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2019 Supreme(Cal) 387
IN THE HIGH COURT OF JUDICATURE AT CALCUTTA
SHAMPA SARKAR, J.
Rashmi Metalliks Limited & Another – Appellants
Versus
Union of India & Others – Respondents
W.P. No. 23104 (W) of 2018
Decided on : 28-06-2019
For the Petitioners:S.K. Kapur, Sr. Advocate, Amitesh Banerjee, Rajesh Kumar Gupta, Kumarjit Banerjee, Shivangi Thard, Advocates.
For the Respondents:Partha Sarathi Bose, Sr. Advocates, Sutanu Chakraborti, Uday Sankar Bhattcharya, Advocates.
The main legal point established in the judgment is the railway authorities' duty to act fairly without being arbitrary or capricious and to exercise their discretion when the circumstances so demanded. The judgment also emphasized the railway authorities' obligation to grant Priority 'C' facility in public interest and for the benefit of the public.
Headnote:
Priority C Facility - Railways Act, 1989 - Section 71 - Summary of Acts and Sections: The court discussed the Railway Act, 1989, particularly Section 71, and the Preferential Traffic Order. The judgment also referenced the policy of the Central Government regarding the inclusion of iron-ore in the list of preferential goods to be carried under Priority 'C'. The court highlighted the railway authorities' duty to give special facilities for carriage of goods as directed by the Central Government and the criteria for granting Priority 'C' facility. The court emphasized the limitations on the railway authorities' power to adjudicate and self-assess the quantum of unpaid freight and penalty payable by the petitioner without proper adjudication by the Civil Court where the suit filed by the Railways was pending. The court also noted the binding effect of the Division Bench's judgment in MAT 1970 of 2014, which directed the railway authorities to consider the request of the petitioner for Priority 'C' facility afresh and in accordance with law. The court highlighted the obligation of the railway authorities to act fairly without being arbitrary or capricious and to exercise their discretion when the circumstances so demanded. The court also emphasized the duty of the railway authorities to grant Priority 'C' facility in public interest and for the benefit of the public. The court quashed and set aside the order dated November 8, 2018, and directed the Chairman, Railway Board to consider the matter fresh, re-examine the issue, and pass a reasoned order upon hearing the petitioner and/or its representatives, within six weeks from the date of communication of the order.
Fact of the Case:
The petitioners sought Priority 'C' facility for the movement of iron-ore under the Railway Act, 1989. The railway authorities had issued a demand notice alleging that the petitioners had availed railway services by paying concessional freight for export of iron-ore, incorrectly shown to be for domestic purpose, and submitted inflated production data for getting allocation of rakes. The petitioners challenged the notice, and the Single Judge granted partial relief. The Division Bench allowed the appeal with conditions, holding that the railways had no jurisdiction to impose any penalty or to stop rail services to any rail user. The petitioners then applied for allotment of rakes under Priority 'C' but were denied the facility by the railway authorities, citing the sub-judice nature of the matter before the Hon'ble Apex Court. The petitioners filed a writ petition challenging the denial of Priority 'C' facility.
Finding of the Court:
The court held that the railway authorities erred in rejecting the request of the petitioners for Priority 'C' facility based on the sub-judice nature of the matter before the Hon'ble Apex Court. The court emphasized the railway authorities' duty to consider the request of the petitioners afresh and in accordance with law, as directed by the Division Bench. The court also noted the railway authorities' obligation to act fairly without being arbitrary or capricious and to exercise their discretion when the circumstances so demanded. The court quashed and set aside the order dated November 8, 2018, and directed the Chairman, Railway Board to consider the matter fresh, re-examine the issue, and pass a reasoned order upon hearing the petitioner and/or its representatives, within six weeks from the date of communication of the order.
Issues: The issues involved the rejection of the petitioners' request for Priority 'C' facility by the railway authorities based on the sub-judice nature of the matter before the Hon'ble Apex Court, and the railway authorities' failure to comply with the specific directions of the court.
Ratio Decidendi: The court held that the railway authorities erred in rejecting the request of the petitioners for Priority 'C' facility based on the sub-judice nature of the matter before the Hon'ble Apex Court. The court emphasized the railway authorities' duty to consider the request of the petitioners afresh and in accordance with law, as directed by the Division Bench. The court also noted the railway authorities' obligation to act fairly without being arbitrary or capricious and to exercise their discretion when the circumstances so demanded.
Final Decision: The court quashed and set aside the order dated November 8, 2018, and directed the Chairman, Railway Board to consider the matter fresh, re-examine the issue, and pass a reasoned order upon hearing the petitioner and/or its representatives, within six weeks from the date of communication of the order.
JUDGMENT :
1. The subject matter of challenge in this writ petition is an order dated November 8, 2018 issued by the Director, Rail Movement (Railway Board) Kolkata, inter alia, holding that the prayer of the petitioners for grant of Priority "C" facility for movement of iron-ore, could not be considered as the matter relating to submission of inflated bills by the petitioner for availing Priority C facility earlier and consequent actions taken by the authorities in that regard, was sub-judice before the Hon'ble Apex Court.
2. The facts as pleaded in the writ petition are that under Section 71 of the Railways Act, 1989, (hereinafter referred to as the said Act) the Central Government was empowered to give special facilities for, or preference to, the carriage of certain goods or class of such goods by general or special orders. Such orders were called Preferential Traffic Orders. For the first time in June 2006, the Central Government included iron-ore in the list of preferential goods to be carried under Priority "C", using the terminology "Programmed Traffic". The policy was renewed from time to time. The petitioners applied for registration under Priority "C" (Programmed Traffic) and were granted registration by the railways on May 29, 2007. The petitioner No.1 paid over Rs.150 crores as freight to the railways for transportation of its product.
3. The railways issued a Rate Circular No.36 of 2009, whereby, dual freight system was introduced, that is, for domestic consumption of iron ore, a concessional freight was introduced and for trading and exports a higher freight was introduced. The petitioner No.1 availed concessional freight for domestic consumption of iron ore and for exports they paid the higher freight.
4. Suddenly, on August 16, 2011, the railways issued a demand notice followed by a demand-cum-show cause notice alleging that the Petitioner No.1 had availed of railway services by paying concessional freight for export of iron-ore although, it was incorrectly shown to be for domestic purpose. It was further alleged that they also submitted inflated production data for getting allocation of rakes. A sum of Rs. 1,32,00,01,758/- towards evaded freight charges and a further sum of Rs. 5,28,00,07,032/- towards penalty was claimed by the railways. The services were also suspended by the railways. The said notice was challenged by way of a writ petition before this Hon'ble Court and by an order dated September 29, 2014, the learned Single Judge granted partial relief to the petitioners.
5. The petitioners, seeking further reliefs preferred an appeal from the order dated September 29, 2014, being MAT No.1970 of 2014. By a judgment and order dated December 24, 2014, the Hon'ble Division Bench allowed the appeal with conditions and held that there was no provision in the said Act to blacklist any rail user on any ground and that the railways had no jurisdiction to impose any penalty or to stop rail services to any rail user. It was held that the Rate Circular No.36 insofar as, it empowered the railways to levy penalty, was illegal. It was further held that the railways could not impose any penalty by way of blacklisting on the basis of its self assessment until the inaccuracy in the declaration submitted by the petitioner No.1 was declared to be so, by the Civil Court in the pending Civil Suit filed by the railways. It was also held that railways could not conduct parallel adjudication proceedings on its own when the Civil Court was in seisin of the matter. However, the Hon'ble Division Bench in order to protect the interest of the railways, directed that at the time of booking of each consignment for carriage of iron-ore, the railways would charge the higher freight and would then decide the freight actually payable by the petitioner No.1.
6. Aggrieved by the part of the said judgment and order dated December 24, 2014, directing the petitioner No.1 to pay the higher freight, the petitioner No.1 preferred a special leave petiti
