The Supreme Court has ruled that Indian Railways can impose penalties for false goods declarations even after delivery. The judgment clarifies the scope of Section 66(4) of the Railways Act, 1989.
New Delhi: Today, on June 11, in a recent and important judgment, the Supreme Court of India has given clarity on the powers of the Indian Railways under Section 66(4) of the Railways Act, 1989.
The Court ruled that railway authorities can collect the correct amount for goods, even after the delivery of those goods, if it is found that the consignor had made a false declaration about the goods.
The case came up when the Central government filed several appeals against a 2021 decision of the Gauhati High Court.
That earlier ruling had said that the Railways cannot ask for more charges for wrongly declared goods after those goods had already been delivered. The Supreme Court disagreed with this view.
A Bench of Justice Sanjay Karol and Justice Prashant Kumar Mishra looked into Section 66(4) and observed that the law does not clearly say that the extra charges must be collected only before the delivery of goods.
Instead, the Court said that the Railways can collect the right charges either before or after delivery.
The Court explained that,
“It is borne from the above that a consignee/owner of goods/person having charge of goods who has brought goods for the purpose of carriage has to give the Railway authorities a written statement regarding the description of the goods, to enable them to charge the appropriate rate of carriage. Under sub-section (4), if the statement is found to be materially false, the Railway authority is empowered to charge the goods at the required rate. No reference is made to the stage at which such a charge can be made, i.e., either before or after delivery. Consequently, it can be seen that the legislative intent had to be, to permit levy of charge under this Section, at either stage and not at a specific one.”
The dispute started when the Indian Railways issued demand notices in 2011 and 2012 to Kamakhya Transport Pvt. Ltd. and other parties.
The notices said that there were false declarations made about goods being transported. The respondents paid the demanded amounts under protest and then filed cases before the Railway Claims Tribunal.
They argued that charges under Section 66(4) could not be demanded after delivery of goods.
The Tribunal accepted the argument and relied on a past decision of the Gauhati High Court in the case of Union of India v. Megha Technical & Engineers Pvt. Ltd. It said that according to Sections 73 and 74 of the Railways Act, any such extra charges should be collected before the goods are delivered.
The High Court also supported this and relied on another old case, Jagjit Cotton Textile Mills v. Chief Commercial Superintendent NR, which had held that extra charges must be raised before delivery.
However, the Supreme Court clearly said that these rulings do not apply to Section 66 because this section talks specifically about false declarations, not about excess weight or overloading.
The Court stated that Section 66 works independently and is different from Sections 73 and 78, which apply to cases where the goods exceed the permitted weight in a wagon.
Those sections say that extra charges should be levied before the goods are delivered. But in the case of false declarations, there is no such rule.
So, the Court clarified that charges for false declarations can be collected even after the goods are delivered.
The Court also rejected the respondents’ claim that the demand notices were fake. The Court said that there was no proper evidence given to prove that the demand notices were not genuine.
As a result, the Supreme Court allowed the appeals filed by the Union of India. It held that the railway authorities acted legally and were within their rights under Section 66(4).
The Court restored the demand notices issued to Kamakhya Transport Pvt. Ltd. and others. Therefore, the orders passed earlier by the Gauhati High Court and the Railway Claims Tribunal were set aside.
A team of legal experts appeared for both sides in the case. Additional Solicitor General KM Nataraj along with Advocates Ameyavikrama Thanvi, Vatsal Joshi, BK Satija, Chinmayee Chandra, Gaurang Bhushan, Amrish Kumar and Sudarshan Lamba represented the Union of India.
On the other side, Advocates Divyansh Rathi, KP Maheshwari, Divyam Rathi, and Gunjan Kumar appeared for the respondents.
Case title:
Union of India v. M/s Kamakhya Transport Pvt. Ltd. Etc. Etc.
Read Judgement:
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