Supreme Court Upholds Appellant in Indian Railways Act Refund Case; Section 26 Bar Not Applicable to Excess Wharfage or Demurrage Collection. Refund Suit Maintainable as Act Provided No Remedy Before Railway Rates Tribunal for Excess Terminal Charges Under Indian Railways Act, 1890 Sections 3(14), 26, 32, 41, 45.

Case Note & Summary

The Supreme Court considered six civil appeals by special leave arising from suits filed by a firm carrying on business in Surendranagar against the Union of India representing the Western Railway for refund of amounts collected as wharfage and demurrage charges. The litigation arose because the Western Railway had recovered wharfage at rates of two annas to four annas per maund per day and demurrage from the firm between 1953 and 1955. The firm pleaded that railway notifications and rules under which these charges were collected were illegal and ultra vires, and that the railway had no power to collect charges for the free time under the head of wharfage. The respondent Union of India denied that the rules were ultra vires or that collection was contrary to rules and pleaded that civil court had no jurisdiction. The trial court dismissed all suits as barred by Section 26 of the Indian Railways Act, 1890, and the High Court of Bombay at Rajkot dismissed the revision applications. The only question before the Supreme Court was whether Section 26 barred the maintainability of the suits in a civil court for refund of the amounts collected as wharfage and demurrage. The court noted that the relevant amounts were collected between 1953 and 1955 and thus later amendments were ignored. It examined the scheme of Chapter V: Section 3(14) defined terminals; Section 32 empowered Central Government to fix rates of terminal and other charges; Section 41 allowed complaints to Railway Rates Tribunal for unreasonable charges; Section 45 excluded demurrage charges from Tribunal jurisdiction except on reference by Central Government; Section 46C(d) defined demurrage. Section 26 barred suits for anything done or omitted in violation or contravention of Chapter V. The court held that Section 26 must be strictly construed; the opening words 'Except as provided in this Act' limited the bar to matters for which the Act provided a remedy. Two conditions had to be satisfied: the railway administration must have done or omitted an act in contravention of Chapter V, and the Act must provide a remedy for that act or omission. The court then considered whether wharfage and demurrage charges were terminals. It referred to Rule 85 and its clauses, which defined demurrage and wharfage. Wharfage and demurrage were charges for goods unloaded from wagons and kept at the station or on the platform beyond free time; they were charges in respect of the station and thus terminals under Section 3(14). However, the Act did not provide any remedy for an aggrieved party to approach the Tribunal for refund of amounts collected in excess by way of wharfage or demurrage; the Tribunal had no jurisdiction to decide whether rules empowering collection were ultra vires or whether amounts collected were in excess of what was leviable under the rules. Since the second condition was not met, Section 26 did not bar the suits. The appeals were allowed and the suits for refund were maintainable.

Headnote

Issue of Consideration

Final Decision

Appeals allowed. Section 26 of the Indian Railways Act, 1890 does not bar suits for refund of wharfage or demurrage charged in excess. The bar under Section 26 is limited by the opening words 'Except as provided in the Act'; two conditions must be met: the railway administration must have done or omitted an act in contravention of Chapter V and the Act must provide a remedy for that act or omission. The Act provides no remedy for an aggrieved party to approach the Railway Rates Tribunal for refund of amounts collected in excess by way of wharfage or demurrage, and the Tribunal has no jurisdiction to decide whether rules empowering collection are ultra vires or whether amounts collected are in excess of what is leviable under the rules. Wharfage and demurrage are charges in respect of goods unloaded from wagons and kept at the station or platform beyond free time; they are terminals under Section 3(14), but that does not attract the bar under Section 26 because no remedy is provided under the Act.

Law Points