2004 (2) TMI 680 - SC - Indian Laws

Whether the claim preferred by the respondents can be said to be a claim for refund of an overcharge ?

Summary

Issues Involved:
1. Illegality and unreasonableness of freight rates charged by Railway Administration.
2. Bar of limitation on filing suits.
3. Requirement of notification of claims under Section 78B of the Railways Act.

Detailed Analysis:

1. Illegality and Unreasonableness of Freight Rates Charged by Railway Administration:
The respondents, West Coast Paper Mills Limited and Dandeli Ferro Alloys Limited, filed complaints against the Railway Administration for charging freight rates that were allegedly in contravention of Section 28 of the Indian Railways Act, 1890. The Railway Administration charged a flat rate from Alnavar to Dandeli, irrespective of the commodity carried, and denied the benefit of the telescopic system of rates, leading to higher freight charges. The Tribunal held that the Railway Administration's freight rates were illegal and unreasonable, as they contravened Section 28 and discriminated against the respondents. This decision was affirmed by the Supreme Court in a judgment dated 14th October 1970, which found the freight charges to be in contravention of Section 28 and unreasonable.

2. Bar of Limitation on Filing Suits:
The Union of India contended that the suits were barred by limitation. The Supreme Court initially referred the matter to a 3-Judges Bench due to doubts about the correctness of the limitation commencement date. The 3-Judges Bench ruled that the limitation period commenced from 14th October 1970, the date of the Supreme Court's judgment, and not from the Tribunal's decision date of 18th April 1966. The period during which the writ petition was pending (5th January 1972 to 29th October 1973) and the mandatory notice period under Section 80 of the Code of Civil Procedure were excluded from the limitation period. Consequently, the suit filed by West Coast Paper Mills Limited on 12th December 1973 was within the limitation period. The suit filed by Dandeli Ferro Alloys Limited on 18th April 1974 was also within limitation, as conceded by the appellants.

3. Requirement of Notification of Claims under Section 78B of the Railways Act:
The appellants argued that the suits could not be entertained unless preceded by notification of claims under Section 78B of the Railways Act. Section 78B requires claims for refunds of overcharges or compensation for losses to be preferred within six months from the date of delivery of goods. The Court held that the term "overcharge" refers to a charge exceeding the amount permitted by law. In this case, the freight charges were initially legal as per the notified rates but later declared illegal and unreasonable by the Tribunal. Therefore, this was a case of illegal recovery of freight, not overcharge, and Section 78B did not apply.

Conclusion:
The Supreme Court dismissed the appeals, affirming the decrees of the Trial Court and the High Court. The suits were filed within the limitation period, and Section 78B of the Railways Act did not apply to the claims. The Railway Administration's freight rates were declared illegal and unreasonable, and the respondents were entitled to refunds of the excess freight charges paid.