunal suffers from no infirmity or illegality, requiring any interference of this Court and he further submits that the respondent authority has rightly calculated and imposed the penal demurrage charge from the appellant herein.
Having heard the submission of the learned counsel for both the parties, this Court has carefully gone through the memo of appeal and the grounds mentioned therein. Also perused the order passed by the Railway Claims Tribunal in OA No. OA(III)/GHY/22/2024, dated 26.06.2025, and the impugned Judgment and Order dated 29.10.2025, passed by the learned Railway Claims Tribunal at Guwahati Bench, Guwahati, in Review Application No. 06/2025, and also gone through the decisions referred to by the learned counsel for both the parties.
The basic facts herein this appeal, are not in dispute. A sum of Rs. 2,00,183/- was collected from the appellant as penal demurrage charge and the fact is apparent from ‘Annexure-2’ of the memo of appeal. ‘Annexure 3’, the Money receipt, indicates that the same was collected as demurrage against an invoice dated 22.02.2024. However, from ‘Annexure-2’ at page No. 29 of the memo of appeal, which is the written statement filed by the respondent; it appears that the amount was imposed as ‘penal demurrage charge’ in terms of Railway Board Master Circular No. TC-I/2016/201/I, dated 17.05.2016.
It also appears that the appellant was only informed over the phone by the Commercial Supervisor of Goods, about the arrival of the goods and for unloading of the same. It also appears from the impugned Judgment and Order, dated 26.06.2025, that at the stage of waiver application, the issue of no information about penal demurrage in the terminal etc. was not raised at all, which deprived the Railway from the opportunity to examine this issue at the nascent stage and this issue was not raised at the claim application too, which was filed on 18.09.2024, and this issue was raised later on, as a new issue at the argument stage only, on 25.03.2025.
However, it appears that in paragraph No. 10 of the claim application, the appellant had raised the issue of demurrage charge/penal demurrage charge, totalling Rs. 2,00,183/-, and in that view of the matter, the finding, so recorded by the learned Tribunal, in the Judgment and Order, dated 26.06.2025, appears to be illegal and arbitrary and on such count, the finding so recorded is liable to be interfered with.
Similarly, in the impugned judgment, dated 29.10.2025, passed in Review Application No. 06/2025, also the learned Tribunal had failed to take note of the issues raised by the appellant herein. Mr. Sarma, learned counsel for the appellant has rightly pointed this out at the time of hearing and the decision of a Division Bench of the Allahabad High Court, in Writ-C No. 11168 of 2011 (M/s Nbk Trade Linker Pvt. Ltd. and Ors. Vs. Railway Board and Ors.), so referred by him also supported the contention of Mr. Sarma, learned counsel for the appellant that there is a requirement of issuing notice, in terms of the paragraph No. 3.3, of the Rates Circular No.74 of 2005, dated 19/12/2005, which was issued by the Railway Board on the subject "Free time and rates of demurrage, wharfage and stacking charges".
Notably, paragraph No. 3.3, of the Rates Circular provides that in case excessive congestion takes place at any terminal/steel plant, CCM/COM/DRM can increase the demurrage rates, even at progressively increasing rate subject to a maximum of six times of the prevalent rate. The Circular further provides that the above penal demurrage rates should be implemented only after giving wide publicity and due notice of 48 hours and should be applicable for the notified period.
It is also to be noted here that ‘demurrage’ is the standard fee charged for holding freight cars, containers, or vessels past the allowed free time. And ‘penal demurrage’ is an escalated, punitive rate charged up to six times the normal rate during severe terminal congestion, applied only after a formal 48-hour advance notice. Following are the differences between demurrage’ and ‘penal demurrage’:-Standard Demurrage
Cause : Exceeding standard free time for loading or unloading.
Rate : Baseline/normal rate (e.g., standard scheduled hourly or daily fees).
Notice: Automatically applies once free time expires Penal Demurrage
Cause : Excessive or critical congestion at a goods shed, siding, or terminal.
Rate : Multiplied penalty rate, scaling progressively up to 6x the base demurrage rate.
Notice: Requires advance public notification and a mandatory 48-hour warning period before taking effect.
Thus, it becomes apparent that penal demurrage cannot be imposed legally without issuing prior formal notice as because penal demurrage is an escalated, punitive charge, ranging from 2 to 6 times the baseline rate, regulatory authorities and courts dictate that it strictly requires advance notice and wide publicity before implementation. Imposing it without notice violates procedural fairness and established logistics laws. Forcing an escalated rate without a warning period is legally deemed an "arbitrary procedural violation".
In this case, indisputably no notice has been given to the appellant herein in terms of the paragraph 3.3. The respondent in page No.35 of the Appeal, had however, taken a stand that the appellant was informed over phone. And without the notice being issued to the appellant the penal demurrage charge was collected, which has civil/penal consequence. It is well settled that if penal action is taken against any person he should be given a reasonable opportunity to defend his case. It is only after filing of W.S. by the respondent, from paragraph No. 9 of page No. 70 of the appeal, the appellant came to know about imposition of penal demurrage charge and earlier, it was collected as demurrage charge, as indicated in the receipt.
The learned Tribunal, in paragraph No. (viii), had however, held that the Penal DC was imposed from last week of January/2024 and the rake was placed for unloading on 29/02/2024 and that it is not acceptable that being a regular customer, the applicant was unaware about the imposition of a hiked DC which was done almost 35 days back the same left this Court unimpressed. While the notice is mandatory, and while imposition of penal demurrage has civil/penal consequences, waiver of the same cannot be viewed lightly, as viewed by the learned Tribunal.
It is well settled proposition that any action taken against a person, that has civil/penal consequences must be passed after furnishing opportunity to the said person. In the event of violation of the principles of natural justice, the order stands vitiated. If any order is passed without complying the principles of natural justice, such action becomes arbitrary and illegal as held by Hon’ble Supreme Court in A.K. Kraipak & others vs. Union of India & others, reported in AIR 1970 SC 150;
Thus, having examined the impugned judgment and order dated 29.10.2025, passed by the learned Railway Claims Tribunal at Guwahati Bench, Guwahati, in Review Application No. 06/2025, arising out of Original Application No. III 22/2024, this Court is of the considered opinion that the same failed to withstand the legal scrutiny and accordingly the same stands set aside and quashed.
This Court has also carefully gone through the decision of Hon’ble Supreme Court in Megha Technical and Engineers Pvt. Ltd.(supra), so referred to by the learned CGC and is of the view that the said decision would not come into assistance of the learned CGC, in as much as the said decision deals with penal freight in excess weightage on demurrage, not penal demurrage charge. And in that view of the matter the same would not come into his assistance.
In the result, this Court finds sufficient merit in this appeal and accordingly, the same stands allowed. The impugned Judgment and Order dated 29.10.2025, passed by the learned Railway Claims Tribunal at Guwahati Bench, Guwahati, in Review Application No. 06/2025, arising out of Original Application No. III 22/2024 stands set aside and quashed.
Consequently, the respondent authorities shall, forthwith, return the penal demurrage collected from the appellant herein.
In terms of above this appeal stands disposed of. Registry shall return the record of the learned Tribunal forthwith, with a copy of this judgment and order.
JUDGE
Comparing Assistant