27 years on, court strikes down Railway’s demand of excess fare from Grasim Group Company
The Mumbai city civil court has set aside a notice issued by the Railways demanding an additional amount of ₹21 lakh from Grasim Industries for transportation of coal. The court ruled that the coal was delivered via a longer route due to issues with the railway line. The court declared that the Railways' charging higher freight for longer routes amounts to unjust enrichment.
Mumbai: Around 27 years after a Grasim Industries group company filed a case against the Railways for charging more for transportation of the coal ordered by it, the city civil court has set aside the notice issued by the Railways demanding an additional amount of ₹21 lakh, claiming that the coal was delivered to them via a longer route.
The demand notice was issued by the Railway Board in July 1991 to Harihar Polifibers and the Grasim Industries group company challenged the demand by filing a suit in 1996.
Harihar Polifibers is an industry engaged in the manufacture of Rayon Grade Pulp and as such was one of the major consumers of coal which it procured from various collieries situated in Maharashtra and other states and the coal was transported by trains to its manufacturing units.
The company said that the railway line at Harihar Polifibers was in meter gauge line, whereas coal fields are situated on broad gauge rail lines and therefore, the coal was transported from the respective collieries to Hospeth from where it was being lifted by road and brought to the company’s manufacturing units.
It added that from November 1989 to February 1991, the railways accepted the bookings by using the shortest possible route and routed all its goods even for the said period and railway receipts were also received for transportation via the shortest possible route and the company accordingly cleared the payments of the entire freight amount of ₹67.68 lakh from November 1989 to July 1990 as per the Railway receipts issued. The payment was accepted by the railways without any grievances whatsoever.
However, they received a notice on July 18, 1991, demanding excess freight charges of ₹21 lakh from November 1989 to July 1990 under the bills which were already cleared by the company.
Railways contended that Secunderabad-Wadi and Wadi-Guntkal are single-line sections with patch doubling wherein some conversion work was being carried out at the relevant time. Since these sections were not fully converted into double lines, it was not possible and practicable to move all the goods traffic via this shorter route and hence, the goods were delivered through a longer route.
The court after hearing both sides observed that when the railways themselves had admitted that the goods of the plaintiffs were booked via a shorter route, though incorrectly and hence they had to transport the goods of the plaintiff (company) via a longer route. The court said if the shorter route was completely closed down because of some issues, then the railways could have claimed the excess amount for transporting the goods via a longer route.
The court thus declared that the act of the Indian Railways charging higher freight for longer routes from the plaintiff amounts to unjust enrichment and therefore the company was not liable to pay the amount.
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