The Supreme Court has clarified that the Indian Railways has the legal right to impose penalty for goods misdeclared even after delivery under Section 66 of the Railways Act, 1989. The judgment overturned an earlier judgment of the Guwahati High Court, which had restricted such penalty only to pre-delivery.
A bench of Justices Sanjay Karol and Justices PK Mishra passed the judgment while allowing an appeal filed by the Union of India against orders passed by the Railway Claims Tribunal (RCT) and the Guwahati High Court in favour of certain transporters.
The case stems from penal charges imposed by the railways between October 2011 and April 2012 on companies, including Kamakhya Transport Private Limited, for allegedly misdeclaring goods during transportation. Although the companies paid the excess charges under protest, they approached the RCT seeking a refund, arguing that the penalty cannot be levied after delivery. They cited Sections 73 and 74 of the Act, claiming that these allow recovery only before the goods are handed over.
In January 2016, the RCT directed the railways to refund the excess charges along with 6% interest, a decision upheld by the Guwahati High Court in December 2021. Dissatisfied, the Union of India moved the Supreme Court.
"It is clear from the above (Section 66 of the Railways Act) that the recipient/owner/person having charge of the goods, who has brought the goods for the purpose of transportation, has to give a written statement to the railway authorities about the description of the goods, so that they can charge a reasonable rate of transportation," - Supreme Court
The court highlighted that Section 66 does not mention any specific stage - before or after delivery - when the duty should be levied. Thus, the railways have the legal right to impose penalty at any time if discrepancies are detected.
"No reference has been made as to at what stage such duty can be levied, i.e., before or after delivery. Consequently, it can be seen that the legislative intention was to permit the levy of duty under this section at any stage and not at any specific stage," - Justice Sanjay Karol
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The bench also addressed the high court's reliance on Jagjit Cotton Textile Mills vs Chief Commercial Superintendent N.R. (1998). It clarified that the decision in that case related to section 54(1) - which deals with general delivery terms - and not section 66, which specifically governs the penalty for misdeclaration.
Case Title: UNION OF INDIA Versus M/S KAMAKHYA TRANSPORT PVT. LTD. ETC.ETC.
Appearance:
For Petitioner(s) : Mr. Amrish Kumar, AOR Mr. K.M.Nataraj, A.S.G. Mrs. Ameyavikrama Thanvi, Adv. Mr. Vatsal Joshi, Adv. Mr. B.k.satija, Adv. Mr. Chinmayee Chandra, Adv. Mr. Gaurang Bhushan, Adv. Mr. Sudarshan Lamba, AOR
For Respondent(s) : Mr. Divyansh Rathi, Adv. Mr. Himanshu Makkar, Adv. Mr. Gunjan Kumar, AOR
