Upper Doab Sugar Mills Ltd vs Shahdara (Delhi) Saharanpurlight Railway Company Ltd

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 9 of 1962

Decision Date: 23 April 1962

Coram: K.C. Das Gupta, J.L. Kapur, Raghubar Dayal

In this case, the Court noted that the dispute involved Upper Doab Sugar Mills Ltd as the petitioner and Shahdara (Delhi) Saharanpurlight Railway Company Ltd as the respondent, with the judgment delivered on 23 April 1962 by a Bench comprising K C Das Gupta, J L Kapur and Raghubar Dayal of the Supreme Court of India. The case citation appeared as 1963 AIR 217 and 1963 SCR (2) 333, with additional citator references RF 1973 SC1281 (8) and D 1975 SC1056 (6). The matter concerned a complaint filed under the provisions of the Railway Tribunal relating to the alleged unreasonable station‑to‑station rates imposed on the carriage of sugarcane by the respondent railway company. The complainant relied on the rates circular No 8 of 1953, which had been issued with effect from 1 October 1953, and asserted that the rates were unreasonable. In its answer, the railway company contended that the rates prescribed by circular 8 of 1953 had ceased to be in force long before the date of the complaint and that a new rate schedule had come into operation on 10 February 1960. Following that representation, the complainant was permitted to amend the original complaint. The relief sought by the petitioner comprised a declaration that the rates charged were unreasonable, a direction for the refund of any excess amounts that had been collected or might be collected after the date of amendment, and, ultimately, an order fixing the rates at a reasonable level. The respondent argued that the Railway Rates Tribunal lacked jurisdiction to consider the reasonableness of rates that had been levied before the filing of the complaint and also lacked jurisdiction to order any refund. The applicable statutory framework was the Indian Railways Act, 1890, as amended by the Indian Railways (Amendment) Act, 1957, specifically sections 34 and 41. By the amendment enacted in December 1957, section 41 was altered so that clause I of that section read: “Any complaint that a railway administration—(a) is contravening the provisions of section 28, or (b) is charging for the carriage of any commodity between two stations a rate which is unreasonable or is levying any other charge which is unreasonable shall hear and decide any such complaint in accordance with the provisions of this Chapter.” The Tribunal, however, held that it possessed no jurisdiction to entertain or try the complaint with respect to rates and charges that existed prior to the institution of the complaint, and further held that it had no jurisdiction to grant any refund. The appellants appealed this determination to the Supreme Court. The Court held that the expressions “is charging” in clause (b) and “is levying” in clause (c) of section 41(1) of the Act must be construed

The Court explained that the Railway Rates Tribunal possessed no authority to consider complaints concerning the reasonableness of rates or charges that had been set before the filing of the complaint. Because the Tribunal could not review the fairness of any rates or charges that preceded the complaint, it logically could not be placed in a position to order the reimbursement of any amounts that might have been over‑collected. A claim for refund could arise only after the Tribunal first determined that the charges were excessive compared with what was reasonable. The Court held further that the statutory provisions neither expressly nor by necessary implication conferred upon the Tribunal any power to make an order of refund. In support of this view the Court referred to the authority in Southern Railway v. The Railway Rates Tribunal, A.I.R. 1955 (Madras) 676. The Court noted that once a complaint is lodged, the Tribunal’s function is limited to hearing and deciding whether the impugned rate or charge is unreasonable. A finding of unreasonableness does not automatically entail any decision about the consequences of that finding. Accordingly, a complainant may seek only a declaration that the rate or charge is unreasonable, and such declaratory relief is the only remedy the Tribunal is authorised to grant. No provision exists for the Tribunal to award consequential relief. The only additional power the Tribunal has in relation to a complaint is to fix “such rate or charge as it considers reasonable.” In the absence of any indication to the contrary, the Court found that such fixation must be prospective; that is, the Tribunal, when fixing a reasonable rate or charge, would specify a future date from which the new rate would take effect.

The appeal, taken by special leave, arose from a complaint filed by the appellant, Upper Doab Sugar Mills Ltd., Shamli, before the Railway Rates Tribunal. The original complaint challenged the station‑to‑station rates imposed on sugarcane transported on the Shahdara (Delhi)‑Saharanpur Light Railway by the respondent Railway Company under Circular No 8 of 1953, which took effect on 1 October 1953. The mill claimed that those rates were unreasonable. In response, the Railway Company contended that the rates prescribed by Circular No 8 of 1953 had ceased to be in force well before the complaint was lodged. The Company also referred to the decision of this Court in S.S. Light Railway Co. Ltd. v. Upper Doab Sugar Mills Ltd., indicating that a new rate had been introduced under Local Rate Advice No 2A of 1960, effective from 10 February 1960. The appellant subsequently sought to amend the complaint to include objections to this newer rate, and the amendment was permitted. The amended complaint therefore alleged that both the rates under Circular No 8 of 1953 and those under Local Rate Advice No 2A of 1960 were unreasonable, and it sought (i) a declaration of unreasonableness of the earlier rates and surcharges from 1 October 1953 to 10 February 1960, (ii) a declaration of unreasonableness of the rates under Advice No 2A from 10 February 1960 onward, and (iii) an order directing the refund of any excess amounts collected or that might be collected after the amendment of the complaint. The Court, after considering the arguments and the statutory scheme, delivered its judgment on 23 April 1962.

In the proceedings, the Court noted that a new rate schedule had been introduced on 10 February 1960 under Local Rate Advice No 2A of 1960. The appellant’s original complaint had been filed only against the station‑to‑station rates on sugarcane that were imposed by the Railway Company pursuant to Local Rates Advice No 8 of 1953, which had been in force since 10 October 1953. After the new Advice came into effect, the appellant applied to the Tribunal for permission to amend the complaint so that it would also address the rates prescribed in the 1960 Advice. The Tribunal allowed that amendment, and on 3 February 1961 the complaint was formally altered to include two distinct sets of allegations: one set challenged the rates and surcharges fixed under Local Rates Advice No 8 of 1953, and the other set challenged the rates fixed under Local Rate Advice No 2A of 1960. The appellant asserted that all of these rates and charges were unreasonable. Consequently, the appellant prayed for four orders: (i) a declaration that the rates and surcharges imposed under Local Rates Advice No 8 of 1953 were unreasonable for the period from 10 October 1953 to 10 February 1960; (ii) a declaration that the rates imposed under Local Rate Advice No 2A of 1960 were also unreasonable; (iii) a direction that any excess amount collected, or that might be collected after the amendment, on the basis of the 1960 Advice be refunded after the Tribunal fixed reasonable rates; and (iv) an order fixing reasonable rates for transportation from various stations to Shamli as specified in the amended complaint.

The Railway Company raised two principal objections that formed the basis of the present appeal. First, it contended that the Tribunal lacked jurisdiction to consider the reasonableness of rates that had been in force before the complaint was lodged. Second, it maintained that the Tribunal was not empowered to order any refund. These objections were framed as Issues No 6 and 9A, worded as follows: “6. Has the Tribunal jurisdiction to entertain or try the present complaint regarding the reasonableness or otherwise of rates and/or charges prior to the institution of this complaint, or, at any rate, prior to 27 July 1958? 9A. Has this Tribunal jurisdiction to grant a refund.” The Tribunal correctly addressed these issues at the outset. It held that it did not have jurisdiction to entertain or try the complaint with respect to the reasonableness of rates and charges that had been imposed before the complaint was filed on 6 May 1960, and it also held that it lacked jurisdiction to grant any refund. In reaching these conclusions, the Tribunal relied upon the decision of the Madras High Court in Southern Railways v. The Railway Rates Tribunal (1) A.I.R. 1955 (Madras) 476. The appellant, now before this Court, submitted that the Tribunal’s determinations on these points were incorrect. For context, the Court observed that the Railway Rates Tribunals had been created in a historical setting where, before their establishment, the Government of India’s regulation of railway rates and charges had largely followed a policy of non‑intervention. For many years the only statutory control over such rates was found in the contracts between the Government of India and the railway companies. The earliest of those contracts, such as the one with the Madras Railway Company dated 22 December 1852, contained provisions limiting the company to charge only fares and tolls approved by the East India Company, and required any increase to obtain prior sanction. Similar provisions appeared in most railway company contracts, authorising the Secretary of State to prescribe maximum and minimum rates for passenger and goods transport. The maxima were later fixed by local governments for provincial railways in 1869, while the Government of India

In the early period, the relationship between the Government of India and the various railway companies was governed solely by the contracts that the parties entered into. The earliest of those agreements was the contract with the Madras Railway Company dated 22 December 1852, which contained a clause stating that the company could levy only those fares and tolls that had been approved by the East India Company, and that any increase in such approved fares could not be implemented without prior sanction of the East India Company. Most of the other railway company contracts contained a similar provision, expressed in terms such as: “The Secretary of State shall from time to time authorise maximum and minimum rates within which the Company shall be entitled to charge the public for services rendered by way of, or in connection with, the conveyance of passengers and goods on the undertaking, and shall prescribe the several classes and descriptions of passengers and goods to which rates shall be respectively applicable.” (Srinivasan’s Railway Freight Rates, A.I.R. 1955 (Madras) 476). In 1869 the local governments fixed the maximum rates for railways operating within their provinces, while the Government of India fixed maximum rates only for grains, coal and for the lowest class of passengers. The first statutory framework for fixing maximum and minimum rates was introduced in 1939 by Act 33 of 1939, which added section 42(b) stating: “The Federal Railway Authority may by general or special order fix maximum and minimum rates for the whole or any part of a railway, other than a minor railway, and prescribe the conditions in which such rates will apply. (2) Any complaint that a railway administration is contravening any order issued by the Federal Railway Authority in accordance with the provisions of this section shall be determined by that Authority.” Prior to that statutory scheme, the investigations of the Acworth Committee led to the creation of a Railway Rates Advisory Committee. That Committee was empowered to investigate and make recommendations on several matters, namely: (1) complaints of undue preference under section 42(2) of the Indian Railways Act; (2) complaints that rates were unreasonable per se; (3) complaints or disputes concerning terminals under section 46 of the Indian Railways Act; (4) the reasonableness of any packing conditions for articles especially liable to damage in transit or liable to damage other merchandise; (5) complaints regarding packing conditions attached to a rate; and (6) complaints that railways failed to provide reasonable facilities under section 42(3) of the Indian Railways Act. It is important to note that the Advisory Committee could only make recommendations and possessed no power to issue binding orders. The Railway Rates Tribunal was later established as a result of the amendment of the Railways Act 1890 in 1948, by Act No. 65 of 1948. Section 34 of the amended Act provides for the creation of a tribunal, named the Rates Tribunal, to discharge the functions assigned to it under the relevant chapter.

The Court noted that the Tribunal’s functions were defined in the Chapter of the Act, specifically in sections 41 and 42, while section 39 authorised the Tribunal to issue both interim and final orders, including orders for the payment of costs, for the purpose of exercising the jurisdiction conferred upon it. The first sub‑section of section 41 enumerated a variety of matters with respect to which complaints could be made against a single railway administration or jointly against two or more railway administrations, and it expressly stated that such complaints “shall be heard and decided by the Tribunal.” The second sub‑section of section 41 provided that, in the case of a complaint falling under clause (d) of sub‑section 1 – namely, where a railway administration or administrations were unreasonably refusing to quote a new station‑to‑station rate – the Tribunal was empowered to fix a new station‑to‑station rate. The first sub‑section of section 42 granted the Tribunal exclusive authority to reclassify any commodity into a higher class, but it limited the exercise of that power to occasions when the Central Government made an application. The third sub‑section of section 42 further provided that both the Tribunal and the Central Government possessed the power to re‑classify any commodity into a lower class. In December 1949 the Indian Railways Act was amended by Act No. 56 of 1949, effecting certain changes in section 41, the details of which the Court considered unnecessary to reproduce. A further amendment occurred in December 1957 by Act No. 53 of 1957, which among other alterations, amended section 41. As a result of those changes clause 1 of section 41 reads as follows: “41(1) Any complaint that a railway administration (a) is contravening the provisions of section 28, or (b) is charging for the carriage of any commodity between two stations a rate which is unreasonable, or (c) is levying any other charge which is unreasonable shall be heard and decided in accordance with the provisions of this Chapter.” The second sub‑section, which was not altered by the 1957 amendment, addressed the burden of proof in relation to complaints under element (a) of the first sub‑section and provided that, in determining whether a lower charge to any trader or class of traders amounts to undue preference, the Tribunal must consider whether such lower charge is necessary in the public interest. The third sub‑section stated: “In the case of a complaint under element (b) or clause (c) of sub‑section 1 the Tribunal may fix such rate or charge as it considers reasonable, provided that the rate to be fixed under clause (b) of sub‑section 1 shall be within the limits of the maximum and minimum rates fixed by the Central Government under sub‑section 1 of section 29.” Finally, section 41A, introduced by the 1957 amendment, gave the Tribunal the power to vary or revoke an order made by it upon satisfaction of an application made by the railway administration showing that a material change in circumstances has occurred, subject to the condition that such an application cannot be made until one year has elapsed from the date of the original order.

The Court observed that an application made by the Railway Administration could be entertained only after a lapse of one year from the date of the original order, even though the application claimed that a material change in circumstances had occurred since the order was passed. The Court noted that the earlier provision of section 42 had been replaced by a new section which expressly stated that only the Central Government had the authority to classify or re‑classify any commodity and, in clause (b), to increase or reduce the level of class rates and other charges. This amendment, the Court said, removed the power that the Tribunal previously possessed with respect to the classification of commodities. At the same time, the amendment of section 41 gave the Tribunal jurisdiction to entertain and consider complaints relating to standard terminal charges, matters that had been excluded under the old version of section 41. However, the amendment simultaneously withdrew the Tribunal’s jurisdiction to entertain any complaint that a Railway Administration had unreasonably placed a commodity in a higher class or had unreasonably refused to quote a new station‑to‑station rate, complaints that were previously covered under the old clauses (d) and (e). The Court then set out its task of interpreting the expressions contained in clause (b) and clause (e) of the first sub‑section of section 42. The principal question, the Court held, was what the legislature intended by the words “is charging” in clause (b) and “is levying” in clause (c). The Court explained that the use of the present progressive tense indicates an activity occurring at the present time and cannot describe something that has already occurred. It illustrated this by analogy, stating that one cannot say a man who has ceased to exist “is existing,” just as one cannot say a charge that has already been made “is being made.” Accordingly, an aggrieved person could correctly allege that “the Railway Administration has charged me at this rate,” but not that “the Railway Administration is charging me at this rate.” The Court recognised that this interpretation rests on the assumption that the legislature employed the phrase “charging a rate” in its ordinary sense of demanding a price. Counsel for the appellant, however, contended that the phrase could also be understood in a broader sense, encompassing a demand that had been made in the past. In clause (c) the language, the appellant argued, could be read to include “collecting a price,” and it was pointed out that the expressions “levying a charge” and “levying” can indeed mean “collecting.” The learned counsel therefore submitted that the words “charging” in clause (b) and “levying” in clause (c) were used by the legislature in the same sense and should be interpreted widely to include the collection of a price. The Court noted that both terms were employed in a single, unified context.

It was held that the terms “is charging” in clause (b) and “is levying” in clause (c) were not meant to include the concept of merely collecting a price. The reasoning was that, had the legislature intended to give the Tribunal authority over complaints concerning charges that had already been imposed, the statute would have used the expressions “has charged and is charging” rather than limiting itself to “is charging.” The absence of the words “has charged” was taken as clear evidence that the legislature did not intend to extend the Tribunal’s jurisdiction to disputes over past charges. Consequently, the Court interpreted the language of the provisions to mean that the Tribunal could address only those charges that were being demanded at the time of the complaint for services to be rendered.

The Railway Rates Tribunal’s finding that it lacked jurisdiction to consider the reasonableness of rates and charges imposed before the filing of the complaint was therefore affirmed. Because the Tribunal could not evaluate the fairness of earlier charges, it could not be called upon to order any refund of those charges; a refund could arise only after a determination that a charge exceeded what was reasonable. Even for those rates within the Tribunal’s jurisdiction, the Tribunal possessed no power to order a refund. This point was addressed because the complaint sought not only a refund of charges already levied but also of future charges that might be imposed under Rate Advice No 2A of 1960.

The appellant argued that it would be inequitable for the Tribunal to refuse a refund order for charges incurred after the complaint’s filing date if those charges were later found to be unreasonable. The Court rejected this equity argument, holding that the Tribunal’s jurisdiction was strictly limited to that conferred by the Act. If a proper construction of the statutory language showed that the Tribunal was not granted such jurisdiction, it could not be endowed with it merely for reasons of convenience, equity, or justice. Section 41(1) of the Act required the Tribunal to hear and decide the complaint, which concerned the alleged unreasonableness of a charge. The Tribunal’s task was therefore limited to determining whether the charge was unreasonable; such a finding did not entail any further consideration of consequent remedies, such as a refund.

In the present case the Court explained that a complainant may seek only a declaration that a particular rate or charge is unreasonable, and that such declaratory relief is the sole remedy that the Tribunal is empowered to grant. The statute contains no provision allowing the Tribunal to award any consequential relief. The only other authority the Tribunal possesses in relation to a complaint is to determine “such rate or charge as it considers reasonable.” Absent any indication to the contrary, it is logical to presume that this determination can be applied only prospectively, meaning that any order fixing a reasonable rate or charge would specify a future date from which the order would become effective. Even assuming, merely for argument’s sake, that the Tribunal could fix rates retroactively from the date of the complaint, such power would still not enable the Tribunal to order a refund.

Mr. Veda Vyasa contended that the power to order a refund originates in section 39 of the Act, which reads: “For the purpose of exercising the jurisdiction conferred on it by this Chapter, the Tribunal may pass such interim and final orders as the circumstances may require, including orders for the payment, subject to the provisions of this Chapter, of costs; and it shall be the duty of the Central Government or the State Government, as the case may be, on whom any obligation is imposed by any such order to carry it out.” The Court examined whether it is necessary for the Tribunal to issue a refund order—at least for charges levied after the complaint date and exceeding the reasonable amount—in order to “exercise the jurisdiction conferred on it.” At most, the Court observed, the relief of a refund is connected with an order that holds post‑complaint charges to be unreasonable; however, such an order is not indispensable for the exercise of the Tribunal’s jurisdiction, which under section 41 is limited to deciding whether a rate is reasonable and, if not, fixing a reasonable rate. Consequently, an order for refund cannot be deemed “necessary for the purpose of exercising the jurisdiction,” and section 39 does not support the appellant’s claim.

The argument was then advanced that, without a power to order refunds, section 46(b) would be meaningless. Section 46(b) provides that the Tribunal may transmit any order made by a civil court having local jurisdiction, and that civil court shall execute the transmitted order as if it were a decree. It is evident that a civil‑court order for the payment of costs could be transmitted under this provision. The Court noted that, even if the Tribunal were unable to pass any other enforceable order, section 46(b) would still operate in relation to cost orders, and it was unnecessary to speculate on other types of orders that might require execution by civil courts.

In this case the Court observed that an order made by the Tribunal could, under section 46 (B), be transmitted to a civil court and be executed by that court as if it were a decree. Even if the Tribunal were unable to pass any other order that might require execution, section 46 (B) would still fulfil its purpose with respect to orders for costs. The Court further held that it was unnecessary to speculate about what other orders the Tribunal might issue that could need execution by civil courts, because such speculation would not illuminate the nature of the orders that may be made under section 39. The Court noted that section 39 does not itself confer jurisdiction; rather, it merely provides a mechanism for the Tribunal to exercise jurisdiction that it already possesses under other provisions. The Court then referred to the language used by the British Parliament in section 196(3) of the Government of India Act, 1935. The first sub‑section of that provision created the Railway Tribunal, and the third sub‑section stated: “It shall be the duty of the Railway Tribunal to exercise such jurisdiction as is conferred on it by this Act, and for that purpose the Tribunal may make such orders, including interim orders, orders varying or discharging a direction or order of the Authority, orders for the payment of compensation or damages and of costs and orders for the production of documents and the attendance of witnesses, as the circumstances of the case may require, and it shall be the duty of the Authority and of every federated state and of every other person or Authority affected thereby to give effect to any such order”. The Court emphasized that the words “orders for the payment of compensation or damages” present in the 1935 enactment are omitted from the present section 39. Counsel for the appellant, Mr Veda Vyasa, vigorously argued that if the Tribunals were not held to have jurisdiction to order a refund, the appellant and others in similar positions would be deprived of the right to obtain relief against charges that had already been paid, contrary to the provisions of section 26 of the Act. Section 26, which is worded identically to the former section 41, provides: “Except as provided in this Act no suit shall be instituted or proceeding taken for anything done or any omission made by a Railway Administration in violation or contravention of any provisions of this Chapter” (Chapter V). The Court observed that the effect of section 26 is to bar the institution of any civil suit seeking a refund of charges that exceed reasonable amounts. This interpretation rests on the mistaken view that such a suit would be “for anything done or any omission made by a Railway Administration in violation or contravention of Chapter V of the Act”. The Court pointed out that Chapter V contains no provision expressly prohibiting a Railway Administration from imposing unreasonable charges. Consequently, if therefore any Railway Administration

In this case the Court observed that when a railway has received payment of charges that are unreasonable, such payments do not fall within the description of “anything done in violation or contravention of any provisions of Chapter V.” Consequently, if the law outside the Railways Act gives a consignor the right to obtain relief against unreasonable charges that have already been paid, section 26 of the Act cannot be used to bar that relief. The Court noted that the precise nature of the consignor’s legal rights with respect to past charges, and whether a claim for repayment of amounts that exceed reasonable rates could succeed in a civil court on the basis that a common carrier may not impose charges beyond what is reasonable, were issues that did not require examination in the present judgment. Because any suit founded on such a claim would not be predicated upon “anything done or any omission made by the Railway Administration in violation or contravention of any provisions of Chapter V,” the provisions of section 26 were considered irrelevant to the question of whether the Railway Rates Tribunal possessed jurisdiction to order a refund. After reviewing the statutory scheme, the Court concluded that the Railway Rates Tribunal had neither express nor implied authority to grant orders for refund. Accordingly, the Court held that the Tribunal’s decisions in the present matter on both contested issues were correct. The appeal was therefore dismissed, and costs were awarded against the appellant.