Union of India (UOI) vs Rashtriya Ispat Nigam Limited (Steel Plant)

V.V.S. Rao, J.—The Union of India represented by its General Manager, South Eastern Railway, Calcutta assails the order of the Railway Claims Tribunal, Secunderabad dated 27-7-1998 made in O.A.No. 248 of 1990, whereby and whereunder the learned Tribunal allowed the claim of the respondent herein directing the appellant to pay a sum of Rs. 6,40,882/- with interest at 12% per annum being the excess freight amount or overcharges collected by the appellant from the respondent.

The case of the respondent herein before the learned Tribunal in a nutshell is that between 1986 and 1988, Rashtriya Ispat Nigam Limited, Visakhapatnam (here in after called ''Visakhapatnam Steel''), booked PVC Insulated Electrical Armoured Conductors from various destinations to its siding at Visakhapatnam duly paying the requisite freight charges at the place of booking. When the goods reached the destination, the same were not delivered to Visakhapatnam Steel on the ground that the freight charges were not correctly paid. Therefore Visakhapatnam Steel paid the freight charges as demanded by the goods clerk and got the goods released.

At the relevant time, the applicable freight was governed by IRCA goods tariff Part-I, Vol. II at page 113. It appears insofar as the tariff applicable to PVC Insulated Armoured Conductors is concerned a printing mistake occurred, according to which the goods clerk collected the higher freight charges than what was actually prescribed. Be that as it is, the Railways issued a circular dated 04-8-1987 ordering the correction. If the same is taken into consideration, the Railways collected more freight than prescribed. Therefore, Visakhapatnam Steel issued notices u/s 78B of Indian Railways Act, 1890 (hereinafter called ''1890 Act'') on 20-1-1988, 24-3-1988, 07-7-1989 and 28-7-1989. The Railways sent reply repudiating the claim on the ground that the claim was made in contravention of Section 78-B of 1890 Act and beyond the period of limitation of three years. Hence, Visakhapatnam Steel filed the application before the learned Tribunal presumably u/s 13 of the Railway Claims Tribunal Act, 1987 (for short, the Act).

The appellant herein opposed the application by filing a written statement as well as two additional written statements. The appellant, inter alia, contended that the claim of the respondent is not valid and tenable u/s 78-B of 1890 Act, and that the claim is barred by limitation.

The learned Tribunal framed four issues for consideration as under:

(1) Whether the collection of undercharges by the Respondent from Applicant in respect of the subject consignments correct and legal?

(2) Whether the application is maintainable?

(3) Whether the application is barred by limitation?

(4) What relief?

On all the above issues, the learned Tribunal held against the appellant and directed the Railways to pay the claim amount.

In this appeal, learned Counsel for the Railways, Sri Gowri Sankar Sanghi, pressed two grounds. First, he contends that the application is liable to be rejected for non-compliance of the provisions u/s 78-B of 1890 Act, in that, notice was not issued within six months as contemplated thereunder. Secondly, he contends that any claim before the Railway Claims Tribunal has to be preferred within three years u/s 17 of the Act and the claim having been preferred on 06-9-1990 is clearly barred by limitation. Reliance is placed on the judgment of the Supreme Court in Jetmull Bhojraj Vs. The Darjeeling Himalayan Railway Co. Ltd. and Others, .

Per contra, the learned Counsel for Visakhapatnam Steel, Sri V. Ravinder Rao, submits that the respondent got issued first notice on 20-1-1988 immediately after coming to know about the correction made by the Railways on 04-8-1987 and, therefore, the said notice is within time as contemplated u/s 78-B of 1890 Act. He would also urge that as the application was filed before the learned Tribunal on 06-9-1990, the same is within limitation and it is not barred u/s 17 of Act. He would also plead that the provision of Section 78-B of 1890 Act, as held by the Supreme Court in Jetmull Bhojraj Vs. The Darjeeling Himalayan Railway Co. Ltd. and Others, should receive liberal construction and a claimant cannot be prevented from recovering the loss merely because a notice was not issued, as contemplated u/s 78-B of 1890 Act.

The points that would arise for consideration are whether the claim made by Visakhapatnam Steel is liable to be rejected on the ground that it is not preceded by a notice as contemplated u/s 78-B of 1890 Act? and whether the claim of the respondent is barred by limitation as per Section 17 of the Act?

Section 78-B of 1890 Act reads as under:

78-B. Notification of claims to refunds of overcharges and to compensation for losses. A person shall not be entitled to a refund of an overcharge in respect of animals or goods carried by railway or to compensation for the loss, destruction, damage, deterioration or non-delivery of animals or goods delivered to be so carried, unless his claim to the refund or compensation has been preferred in writing by him or on his behalf-

(a) to the railway administration to which the animals or goods were delivered to be carried by railway, or

(b) to the railway administration on whose railway the destination station lies, or the loss, destruction, damage or deterioration occurred.

within six months from the date of the delivery of the animals, or goods for carriage by railway:

Provided that any information demanded or inquiry made in writing from, or any complaint made in writing to, any of the railway administrations mentioned above by or on behalf of the person within the said period of six months regarding the non-delivery of delay in delivery of the animals or goods with particulars sufficient to identify the consignment of such animals or goods shall, for the purposes of this section, be deemed to be a claim to the refund or compensation.

By Indian Railways (Amendment) Act, 1961, the old Section 77 was substituted by Section 78-B, duly enacting another provision as Section 77. Be that as it is, Section 77, which was the direct precursor of Section 78-B of 1890 Act, came up for consideration before the Supreme Court in Jetmull Bhojraj v. D.H. Railway (1 supra). Majority of the three Judge Bench after referring to Section 77 (78-B after 1961) opined that in enacting the above provision, the legislature never intended to deprive the legitimate claims for compensation and that it was intended to shield Railway administration against fraud. After referring to judgments of various High Courts it was observed thus:

The High Courts in India have taken the view that the object of service of notice under this provision is essentially to enable the railway administration to make an enquiry and investigation as to whether the loss destruction or deterioration was due to the consignor''s laches or to the wilful neglect of the railway administration and its servants and further to prevent stale and possibly dishonest claims being made when owing to delay it may be practically impossible to trace the transaction or check the allegations made by the consignor. In this connection we may refer to a few of the decisions. They are : Shamsul Huq Vs. Secy. of State, ; A. Mahadeva Ayyar Vs. The South Indian Railway Co., Governor-General in Governor-General in Council Vs. Gouri Shanker Mills Ltd., ; Meghraj Hirjee and Co. v. B.N. Rly Ltd. AIR 1939 Nag. 141. Bearing in mind the object of the section it has also been held by several High Courts that a notice u/s 77 should be liberally construed. In our opinion that would be the proper way of construing a notice under that section. In enacting the section the intention of the legislature must have been to afford only a protection to the railway administration against fraud and not to provide a means for depriving the consignors of their legitimate claims for compensation for the loss of or damage cause to their consignments during the course of transit on the railways.

The above principles cannot be ignored while appreciating the facts in this case. Along with the notices issued by Visakhapatnam Steel, the authorized officer went on enclosing statements showing the date of consignment and the freight amount paid at the place of origin. These notices were annexed to the application before the learned Tribunal. An analysis of these notices would show that the respondent booked consignments of PVC Insulated Armoured Electrical Conductors during the period from 20-12-1985 to 03-8-1987 duly paying the tariff as printed in the tariff book. When they were about to be taken delivery, the respondent was compelled to pay the higher tariff by reason of a printing mistake in IRCA Goods Tariff Part-I, Vol. II. The Respondent has paid the higher tariff and taken delivery of the goods. The Visakhapatnam Steel only came to know about the correction ordered by the Railway Board by reason of circular dated 04-8-1987 and immediately thereafter within a period of six months, issued the first notice on 20-1 -1988. These facts are neither disputed nor denied before learned Tribunal or before this Court. Even if it is taken that the respondent is aware of the correction ordered by the Railways, the same can be only after 04-8-1987, in which event the notice issued on 20-1 -1988 is well within six months from the date of realizing that the respondent paid overcharges. Therefore it cannot be said that the claim was made in contravention of Section 78-B of 1890 Act.

Sections 13 and 17 of the Act read as under:

Jurisdiction, powers and authority of Claims Tribunal:-

(1) The Claims Tribunal shall exercise, on and from the appointed day, all such jurisdiction, powers and authority as were exercisable immediately before that day by any civil court or a Claims Commissioner appointed under the provisions of the Railways Act,-

(a) relating to the responsibility of the railway administrations as carriers under Chapter VII of the Railways Act in respect of claims for-

(i) compensation for loss, destruction, damage, deterioration or non-delivery of animals or goods entrusted to a railway administration for carriage by railway;

(ii) compensation payable u/s 82-A of the Railways Act or the rules made thereunder; and

(b) in respect of the claims for refund of fares or part thereof or for refund of any freight paid in respect of animals or goods entrusted to a railway administration to be carried by railway.

(1-A) The Claims Tribunal shall also exercise, on and from the date of commencement of the provisions of Section 124A of the Railways Act, 1989 (24 of 1989), all such jurisdiction, powers and authority as were exercisable immediately before that date by any civil court in respect of claims for compensation now payable by the railway administration u/s 124A of the said Act or the rules made thereunder.

(2) The provisions of the Railways Act 1989 (24 of 1989) and the rules made thereunder shall, so far as may be, be applicable to the inquiring into or determining, any claims by the Claims Tribunal under this Act.

Limitation:-

(1) The Claims Tribunal shall not admit an application for any claim-

(a) under Sub-clause (i) of Clause (a) of Sub-section (1) of Section 13 unless the application is made within three years from the date on which the goods in question were entrusted to the railway administration for carriage by railway;

(b) under Sub-clause (ii) of Clause (a) of Sub-section (1) or, as the case may be, Sub-section (1-A) of Section 13 unless the application is made within one year of occurrence of the accident;

(c) under Clause (b) of Sub-section (1) of Section 13 unless the application is made within three years from the date on which the fare or freight is paid to the railway administration:

Provided that no application for any claim referred to in Sub-clause (i) of Clause (a) of Sub-section 13 shall be preferred to the Claims Tribunal until the expiration of three months next after the date on which the intimation of the claim has been preferred u/s 78-B of the Railways Act.

(2) Notwithstanding anything contained in Sub-section (1), an application may be entertained after the period specified in Sub-section (1) if the applicant satisfies the Claims Tribunal that he had sufficient cause for not making the application within such period.

Section 17 of the Act cannot be understood in isolation without reference to Section 13 of the Act because the three clauses under Sub-section (1) of Section 17 of the Act prescribe period of limitation with reference to the compensation for loss, destruction etc., u/s 13(1)(a)(i) of the Act, compensation payable u/s 82-A of 1890 Act and refund of fares or for refund any freight paid in respect of animals or goods. Section 17(1)(c) of the Act refers to period of limitation for making claim'' u/s 13(1)(b) of the Act. A plain reading of Section 17(1)(c) of the Act would show that when a claim is made u/s 13(1)(b) of the Act, an application has to be made before the learned Tribunal within three years from the date on which the fare or freight is paid to the Railway administration. In a case of this nature, when the Railways collected freight charges under a mistake and the same is corrected subsequently, it should be taken that the claimant paid the excess fare or freight only on the day when the correction order is issued. That would be reasonable way of interpreting Section 17(1)(c) of the Act. As otherwise it is possible that the Railways, having realized the mistake in the tariff order, may keep quiet and issue correction order after expiry of period of limitation to defeat legitimate claims. Such being not the intention of the legislature, it is not possible to agree with the submission of the learned Counsel for the Railways that the claim is barred by limitation u/s 17(1)(c) of the Act. To reiterate, it is only on 04-8-1987, the Railway Board issued a circular correcting the tariff order and immediately thereafter Visakhapatnam Steel sought refund u/s 13(1)(b) of the Act by issuing a notice on 20-1-1988. Therefore the claim is not barred by limitation.

The decision cited by the learned Counsel for the Railways in Birla Cement Works Vs. G.M., Western Railways, and another, is distinguishable on facts. In that case, the appellant booked various consignments between May-June 1989 and March 1990 whereas a notice u/s 78-B of 1890 Act was sent on 21 -1 -1991 very much beyond six months. The rejection of the appellants'' claim by the Tribunal as well as the High Court was therefore upheld by the Supreme Court observing as under:

Section 78-B of the Act provides that a person shall not be entitled to refund of overcharge or excess payment in respect of animals or goods carried by railway unless his claim to the refund has been preferred in writing by him or on his behalf to the railway administration to which the animals or goods were delivered to be carried by railway etc., within six months from the date of the delivery of the animals or goods for carriage by railway. The proviso has no application to the facts of this case. An over charge is also a charge which would fall within the meaning of Section 78-B of the Act. Since the claims were admittedly made u/s 78-B itself but beyond six months, by operation of that provision in the section itself, the claim becomes barred by limitation. Therefore, the Tribunal and the High Court have rightly concluded that the petitioner is not entitled to the refund of the amount claimed.

We do not find any ground for our interference with the order challenged in S.L.Ps. The Special Leave petitions are accordingly dismissed.

In the facts and circumstances of the above case, the appellant''s claim (sic. case) was certainly untenable u/s 78-B of 1890 Act.

In the result, for the above reasons, the appeal fails and is accordingly dismissed. No costs.