2024 (5) TMI 1512 - HC - Indian Laws

Challenge to two letters issued by the Railway Authorities that granted a revival of way leave permission to respondent no. 6 for constructing and running a water pipeline under Railway property - whether the grant of renewal of the way leave permission to respondent no. 6 which had expired in the year 2017 is valid in the eye of law and/or interdicts the rights conferred in the meantime on the petitioner in any manner? HELD THAT - The admitted position is that the way leave permission granted to the respondent no. 6-Company on July 10 2007 had expired in the month of July 2017 - The rights of the petitioner regarding construction of an underpass were first created by way leave permission on February 1 2019 followed by an agreement dated February 27 2019 and next by the way leave permission of June 1 2022 followed up by an agreement dated June 2 2022. There are several palpable irregularities in the mode adopted by the Railways in granting such renewal. First for a permission to qualify as a renewal such renewal has to occur before the expiry of the previous permission or at least within a reasonable time immediately thereafter. There is a distinction between renewal and novation. The moment a previous permission expires it ceases to exist and there cannot be any renewal of the same. Anyway leave permission granted thereafter would be new contract/permission - The impugned way leave permission has been given specifically for repairing and reviving and renewal of way leave permission to operate an underground pipeline and not any overhead structure. By no stretch of imagination can an overhead structure to be built over the railway lines be defined as an underground pipeline . The Clean Slate Theory propounded by the Supreme Court and followed by several High Courts in respect of approved Resolution Plans under the IBC applies only to efface previous debts and liabilities of the Corporate Debtor to enable the successful Resolution Applicant to revive the concern with a clean slate . However the said legal fiction cannot be doubly applied to generate another legal fiction of creation of new rights which is entirely de hors the ambit of the IBC itself. The rights under different laws than the IBC cannot be deemed to be created or permitted to be created under a Resolution Plan since such an interpretation of law would confer powers on the authorities prescribed under the IBC which are not vested in them by law. In view of the Railway Authorities having themselves relied on the Master Circular on Policy for Management of Railway Land and the Railway Engineering Code on several occasions as demonstrated by the petitioner and in view of the fact that those have been adhered to at all material times by the Railways and are binding on them the argument that those are not binding and may be flouted by the Railways at their sweet will cannot be accepted more so at the behest of the respondent no. 6 where the Railways themselves have not gone to the extent of arguing so. Conclusion - i) The way leave permission granted to respondent no. 6 is void and illegal as it was a new permission disguised as a renewal violating the petitioner s rights and the Railway Engineering Code. ii) The action of public authorities of the stature of the Railways has to be transparent and aboveboard and cannot be actuated by petty profit-motives giving a go-bye to safety standards and violating existing valid agreements with third parties. The way leave permission granted to the respondent no. 6 for renewal/revival or otherwise set aside - appeal allowed.

Summary

The present writ petition challenges two letters issued by the Railway Authorities that granted a revival of way leave permission to respondent no. 6 for constructing and running a water pipeline under Railway property. The petitioner argues that this permission interferes with their rights to use an underpass constructed under a previous agreement with the Railways.

The core legal issues considered are: (1) whether the revival of way leave permission granted to respondent no. 6 is valid, and (2) whether it infringes on the rights conferred to the petitioner by prior agreements with the Railways. The Court examines the legality of the way leave permission granted under the Railway Engineering Code and the Master Circular on Policy for Management of Railway Land.

Regarding the first issue, the Court analyzes Clause 1033 of the Railway Engineering Code, which governs the grant of way leave permissions. The petitioner contends that the permission violates Clause 1033(3)(ii) as there is an alternative water source available, and Clause 1033(12) which prohibits overhead constructions on railway land. The Court finds that the way leave permission granted to respondent no. 6 was described as a "renewal" with retrospective effect, which is not permissible since the original permission expired in 2017. The Court notes that a renewal must occur before or shortly after the expiry of the original permission, and the seven-year gap renders the revival a new permission rather than a renewal.

The Court also considers the Master Circular on Policy for Management of Railway Land, which stipulates that only existing way leave users can migrate to the new policy regime after the expiry of their agreements. Since respondent no. 6's permission expired in 2017, they were not an existing user at the time of the purported renewal. The Court concludes that the renewal was a fraudulent attempt to bypass the legal framework and suppress the petitioner's rights.

On the second issue, the Court examines the agreements between the petitioner and the Railways, which granted the petitioner rights to construct an underpass in 2019 and 2022. These agreements were valid and subsisting when the way leave permission was purportedly renewed for respondent no. 6. The Court finds that the revival of the way leave permission infringes on the petitioner's rights, as it allows for an overhead construction that violates the Railway Engineering Code and endangers the petitioner's underpass.

The Court rejects the argument that the Railway Engineering Code and Master Circular are mere administrative instructions, noting that they have been relied upon by the Railways and have statutory force. The Court also dismisses the claim that the petitioner's challenge is motivated by mala fides due to their failure in a Corporate Insolvency Resolution Process (CIRP) involving respondent no. 6. The Court emphasizes that the petitioner's rights under the agreements with the Railways are independent of the CIRP outcome.

The Court concludes that the way leave permission granted to respondent no. 6 is void and illegal, as it was a new permission disguised as a renewal, violating the petitioner's rights and the Railway Engineering Code. The Court sets aside the impugned letters and quashes all consequential actions taken under the invalid permission. Respondent no. 6 is ordered to restore the property to its original condition before the commencement of construction.

Significant holdings include the Court's determination that a renewal must occur within a reasonable time after the expiry of the original permission and that the Railway Engineering Code and Master Circular have binding force. The Court underscores the importance of adhering to statutory guidelines and protecting existing rights conferred by valid agreements.