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SABYASACHI MUKHARJI AND K. JAGANNATHA SHETTY, JJ.
Civil Appeal No. 223 of 1974, D/- 8-10-1987.
Delhi Cloth and General Mills Ltd., Appellant
Versus
Union of India, Respondent.
Railways Act No. 9 of 1890 – Section 41(1),(1)(a),(b), 28, 41 - Railways Act, 1080 – Factory - Fertilizers - Railway Board - Charging Rate - Freight Rate - When factory was almost ready for operation company wrote a letter requesting Railway Board for charging rate under classification 62.5 B instead of 85-B (Special) - Railway Board did not accede to request - Company wrote another letter informing Railway Board that movement of Naptha would commence from and pending decision of companys earlier request, Railway Board may permit charging rate equivalent to 85-B (Special) already offered in terms of letter Ex. C5 - Railway Board refused to grant that request also - Company filed a complaint - Whether Railway Board was bound to give concessional rate offered to company under Ex.C5 - Whether rate charged for carriage of Naptha between Bajuva and Dadhevi is unreasonable - Whether Railways are showing undue preference or advantage in respect of other traffic and contravening provisions of S. 28, Railways Act – Held, Section 28 is obviously based on principle that power derived from monopoly of railway carriage must be used in a fair and just manner in respect of all persons and all descriptions of traffic passing over railway area - In other words, equal charges should normally be levied against persons or goods of same or similar kinds passing over same or similar area of railway lines and under same or similar circumstances; but this rule does not mean that, if railway administration charges unequal rates in respect of same or similar class of goods travelling over same or similar areas, inequality of rates necessarily attracts provisions of S. 28 - Here again onus to prove alleged unreasonableness of freight rests on company - It is for company to establish that rate charged by Railway Administration for carriage of Naptha is unreasonable - Of course, this onus could be discharged by relying upon material produced by Railways - There may be other representations from same or some other authorities - If those representations have been relied upon by the company, the Court would compel those parties to adhere to their respective representations. It is immateriall whether each of representations was wholly responsible or partly responsible for locating factory at Kota - First part of letter offering concessional rate equal to class 85-B (Special) has been completely watered down in second part of letter - It has been expressly stated that rate may need be reviewed when traffic actually begins to move - Company was put to notice that it has to again approach Railway Administration - Railway authorities now state that they have reviewed whole matter and found no justification to offer a concessional freight rate for Naptha, since fertilizers are deliberately given a low classification in tariff - From the tenor of Ex. C-5 Railways are entitled to state so and it does not amount to resiling from earlier assurance - No question of estoppel arises in favour of appellant out of representation made in Ex. C-5 - Appeal dismissed.
Judgement
JAGANNATHA SHETTY, J.:- This appeal, with Special Leave, is against the order and judgment dated July, 13, 1973, of the Railways Rates Tribunal, Madras, in complaint filed by the appellant under S. 41(1), Railways Act No. 9 of 1890. The background facts are these :
2. The appellant is a company. It has set up a fertilizer factory at Kota in Rajasthan. It is said to be an industrially backward area. The factory manufactures Urea for which the main raw material is Naptha. Naptha has to be transported from Koyali Refinery of Indian Oil Corporation. The nearest railway station is Bajuva near Baroda. The nearest railway station serving companys factory is Dadhevi in Rajasthan. The distance between Bajuva and Dadhevi is about 520 Kms. For transportation, the Naptha has been classified by the Railway under Clause 110-B of the tariff.
3. Before the actual setting up of the factory, the company, by its letter dated September 5, 1966 requested the Railway Board for a concessional freight rate for the carriage of Naptha. It requested the Railway Board for fixed Station to Station rate equivalent to classification 62.5-B. That would have meant reduction of about 43% in the normal tariff under Clause 110-B. In that letter it was pointed out that if such concessional rate was not fixed, the company would be put to disadvantageous position as against the other factories located at ports or near the refineries. The Railway Board by its letter Ex.C5 dated November 5, 1966 agreed to quote station to station rate equal to 85-B (Special). In the said letter it was also stated that as the special rate was being quoted ahead of the actual setting up of the factory the freight rate need to be reviewed when the traffic actually begins to move.
4. When the factory was almost ready for operation the company wrote a letter dated June 5, 1967 requesting the Railway Board for charging the rate under classification 62.5 B instead of 85-B (Special). The Railway Board did not accede to the request. On May, 31, 1968 the company wrote another letter informing the Railway Board that the movement of Naptha would commence from June/July 1968 and pending decision of the companys earlier request, the Railway Board may permit charging the rate equivalent to 85-B (Special) already offered in terms of the letter Ex. C5. The Railway Board refused to grant that request also. The Railway Board, however, informed the company in the letter dated July 11, 1968 as follows :
"However, if on the basis of facts and figures your cost of production (date to be furnished for at least one complete year) vis-a-vis the sale price of fertilizers, it can be established that production of fertilizers at Kota uneconomical, until freight concession on the movement of Naptha from Bajuva/Trombay to Kota is granted, the Railway Board would be prepared to reconsider the question."
5. On April 19,1969, the company filed a complaint under S. 41(1)(a) and (b), Railways Act, 1890 before the Railway Rates Tribunal, Madras. The principal contentions raised in the complaint are as follows :
(i) The Railway Board was estopped and/or precluded from going back on the assurance of quoting station to station concessional rate 85-B when the company had invested a large amount of capital in setting up the factory at a place away from the refinery or port (ii) The rate charges by the Railway for the carriage of Naptha between two stations - Bajuva and Dadhevi was unreasonable under S. 41(1)(b), Railways Act, 1080, and (iii) The Railways were showing undue preference or advantage in respect of other traffic and contravening the provisions of S. 28, Railways Act, 1890."
6. With these and other contentions, the company requested the tribunal to declare the rate charged for the carriage of Naptha as unreasonable and to fix a reasonable rate for such carriage.
7. The Railway Board in its reply maintained that while quoting the concessional rate equal to 85-B (Special) it was made clear to the company that the r
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