Raichand Amulakh Shah vs Union of India

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

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 21 October 1963

Coram: J.R. Mudholkar, K. Subba Rao, K.N. Wanchoo, N. Rajgopala Ayyangar, P.B. Gajendragadkar

In this case the Court noted that six appeals had been filed by way of special leave, all raising a single legal issue, namely whether suits filed against the Western Railway for the recovery of amounts that had been collected from the appellant‑firm as wharfage or demurrage could be entertained by a civil court. The appeals were recorded as Civil Appeals Nos 152 and 153 of 1959 and they originated from suits seeking the return of sums that the appellant‑firm claimed had been improperly levied as demurrage. The remaining appeals were filed on the basis of suits that sought the return of sums the appellant‑firm said had been collected as wharfage charges. The Court observed that it would be sufficient to set out the details of one representative suit because the bar at the Bar made clear that the refund claims in the other suits were essentially the same. The only suit whose plaint was placed before the Court was Civil Suit No 109 of 1957; the other plaints were not produced. Consequently the Court proceeded on the assumption that the material allegations contained in each of the plaints were similar, especially since the counsel for the appellants asserted this similarity and the counsel for the respondent did not dispute it.

The Court then described the facts of Civil Suit No 109 of 1957, which had been the subject of Civil Appeal No 149 of 1959. The appellants were a firm engaged in business at Surendranagar, and they had received a consignment of one hundred and twenty‑five bags of rice that had been booked for transport from Belanganj to the Surendranagar railway station. When the consignment arrived for delivery, the Station Master at Surendranagar demanded and collected from the appellant‑firm the sum of Rs 275‑7‑0 as wharfage charges. The plaint alleged that the railway notifications and the rules under which the railway imposed a wharfage of two annas to four annas per maund per day were illegal and ultra vires, and further claimed that the railway had no authority under those rules to levy a charge for “free time” under the heading of wharfage. On the basis of these allegations the firm instituted suit seeking the refund of the amount that had been collected. The defendant, representing the Western Railway, denied that the rules were ultra vires and denied that the collection was contrary to the rules; instead it contended that the civil court lacked jurisdiction to entertain the suit. Similar suits were filed for other amounts, all raising the same factual and legal contentions. The learned Civil Judge dismissed all of the suits, holding that they were barred by section 26 of the Indian Railways Act, 1890 (Act IX of 1890), which the Court thereafter referred to simply as the Act. The appellant‑firm, in each of the suits, had prefixed revisions against the judgment of the Civil Judge and had taken those revisions to the High Court of Bombay at Rajkot.

The parties appealed the judgment of the Civil Judge to the High Court of Bombay at Rajkot. The High Court adopted the view expressed by the Civil Judge and consequently dismissed the revisions. This dismissal gave rise to the present appeals. The sole issue that the Court was called upon to consider was whether section 26 of the Indian Railways Act, 1890, operates as a complete bar to the maintainability of suits filed in a civil court seeking refund of the amounts that had been collected from the appellant‑firm in the form of wharfage and demurrage charges.

In order to understand the arguments advanced by the parties, the Court found it necessary to examine the pertinent provisions of the Act. It was observed that the amounts in question had been collected during the period 1953 to 1955; therefore, for the purpose of this inquiry, any amendments to the Act that were effected after that period would be disregarded. Section 3(14) defines “terminals” to include charges relating to stations, sidings, wharves, depots, warehouses, cranes and other similar facilities, as well as any services rendered at such places. Section 26 provides that, except as expressly provided in the Act, no suit or legal proceeding may be instituted for any act or omission of a railway administration that is in violation of any provision of Chapter V of the Act.

Section 32 empowers the Central Government, by means of a general or special order, to fix the rates of terminal and other charges for the whole or any part of a railway and to prescribe the conditions under which those rates shall apply. Section 34 creates a Railway Rates Tribunal to discharge the functions prescribed in the Chapter. Under section 41(i), any complaint that a railway administration is levying charges other than the standardised terminal charges and that such charges are unreasonable may be presented to the Tribunal, which is required to hear and determine the complaint in accordance with the provisions of the Chapter.

Section 45 clarifies that the Tribunal does not have jurisdiction over scales of charges imposed by a railway administration for the carriage of passengers, their luggage, parcels, military traffic, railway materials, stores, or demurrage charges, unless the Central Government refers the matter to the Tribunal. Section 46A states that a decision of the Tribunal shall be made by a majority of the members hearing the case and shall be final. Section 46A also provides that where a single member has decided a matter, that member may, at his discretion, permit any party to appeal to the Full Bench; if such an appeal is filed, the decision of the Full Bench or the majority of its members shall be final. Section 46B allows the Tribunal to transmit any of its orders to a civil court that has local jurisdiction, and that civil court shall execute the order as if it were a decree. Section 46C contains further provisions relating to the Chapter, subject to any qualifications that may be applicable.

The judgment first clarified that the term “demurrage” is defined as the charge imposed after the expiration of the free time allowed for loading or unloading a wagon. It then explained that the legislative scheme governing the matter is plain. The Central Government has the authority to fix rates for terminal charges and other charges for the whole of a railway or for any part thereof. When a railway administration levies charges that differ from the standardised terminal charges and those charges are unreasonable, an aggrieved person may lodge a complaint against the railway administration before the Railway Rates Tribunal, and the Tribunal’s decision is final. Regarding demurrage charges that are mentioned in section 45 of the Act, the Tribunal does not possess jurisdiction to entertain a claim concerning those charges unless the Central Government refers the matter to the Tribunal. Section 26 of the Act expressly bars ordinary civil courts from entertaining any suit or proceeding that concerns any act or omission by the railway administration that violates or contravenes any provision of Chapter V. Consequently, an aggrieved party can pursue relief only in the manner prescribed by the Act. The Court identified the precise issue as whether the claims for refund sought by the petitioners fall within the bar created by section 26. Because section 26 excludes the jurisdiction of civil courts, its language must be given a strict construction. The bar applies to any act or omission by the railway administration that breaches any provision of Chapter V. If the introductory words “Except as provided in this Act” were ignored, the bar would appear all‑encompassing and could cover any dereliction of duty by the railway administration relating to matters within that chapter. However, the Court held that such a sweeping intention cannot be ascribed to the legislature unless the statutory language is unmistakably clear. The opening words “Except as provided in this Act” therefore restrict the operation of the bar. The Court reasoned that the restriction can be understood to mean that the bar applies only to those matters for which the Act itself provides a remedial mechanism. Accordingly, before section 26 can be invoked, two conditions must be satisfied: first, the railway administration must have committed an act or failed to perform an act that contravenes a provision of Chapter V; and second, the Act must have furnished a specific remedy for that act or omission. The petitioners argued that charges levied under the headings “wharfage” and “demurrage” constitute “terminals,” for which the Central Government has framed rules under section 32 of the Act, and that their grievance was that the rates collected exceeded those prescribed by those rules.

In this case the Court identified the first issue as whether the charges called wharfage and demurrage fell within the meaning of “terminals” under the Act. The Court noted that section 26 barred a suit for recovery of amounts that were covered by a “terminal” charge, and therefore it was necessary to determine whether the two charges in dispute were “terminals”. The Court observed that “terminals” were defined by section 3(14) of the Act to include charges relating to stations, sidings, wharves, depots, warehouses, cranes and other similar matters, as well as any services rendered at those places. Under section 32 of the Act the Central Government could, by a general or special order, fix rates of terminal and other charges for the whole or any part of a railway and prescribe the conditions in which such rates would apply. To decide whether wharfage and demurrage fell within this definition, the Court said it was necessary to ascertain the meaning of the words “wharfage” and “demurrage” as understood by the Act and the rules made thereunder. The Court pointed out that the Act contained no definition of “wharfage”. However, section 46C(d) defined “demurrage” as the charge levied after the expiry of the free time allowed for loading or unloading a wagon. The Court further referred to rule 85, which was made under the Act and set out the practical meaning of the two terms. Rule 85 explained that the actual wharfage and demurrage rules applicable to different railways were published in each railway’s tariffs and could be obtained on application at stations. The rule then reproduced the rates and definitions used by the Bengal‑Bihar and Central India Railway, now known as the Western Railway. Clause (C) of the rule defined demurrage as a charge imposed when wagons required to be unloaded by consignees were not unloaded within a free period of six daylight hours after being placed in position for unloading; demurrage under clause (B)(ii) would be charged for any time beyond those six daylight hours while the goods remained in the wagon, and wharfage at the station‑notified rate would be charged if the goods were not removed from the railway premises by the end of the day following the unloading. Clause (C) also stated that when wagons were unloaded within the six‑hour free period, wharfage at the station‑notified rate would be charged if the goods were not removed from the railway premises by the end of the day after the free time expired. The Court therefore concluded that demurrage was a charge levied on goods not unloaded from wagons within the six‑hour free period, and wharfage was a charge imposed on goods not removed from the railway premises after the expiry of the free time allowed for that purpose. The Court further observed that the definition of “demurrage” in section 46C(d), inserted by Act 65 of 1945, essentially adopted the definition provided in the cited rule.

The Court observed that wharfage and demurrage constitute charges imposed for goods that remain in wagons or on railway premises beyond the free time allowed for clearance under the rules. It then examined whether such charges fall within the meaning of “terminal charges” defined in the Act. The expression “terminal charges” first appeared in the Indian Railway Act of 1890, having been taken from section 55 of the English Railway and Canal Traffic Act of 1888. According to that definition, terminal charges are divided into two categories: charges for services and charges for accommodation and appliances that facilitate business. Service terminals comprise remuneration for handling goods at the terminal station, such as weighing, loading, and unloading performed by railway employees. In contrast, station terminals refer to charges for providing accommodation incidental to the carrier’s business. Such charges include working charges, repairs, renewals, insurance of station buildings, sidings, sheds, platforms, warehouses, cranes, hydraulic power, and fixed appliances. The Court reasoned that both demurrage and wharfage belong to the category of station terminals because they are levied for the use of the wagon after transit is complete. These charges are also imposed for the use of the platform or goods‑shed and are not incidental to the conveyance itself. Charges related to stations are expressly included in the definition of “terminals” under the Act. Since wharfage and demurrage are charges concerning goods unloaded from wagons and kept at stations or on station platforms, the Court concluded that they can properly be described as charges in respect of the station. Consequently, the Court held that such charges qualify as “terminal” charges within the meaning of the definition contained in the Act.

The Court then considered whether the Act provides any remedy for a party aggrieved by the collection of such charges on the grounds pleaded in the plaint. It noted that the Tribunal established under section 34 of the Act possesses jurisdiction to determine whether charges levied by the railway administration, other than the standardised terminal charges, are unreasonable. However, the Act does not contain any provision that allows an aggrieved party to approach the Tribunal for a refund of amounts collected as wharfage or demurrage on the basis that the rules authorising such collection are ultra vires. The Act also lacks a provision for a refund claim where the amounts collected exceed those permissible under the applicable rules. When the charges in question are classified as standardised terminal charges, the dispute falls outside the scope of section 41 of the Act. When the charges are not standardised terminal charges, the Tribunal’s jurisdiction is limited solely to the question of their reasonableness. The Tribunal, therefore, lacks authority to decide whether the rules empowering the railway administration to levy a particular charge are ultra vires. It also cannot determine whether the railway administration collected amounts beyond what the rules permit. Because no such remedial provision exists, the Court concluded that section 26 of the Act cannot operate as a bar against the maintainability of the suits filed by the appellants.

The Court observed that if the railway administration had levied amounts that exceeded the charges it was authorized to impose under any rule, the Act did not contain a provision for a refund. Thus, an aggrieved party could not obtain a refund of the excess amounts under the Act. The Court concluded that Section 26 of the Act could not operate as a jurisdictional bar to prevent the suits filed by the appellants from being maintainable. The Court examined the language of Section 26 and found that it addressed only the jurisdiction of the Tribunal with respect to standardised terminal charges, not the right to recover excess levies. Because the statute does not contemplate a refund remedy, the parties cannot invoke Section 26 to defeat the maintainability of their actions seeking restitution. Consequently, the Court concluded that the limitation imposed by Section 26 could not be applied to bar the present suits which challenged the validity of the levied amounts. The Court therefore held that the absence of a specific statutory refund provision meant that the appellants’ cause of action remained viable despite the existence of Section 26. In sum, the Court determined that the statutory scheme did not bar the suits and therefore allowed them to proceed.

The Court further noted that it would not express any opinion on whether the demurrage charges in dispute fell within the definition of “demurrage charges” contained in Section 45 of the Act. The Court explained that the issue had not been raised before it and therefore was not argued by the parties. Accordingly, the Court held that both the High Court and the trial Court erred in dismissing the suits on the ground that Section 26 of the Act barred their maintainability. The Court therefore set aside the judgments of the High Court and the trial Court and remanded the matters to the trial Court for fresh disposal in accordance with law. The Court clarified that it was not expressing any view on the other questions raised in the suits. The Court ordered that the respondent should bear the costs incurred by the appellants in these proceedings in this case. The costs of the lower courts will follow the result of the remand and be borne accordingly by the parties. Accordingly, the suits were remanded to the trial Court for further determination in accordance with the law and to ensure proper adjudication.