Union of India vs M/s Indian Oil Corporation Ltd.

Railways Act, 1989 – s. 106 (3) – Meaning of Overcharge – Notice for Claim for Refund of Overcharge – Conditions: Held: The term “overcharge” has neither been defined in the Act, 1989 nor the erstwhile Act, 1890 – The term “overcharge” is derived from the word ‘charge’ prefixed by the word ‘over’ and means “something more than the correct amount or more than a certain limit” – The Supreme Court in Union of India & Ors. v. West Coast Paper Mills Ltd. & Anr. explained that an overcharge is something in excess of what is due according to law, an overcharge must be of the same genus or class as a charge, and it does not include a sum that was collected but was not due – The Supreme Court as-well as various High Courts have consistently held that the rigours of Section 106(3) of the Act, 1989 will only be applicable where the claim is for a refund of an ‘overcharge’ – Where the claim for refund is for anything but an ‘overcharge’, Section 106(3) of the Act, 1989 will not apply, and no notice of claim is required – When it comes to a Notice for Claim for Refund of Overcharge under Section 106(3) of the Act, 1989 the following conditions must be fulfilled: - a) Claim must be for refund of an ‘Overcharge’; b) Overcharge must have been paid to the Railway Administration in respect of the goods carried by the railway; c) Notice must be issued within 6-months from the date of payment or delivery of goods for which overcharge was paid; d) Notice must be served to the concerned railway administration to whom the overcharge was paid – Thus, the rigours of Section 106 sub-section (3) i.e., the 6-month time period for making a notice of claim, is only attracted, when the refund is for an overcharge. [Paras 43, 44, 45, 53, 59] Railways Act, 1989 – What is the difference between an “Overcharge” and an “Illegal Charge”:

Held: As to what would be an ‘overcharge’, the Supreme Court and the various High Courts have consistently held that an ‘overcharge’ is any sum charged in excess or more than what was payable as per law – Whereas an illegal charge is any sum which is impermissible in law – For an excess sum to be an “overcharge” the sum paid must partake the same character as the basic charge, or must belong to the same genus of charge which was payable or required to be paid by law – Whereas, for an illegal charge, the sum must not have been payable by law – Another very fine but pertinent distinction between an ‘overcharge’ and an ‘illegal charge’ is that, an ‘overcharge’ is generally inter-se the specific parties involved and in its peculiar facts – Whereas an ‘illegal charge’ is illegal for everyone irrespective of the parties or facts. [Paras 60, 70, 71] Railways Act, 1989 – Whether, the claim towards the refund of difference of 110 km in freight charges is covered by Section

106 sub-section (3) of the Railways Act, 1989; In other words, whether the claim is for a refund of an ‘overcharge’: Held: The respondent company has undisputedly paid the freight charges as per the notified chargeable distance, and nothing more has been charged than what was at the time of booking of the consignment required to be charged as per the law prevailing i.e., as per the old local distance table – The case of the respondent company is not that it has paid anything in excess of what was at the time of booking of the consignment required by law, rather, the respondent’s case is that the charge which was required to be paid by the law as prevailing at the time of booking of the consignment was wrong – In other words, the respondent’s case is that the very chargeable distance of 444 km as per the old local distance table was wrong, and not that the distance for which the respondent has been charged is incorrect in terms of the chargeable distance that was notified at that time – Since admittedly, what was charged from the respondent was as per the chargeable distance notified and required to be payable by law at that time with nothing in excess, and since the respondent has challenged the very basis or genus of the charge i.e., primary challenge is to the chargeable distance of 444 km in itself and not the incidental quantum of freight levied on the distance of 444 km, and because the same was admittedly charged as per the prevailing law and not due to any misapplication or mistake i.e., as per the old local distance table, this clearly is not a case of overcharge and would not fall within the four corners of Section 106(3) of the Act, 1989. [Paras 104, 105, 107]

Railways Act, 1989 – Whether the notified chargeable distance of ‘444 km’ was an Illegal Charge or not?

Held: In the instant case, prima-facie it appears that under both; the Old Distance Table and the New Distance Table, the actual engineering difference was being taken into consideration, and the only difference between the two methodologies lies in the roundingoff – The effect of the change in methodology on the chargeable distance would not have resulted in a huge difference of 110 km – There had been neither any change in the route by way of addition of new station nor change in the physical track length of the said route – The letter dated 05.07.2005 itself indicates that the change in the chargeable distance of 444 km was due to an error, and has no bearing with the Ministry of Railway’s letter dated 07.04.2004 introducing the new methodology – There was failure of the appellant in establishing that the chargeable distance of 444 km was the correct chargeable distance as per the law – There is a concurrent findings of both, the Railway Claims Tribunal and the High Court on the limited aspect of the actual distance being

333.18 km – Thus, the said chargeable distance of 444 km was illegal – No infirmity in the judgment and order passed by the High Court. [Paras 126, 136, 137, 138]

Words and Phrases – Charge, Over, Illegal – discussed. [Para 61]

Interpretation of Statutes – Reasonableness or unreasonableness of any provision:

Held: It is a settled law that in interpreting a statute or a rule, the court must bear in mind that the legislature does not intend what is unreasonable or impossible – If a rule leads to an absurdity or manifest injustice from any adherence to it, the court can step in – A statute or a rule ordinarily should be most agreeable to convenience, reason and as far as possible to do justice to all – A law/rule should be beneficial in the sense that it should suppress the mischief and advance the remedy – In interpreting a rule, it is legitimate to take into consideration the reasonableness or unreasonableness of any provision – Gross absurdity must always be avoided in a statute/rule – The expression reasonable means rational, according to the dictate of reason and not excessive or immoderate. [Para 82]

Railways Act, 1989 – s. 106 (3) – Hohfeld’s scheme of jural relations:

Held: As per Hohfeld’s scheme of jural relations conferring of a right on one entity must entail vesting of a corresponding duty in another – Under Section 106(3) of the Act, 1989, the right of consignee to seek a refund of an overcharge arises only when there is a corresponding duty on the railway administration to grant such refund i.e., when the notice of claim is made to it within the statutory period – To seek a refund, certain condition precedents need to be satisfied by the consignee before the right can be said to accrue, namely, a) An overcharge has been paid by the consignor to the Railway administration; b) A notice has been served by the consignor to the Railway administration to which overcharge has been paid; c) The consignor has served the said notice within six months from the date of such payment or the date of delivery of such goods at the destination station, whichever is later – Thus, once the aforesaid conditions are satisfied, the consignee’s “right to get a refund” can be said to have as its jural correlative the “duty to grant refund” of the Railway administration. [Paras 84, 84.1]

Railways Act, 1989 – Claim of refunds – Cautioning the courts and the railway claims tribunal:

Held: Where the court or tribunal whilst examining a claim for refund finds that a particular charge for which refund is sought is not an overcharge, they must not jump to the conclusion that the said charge then is an illegal charge – There may be situations, where a charge for which refund is sought may not be an overcharge or even an illegal charge and rather would be a lawful charge perfectly valid in the eyes of law, or a charge though valid but in the extant of equity may be refundable, the same has to be determined upon appraisal of the entire facts of the case – The courts and tribunal must be mindful of the fact that, the question as to what is the nature of a particular charge, be it overcharge or illegal charge or valid charge etc. is for ultimately determining whether it is liable for refund or not, without jumping to any conclusion. [Paras 95 and 96]