Judgment

SHAH, J.:- This is an appeal with special leave against the order of the Railway Rates Tribunal constituted under Section 34 of the Indian Railways Act 9 of 1890.

2. The West Coast Paper Mills Ltd.- hereinafter called the Company - is a manufacturer of paper and paper products. It has set up a factory at Bengurnagar in Dandeli at the terminus of Alnawar-Dandeli branch line of the Southern Railway. This branch line 32 Kilometers in length was a "light railway" constructed and opened for traffic by the Government of Bombay in 1919, principally for the purpose of transporting forest produce collected in the surrounding region. With the reorganization of the States under the States Reorganization Act the ownership of the Railway passed to the Mysore Government. The Railway was finally taken over by the Government of India with effect from October 1, 1962, and now forms part of the Indian Railways.

3. The Company used the branch line for transporting coal, limestone etc., required for its manufacturing activities, and also for transporting its manufactured products. Initially the Railways were levying freight over this branch line at "common rates" for all commodities on "a weight basis". On representations made by the users of this branch line, the Indian Railways substituted, with effect from February 1, 1964, the "standard telescopic class rates". In charging the goods freight, however, the actual distance of the branch line was multiplied by three.

4. The Company filed a complaint before the Railway Rates Tribunal and challenged as "unjust, unreasonable and discriminatory" the method of levy of freight on good traffic. The Company claimed that the levy of rates offended the provision of Section 28 of the Indian Railway Act, 1890, and that the existing rate were per se unreasonable. The Company claimed a declaration that the rate between the stations specified in the complaint were unreasonable and a direction to the Railway to levy with effect from the date of the complaint standard rates and charges for the traffic on the branch line without "inflating the distance".

5. The Union of India as representing the Southern Railway defended the complaint. They contended that the introduction of "standard rates and fares" over the section "on a continuous distance basis with three times inflation of the chargeable distance" for goods was made on the authority of the Central Government under its directive and the Railway Rates Tribunal is precluded from questioning its legality or propriety. They also contended that in any event the levy is not unjust, unreasonable or discriminatory; that the increased rate on the basis of "inflated distance was in vogue in different sections of the Indian Railways: that such inflation was adopted either because of the higher cost of operation of the particular section or because of unusually heavy capital costs involved on a particular system of Railway and to similar reasons; that the reason for inflation on the branch line was due to large capital investment for the rehabilitation of this branch line by the Central Government after it was taken over from the previous owner ; that before the branch line was purchased it was working at a loss for number of years and for effectively working the branch line it had be come necessary to undertake extensive repairs and renewal work including complete relaying of the track, construction of crossing stations, etc., that the total costs of such repairs and renewal was Rs. 28.99 lakhs, and that even after the introduction of higher rates and fares with three times inflation in distance, the users of branch line will be paying less than what they were paying before the introduction of the new rates. The Union denied the charge of discrimination and undue preference and contended that the Tribunal had no jurisdiction to hear the complaint merely because the Company had selected certain commodities and certain sets of stations in support of its grievance u