UNION OF INDIA Vs. INDIAN SUGAR MILLS ASSOCIATION

JUDGEMENT

(1.) Belsun Sugar Co. Ltd. Riga (hereinafter referred to as the company-) was incorporated in the year 1932. Soon after the incorporation of the Company, the Company established a fairly large sugar mill near railway station Riga. This station was on the railway line of the Bengal and North Western Railway which at that time, was owned by a limited Company known as the Bengal and North Western Railway Limited. At Riga railway station, the Railway had two main lines running, one along the passenger platform, and another forming a loop against it running parallel to the first line with points on both sides of the platform for taking the railway trains to line 2 when arriving from either direction at Riga railway station. For the sake of convenience, the line along the passenger platform will be referred to as line 1, and the other main line forming the loop as line 2. In addition, there was a good platform and a line was run connecting line l to the line along the goods platform from both directions. That line is to be referred to hereinafter as line S. Since the sugar factory of the Company was established close to Riga Station, considerable goods traffic started being received for the Company and, at the sane time, goods traffic was also booked by the company for outward transmission from this station. During the crushing season, a large number of wagons loaded with sugarcane used to be received and, under the existing constructions of the Railway, delivery of the sugarcane had to be taken from the goods wagons on line 5 at the goods platform. Since the traffic was considerable, it became inconvenient and, consequently, an arrangement was entered into between the Railway and the Company for construction of two sidings described as assisted sidings. In pursuance of this arrangement two further lines (hereinafter referred to lines 3 and 4) were laid between lines 2 and 5 running parallel to these lines. Trains from line 1 could be taken to lines 3 and 4 from both directions in the same manner as they could be taken to line 5. At the time of construction of these assisted sidings represented by lines 3 and 4, an agreement was entered into between the Railway and the Company on 21st November, 1933. Under that agreement, part of the expenditure on the construction of these assisted sidings was met by the Company, while part of the expenditure was incurred by the Railway. It was agreed in that agreement that the Company will pay, in advance, in two equal half-yearly instalments on the first day of April and the first day of October respectively in each half-year, fixed contribution of Rs. 709/8/- per-half-year to the Railway for the use of the railway portion of the siding. The agreement proceeded to lay down that the payment of this contribution by the Company was to be taken in lieu of paying separately for interest on, and cost of maintenance of, the permanent-way, points and crossings and interlocking connected therewith and for freight on the traffic over the siding. It was further agreed that, in the event of the above contribution not being sufficient to meet the cost of the working of the siding, the Railway was entitled, on giving six months' notice of its intention to do so, to modify the above contribution and charge the Company such higher amount as it may consider necessary to meet the increased cost of working. Further railway lines were also laid from Riga railway station up to the factory of the company. A line ran from the junction of lines 3 and 4 on the western side of the station in a semi-circular loop and then entered the factory of the Company where the line was connected to four different lines. This line, running from the junction up to a point where there was further bifurcation of lines, will be referred to as line 6. At the end of line 6, this line was connected to two lines, one situated to the south, and the other to the north. There was also a loop formed by connecting the northern line to the southern line by another connecting line. This loop is to be referred to as line 7. Lines 6 and 7 went laid at the cost of the Company. The arrangement was that the Company was to take delivery of its sugarcane wagons as well as all other goods on lines 3 and 4 at the assisted sidings. Thereafter, it was the duty of the Company to unload the wagons there or to them rolled into their own factory yard. It appears that the Company purchased a railway engine and used it for taking the loaded wagons to the factory and bringing back the unloaded wagons to these lines 3 and 4. For outward traffic also the empty wagons often used to be loaded in the factory yard and brought by the factory engine to Riga railway station. On some occasions, the wagons were taken by being pushed by manual labour instead of using the engine. A third alternative was that the Company would request the Railway to arrange for the shunting of their wagons from lines 3 and 4 to the factory yard. Whenever this arrangement was adopted, the Railway charged the factory for this service rendered. It appears that between the years 1956-57 to 1958-59, the Railway used to charge the Company at the rate of Rs. 18 per hour, computing the time taken by the shunting engine in completing the work of the Company. The time computed began when the shunting engine came to lines 3 and 4 to take away the Company's wagons, and ended when the engine returned to the railway station after completing the work of shunting the wagons. Sometimes, on return, the engine brought empty wagons, but this was considered immaterial, because the charge was made from the Company by the Railway on the basis of the time actually taken by the shunting engine calculated at Rs. 18 per hour. This rate of Rs. 18 per hour will be described hereafter as the rate of the shunting engine charge. It may be mentioned that, in the year 1942 the Bengal and North Western Railway was taken over by the Indian Government and, at the relevant time in the year 1958, the Railway was owned by the Union Government and was run under the name of North Eastern Railway, which is the name it continues to bear at present.

(2.) The arrangement, mentioned above continued up to 8th February, 1958. On this date, a notice was given by the Railway to the Company proposing enhancement of the charges to be levied in pursuance of the agreement which had been entered into in 21st November, 1933 under which the Railway was empowered to enhance the charges if it considered it necessary to meet the increased cost of the working of the assisted sidings. By this letter dated 8th February, 1958, the Railway gave six months' notice of enhancement of the charges, after mentioning that the fixed contribution of Rs. 709/8/- per half-year for use of the Railway portion of the siding in lieu of paying separately for interest on, and cost of maintenance of, the permanent way, points and crossings and interlocking connected therewith and for freight on the traffic over the siding was not considered sufficient to meet the cost of present-day working of the siding. The charges to be levied in lieu of existing fixed contribution were mentioned as a sum of Rs. 603.7 np. per half-year in respect of interest on the capital and cost of maintenance of the permanent way, points and crossings and interlocking connected therewith, while for the freight on the traffic over the siding, described as the siding charge, the Railway demanded Re. 1 per 4- wheeled wagon hauled over the siding, subject to a minimum of Rs. 7 per shunt. The new rates were to come into force with effect from 10th August, 1958. Though the Company did not agree to these new rates, the Railway demanded payment at these rates and, ultimately, the Company was informed by the Railway that, if payments at new rates were not made, the facility of the assisted siding would be withdrawn. The Company made payments under protest. Further, the Railway also enhanced the rate for the shunting engine charge. The rate was enhanced to Rs. 28 per hour for the year 1959-60 and to Rs. 30.50 np. per hour for the year 1960-61.

(3.) The Company being dissatisfied with these charges, filed a complaint under Section 41 (1) (c) of the Indian Railways Act, 1890 (hereinafter referred to as "the Act") before the Railway Rates Tribunal at Madras (hereinafter referred to as "the Tribunal") , against the enhancement of the shunting engine charges from Rs. 18 per hour to Rs. 28 and subsequently Rs. 30.50 np. per hour, as well as the enhancement of the siding charges by prescribing a scale of payment at Re. 1 per wagon with a minimum of Rs. 7 per shunt. It appears that there were a large number of sugar mills situated along various railway stations served by the North Eastern Railway, and with them also there existed similar arrangement as the one arrived at between the Railway and the Company in 1933 under the agreement mentioned above. All these sugar mills were members of the Indian Sugar Mills Association. This Association also joined as a complainant in the complaint of the Company representing all its constituent sugar mills. In the proceedings before the Tribunal however, the Indian Sugar Mills Association did not take any active part and the case was actually fought out by the Company. It was urged in the complaint that both the shunting engine charges and the siding charges at the enhanced rates claimed by the Railway were unreasonable and the Tribunal was requested to fix reasonable charges in exercise of its powers under Section 41 (8) of the Act.