2015 Supreme(SC) 1205

SUPREME COURT OF INDIA
VIKRAMAJIT SEN, SHIVA KIRTI SINGH, JJ.
M/S. S.K.L. CO. – APPELLANT
Vs.
CHIEF COMMERCIAL OFFICER & ORS. – RESPONDENTS
CIVIL APPEAL No. 6905 OF 2005
Decided on : 29-12-2015

IMPORTANT POINT
Power to make subsidiary legislation may be entrusted by the legislature to another body of its choice but the legislature should, before delegating, enunciate either expressly or by implication, the policy and the principles for the guidance of the delegates”.

Headnote:Indian Railways Act, 1989 – Section 30, 32, 70 and 71 – Tender notice no. 3/2000-2001 dt. 19.6.2000, inviting sealed tenders from traders and other interested parties for leasing of Front Second class Luggage Rake of 4 or 8 tons and Ventilated Parcel Van of 18 tons capacity on the Broad Gauge on payment of lump sum rate for loading of parcels by certain trains for a period of two years , challenged – Respondent-Railways are run as a commercial undertaking, and its administration cannot be prevented from taking steps to increase its revenue, as long as they are not detrimental to the interest of the general public – Appellant failed to establish that undue preference had been given to one over another and Section 70 had been violated – Railway tariff no doubt has to be realistic and keep pace with time and if State so perceives, need not be a losing financial proposition – While it may be both pragmatic and sagacious to auction FSLR & VP it can be done with an objective of gathering the optimum revenue – Respondents directed to ensure that successful tenderer does not charge carriage prices in excess of those prescribed by Respondents in Coaching Tariff No. 24 Part III – Judgment of Division Bench upheld. (Para 8, 14 to 17)

       Facts of the Case:

       In pursuance of the budget speech of the Hon’ble Minister for Railways in the year 1999-2000, the Respondents issued a tender notice no. 3/2000-2001on 19.6.2000, inviting sealed tenders from traders and other interested parties for leasing of Front Second class Luggage Rake of 4 or 8 tons and Ventilated Parcel Van of 18 tons capacity on the Broad Gauge on payment of lump sum rate for loading of parcels by certain trains for a period of two years.

       The first compartment, immediately after the engine, is known as Front Second Class Luggage Rake (FSLR) and each FSLR consist of four different sections. The first section is meant for carrying goods/parcels of 4 tons capacity, followed by the section known as the ‘Brake Van’ which is occupied only by the guard. The third section is for carrying unreserved passengers, and the last section is again a luggage compartment with a capacity of 4 tons. Similarly, the last compartment in each train is known as Rear Second Class Luggage Rake (RSLR), which also consists of four sections similar to the FSLR. Further, if there is excess demand, a Ventilated Parcel Van (VP) is added to the train after reducing, if necessary, a passenger compartment so as not to exceed the maximum hauling capacity of the engine. The VP is meant exclusively for the purpose of carrying parcels and its normal capacity is 18 tons. The Respondents had noticed that in some trains, most of the time, the luggage capacity available in FSLR and RSLR was not being fully utilized resulting in loss of revenue. In view of this, as a matter of policy, it was decided by the Government of India to lease the luggage space in FSLR to traders and other interested persons after inviting tenders from them.

       FSLR of Train no. 2627 Bangalore-New Delhi-Karnataka Express (Daily) was leased for a period of two years at Rs. 19,800/-per 4 metric ton space per day. The lease was given on 24.7.2000 in favour of a company known as BIC Logistic Limited, in pursuance to a tender issued by the Respondents. The lessees agreed to pay for the two spaces each of 4 tons at that rate aggregating to Rs. 39,600/-per 8 tons per day. The Appellant filed Writ Petition No. 27568 of 2000 before the High Court of Karnataka, challenging the impugned notice. The Appellant is engaged in trading of grapes who contended that as a result of the Respondents leasing out the FSLR in the Karnataka Express, the Appellant was denied the facility of transporting grapes from Bangalore to New Delhi at the rates specified in the Coaching Tariff no. 24 Part III (Rates for Parcels & Luggage Traffic), which came into effect on 1.4.2000. Another trader of grapes filed Writ Petition No. 37150 of 2000 before the High Court of Karnataka on 27.11.2000 seeking to restrain the Respondent-Railways from charging any tariff other than that specified in Coaching Tariff No.24 Part III. The learned Single Judge by common Judgment dated 25.7.2001 allowed both the Writ Petitions and quashed the impugned notification, holding that the awarding of contract of lease of FSLR and VP is bad in law. Aggrieved by the decision of the learned Single Judge, the Respondents preferred two appeals.

       The Division Bench of the High Court opined that the impugned Notification was not issued under Section 30 and 31 of the Act, but instead was a product of a policy decision of the Government of India which aimed to augment the earnings of the Respondent-Railways by leasing the FSLR and VP in different trains. The Respondent-Railways are run as a commercial undertaking, and its administration cannot be prevented from taking steps to increase its revenue, as long as they are not detrimental to the interest of the general public. It was held that the action of inviting tenders could not be quashed as being opposed to Section 30 and 31. The High Court observed that to prove that Section 70 had been violated, the Appellant had to establish that undue preference had been given to one over another, and as the Appellant failed to provide any cogent evidence to that effect, this contention was dismissed. The apprehension of the Appellant was that due to the leasing out of space to a third party, there was less than adequate space for the general public, and that, as a result they would have no choice but to approach the third party and pay any rate that he may quote. The High Court observed that this apprehension of the Appellant had been allayed by the affidavit filed by the Respondents wherein they had stated that if the need arises they would ordain more space for the parcel service. Thus, the High Court allowed the appeals. However, with the intention of safeguarding the interest of the general public, it also issued directions to the Respondent to incorporate certain Regulatory checks on the unbridled power of the lessee. The checks were meant to be in the form of an upper limit on the tariff that could be charged by the contractors for different trains.

       Findings of the Court:

       Cost of operation cannot by itself be the basis for judging the reasonableness of the rate charged.

       Result : Judgment of Division Bench upheld with directions.