M/S Rare Earth Overseas vs Container Corporation Of India ...
2015 Latest Caselaw 938 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI
                                       Date of decision: 3rd February, 2015
+                               W.P.(C) 2957/2012

       M/S RARE EARTH OVERSEAS                    ..... Petitioner
                    Through: Mr. Shahid Ali, Adv.
                                     Versus

    CONTAINER CORPORATION OF INDIA LTD. ...Respondent
                  Through: Mr. Abhas Kumar, Adv.
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

RAJIV SAHAI ENDLAW, J.

1. The petitioner filed this petition seeking the reliefs of, (i) quashing /

setting aside of the policy formulated and adopted unilaterally by the sole

respondent for determining the compensation claims for losses / damages

caused to consignments deposited with the respondent; and, (ii) for a

direction to the respondent to compensate the petitioner equivalent to the

loss suffered by the petitioner on account of destruction of the goods of the

petitioner in the incident of fire at the Inland Container Depot (ICD),

Tughlakabad, New Delhi on 10th April, 2010, pleading:

(i) that the Govt. of India, to facilitate the export from places like

Delhi where the port of loading in ships is not available had felt the

need to constitute a statutory body and therefore established the

respondent Container Corporation of India Ltd. as a subsidiary of

Indian Railways to cope with the requirement of exporters operating

from places where the ports of loading are not situated;

(ii) that the petitioner, executing an export order placed by its

foreign client based at Ukraine, had on 9th April, 2010 deposited

goods with the warehouse of the respondent situated at Export

Warehouse, ICD, Tughlakabad, New Delhi in order to transport the

goods through the respondent to port of loading in the ships at

Mumbai Port;

(iii) that as per the practice, the petitioner had also deposited the

invoice shipping bills for export and packing list showing the value of

the goods deposited as Rs.6,06,282.75 paise;

(iv) that owing to the failure of the respondent to perform its duty /

obligation to secure the said goods including against the risk of fire,

on 10th April, 2010, while the goods of the petitioner were still lying

deposited at ICD, Tughlakabad, a major fire occurred therein

destroying inter alia the goods of the petitioner;

(v) that the petitioner in response to a public notice issued by the

respondent inviting claims, on 13th April, 2010 preferred a claim but

the respondent vide communication dated 7th February, 2011 informed

the petitioner that in terms of its policy, a sum of Rs.1,07,090/- only

was payable to the petitioner;

(vi) that on making further enquires, the petitioner further learnt that

the claim had been so assessed in accordance with the provisions of

The Indian Railways Act, 1989 and The Railways (Extent of

Monetary Liability and Prescription of Percentage Charge), Rules,

1990 (hereinafter referred to as the Rules) which provide for

maximum payment @ Rs.50 per Kg. of goods.

Contending that though the sum of Rs.50 per Kg. may have

been a good compensation in the year 1990, when the policy

contained in the Rules was framed but can no longer be good today

and that weight cannot always be the criteria for payment of

compensation, the writ petition was filed.

2. The petition was entertained and the respondent filed a counter

affidavit, pleading:

(a) that the respondent is governed by the provisions of the

Railways Act with regard to the compensation claim of any kind of

loss / damage caused to the consignment in transit;

(b) that as per Section 103 of the Railways Act, where the value of

a consignment entrusted to Railways for carriage has not been

declared by the consignor, the amount of liability of the Railway

Administration for the loss, destruction, damage, deterioration or non-

delivery of consignment shall in no case exceed such amount

calculated with reference to the weight of the consignment as may be

prescribed; however where the consignor at the time of entrusting the

consignment for carriage by Railways declares the value thereof and

pays such percentage charge as may be prescribed on such value of

the consignment as is in excess of the liability of the Railway

Administration as per weight, the liability of the Railway

Administration for the loss, destruction, damage, deterioration or non-

delivery of such consignment shall not exceed the value so declared;

(c) that the amount payable in the event of non-declaration of the

value has been prescribed by Rule 3 of the Rules aforesaid as Rs.50

per Kg.;

(d) that since the petitioner had not declared the value or paid any

amount towards percentage of such value, the petitioner in accordance

with the Act and the Rules was entitled to an amount @ Rs.50 per Kg.

only and the amount offered to the petitioner had been so calculated

on the weight of 2141.80 Kg.;

(e) that 90% of the exporters or importers availing of the facility of

the respondent insure their goods with some Insurance Company; so

as to not to burden them with double liability towards insurance

charges, the policy aforesaid of giving an option to them of declaring

value of the goods and paying percentage charge had been adopted.

3. The petitioner filed an application stating that during the hearing of

the petition on 7th November, 2012, it was felt that though the petitioner had

sought quashing / setting aside of the policy formulated by the respondent

but since the petitioner had not impugned Rule 3 of the Rules aforesaid, the

petition was deficient and seeking leave to amend the petition and to also

claim the relief of impugning Rule 3 of the Rules aforesaid.

4. Though the respondent opposed the aforesaid application of the

petitioner but the amendment was allowed vide order dated 12 th March,

2013.

5. The counsel for the respondent dispensed with the filing of counter

affidavit to the amended petition and the counsel for the petitioner stated that

no rejoinder to the counter affidavit needs to be filed.

6. The petition till then, as per Roster of this Court was pending before a

Single Judge of this Court, however finding that the amended petition

challenged the vires of a statutory rule and which challenge was to be heard

by a Division Bench, the petition was vide order dated 4th July, 2013 ordered

to be put up before a Division Bench of this Court.

7. Thereafter, the matter was adjourned from time to time on the request

of the counsels and finally on 2nd September, 2014 arguments were heard

and judgment reserved.

8. The counsel for the petitioner argued that the rate of Rs.50 per Kg.

fixed as rate of compensation in the year 1990 cannot be good for the next

25 years.

9. We had during the hearing enquired from the counsel for the

petitioner, would not setting aside Rule 3 of the Rules supra which provides

for payment of compensation @ Rs.50 per Kg., create a vacuum, with the

petitioner being not entitled to any compensation and be thus detrimental to

the interest of the petitioner.

10. No answer was forthcoming.

11. The counsel for the respondent argued that the petitioner having not

opted for insurance with the respondent by declaring the value of the

consignment and paying percentage charge of such value, cannot be entitled

to the value now claimed by him and can only be entitled to the

compensation in terms of the Rules i.e. @ Rs.50 per Kg. of the consignment.

It was further contended that hardship, even if any to the petitioner being

attributable to the failure of the petitioner itself to declare any such value, is

no ground to quash the Policy / Rules. Reliance in this regard was placed on

Bharat Petroleum Corporation Ltd. Vs. Maddula Ratnavalli (2007) 6 SCC

81. It was further contended that even if this Court were to hold that the

compensation under the Rules @ Rs.50 per Kg. needs to be amended, such

amendment can be prospective only and cannot benefit the petitioner.

Reliance in this regard was placed on M/s. Kusumam Hotels (P) Ltd. Vs.

Kerala State Electricity Board (2008) 13 SCC 213.

12. The counsel for the petitioner in rejoinder argued that the damage in

the present case was owing to the depot of the respondent lacking the fire

fighting facility which it ought to have maintained; that the loss of goods in

the present case was not in transit but at the depot of the respondent; that the

severity of the incident is evident of the fact that it took eleven hours to

bring the fire under control.

13. The petitioner itself in the petition has described the respondent either

as an „autonomous body‟ set up under the Ministry of Railways in the year

1988 or as a „statutory body‟ established as a subsidiary of Indian Railways.

The respondent in its counter affidavit has described itself as a Public Sector

Undertaking. The respondent on its website www.concorindia.com describes

itself as "A Govt. of India Undertaking" or as a "Central Public Sector

Undertaking".

14. Though the petitioner in the amended petition has inter alia impugned

Rule 3 of the Rules aforesaid and which Rules have been framed by the

Central Government in exercise of powers under Section 112 of the

Railways Act but we have at the time of dictating the judgment found that

the petition does not implead Union of India as a respondent. We fail to see

as to how, without impleading the Union of India, challenge to the vires of

the Rule aforesaid can be maintained.

15. As far as the other reliefs claimed in the petition are concerned, the

same are dependent upon the challenge to the vires of the said Rule and if

the said challenge is not maintainable for this reason, the question of the

petitioner being entitled to other reliefs, would not arise.

16. Unfortunately, not only did the petitioner fail to implead the Union of

India but even the counsel for the respondent failed to take any such

objection, either in the counter affidavit or at the time of arguments and

which resulted in the said lacuna being discovered after the judgment has

been reserved.

17. Not only so, what further becomes evident is that the said Rule is in

consonance with Section 103 of the Railways Act. It is the said Section 103

which provides that in the absence of the consignor making a declaration of

the value thereof and paying such percentage charge as may be prescribed

on such value, the liability of the Railways will be confined to what may be

prescribed. The Rule merely prescribes the said value. The purport of the

challenge by the petitioner appears to be to the liability being so restricted.

For such a challenge to be maintainable, the petitioner is required, if entitled,

to challenge the vires of Section 103 of the Act and which has not been

done. However, if the purport is only to challenge the amount of fixed

liability prescribed being not enhanced with the passage of time, then of

course Section 103 need not be challenged.

18. We may notice that a provision as in Section 103 of the Railways Act,

is also to be found in the Carriage of Goods by Road Act, 2007, Multimodal

Transportation of Goods Act, 1993, The Carriage by Air Act, 1972 and The

Carriage of Goods by Sea Act, 1925. The Supreme Court in Nath

Bros. Exim International Ltd. Vs. Best Roadways Ltd. (2000) 4 SCC 553

examined judgments of various High Courts inter alia to the effect that

relative rights and liabilities of common carriers and those for whom they

carry, are outside the Indian Contract Act and the liability of a common

carrier for loss of goods may be limited. A Division Bench of the High Court

of Madras, in Shivashankar Textiles Vs. Union of India

MANU/TN/0724/2005 held that when rights of consignor and the Railway

Administration are governed by statutory provision, Railway Administration

cannot be held liable to entire value of good entrusted and it is for the

consignor to declare the value, pay percentage charges and then claim such

value in the event of loss and unless the consignor does so, he would have

no right to defeat the statutory provision.

19. As far as the challenge on the ground of the rates of fixed

compensation prescribed in the year 1990, having notwithstanding passage

of time being not been revised, though there is considerable judicial

authority (See Anuj Garg Vs. Hotel Association of India (2008) 3 SCC 1,

Hotel Association of India Vs. Union of India MANU/DE/0284/2006,

Atam Prakash Vs. State of Haryana (1986) 2 SCC 249, Bipin Shantilal

Panchal Vs. State of Gujarate (2002) 10 SCC 529, Malpe Vishwanath

Acharya Vs. State of Maharashtra (1998) 2 SCC 1, Onkareshwar Prasad

Vs. State of Bihar MANU/BH/1166/2011 (where rates of treatment fixed

were held to be archaic), Raghunandan Saran Ashok Saran (HUF) Vs.

Union of India 95 (2002) DLT 508 (DB) and Ramji Veerji Patel Vs.

Revenue Divisional Officer (2011) 10 SCC 643) in support of the

proposition that with the passage of time a legislation which was justified

when enacted may become arbitrary and unreasonable with the change of

circumstances but the present is not a case where Section 103 of the Act in

absolute terms limits the liability of the Railways for compensation.

Liability is limited only in the eventuality of the consignor not declaring the

value of the consignment and not paying the charges in the form of premium

for insurance on such value. It is only in that event that the liability of the

Railways and of the respondent is limited.

20. However, having said that, it is not as if, Section 103 also absolves the

Railways of all liabilities. The Legislature deemed it appropriate to, in the

event of the consignor not so declaring the value and thereby taking

insurance, fixing the liability of the Railways as per weight of the

consignment / goods. What that liability should be was left to the Central

Government to prescribe (see Section 112 empowering the Central

Government to by notification make rules to carry out the purposes of

Chapter XI of the Act which contains Sections 93 to 112 and Sub-section

(2)(c) whereof specifically provides for the Central Government to make

rules providing for the maximum amount payable by the Railways for the

loss, destruction, damage, deterioration or non-delivery of any consignment

under Sub-Section (1) of Section 103). The Central Government in

discharge of its liability under Section 103 read with Section 112 prescribed

the Rules aforesaid and Rule 3 whereof prescribes inter alia the rate of

Rs.50 per Kg.

21. The language of Section 103 precludes the consignor, in the event of

having not declared the value of consignment and taken insurance therefor

by paying the premium, from claiming any compensation in excess of that

prescribed. The general or so-called common law would ordinarily make a

carrier liable in tort for damage caused to the goods. Though by Statute the

said liability has been limited but such provision in a Statute, if static, would

run the risk of being declared ultra vires and which would result in the

Railways / respondent, as a carrier of goods becoming liable under the

general law of tort. It is perhaps for this reason only that Section 103,

instead of fixing / limiting the compensation itself has left it to be prescribed

with the intent that the Government by making assessment from time to time

as may be required would prescribe the limits of the compensation. The

Government however has not done so.

22. It cannot be lost sight of that Railways enjoys monopoly in the

country. There is a need to approach the aspect of such compensation from

a holistic perspective, keeping in mind the interest of the citizens. It prima

facie appears that the Government is required to have a relook into the Rules

from time to time to keep pace with the inflationary trends and to ensure that

the rate of compensation fixed in the year 1990 at least remains static in

terms of value and does not fall with the passage of time. The buying power

of Rs.50 today is far less than what it was in the year 1990. What thus has

happened is that the value of compensation payable today under the

aforesaid provisions is far less than that payable in the year 1990. There

does not appear to be any reason therefor.

23. All the aforesaid are but our meanderings on the subject and which we

feel our duty to record, having reserved judgment and having applied

ourselves to the subject. The same, in the absence of Union of India as

aforesaid, can by no stretch of imagination be binding. For the same reason,

we cannot also issue a direction to the Ministry of Railways to have a relook

into The Railways (Extent of Monetary Liability and Prescription of

Percentage Charge), Rules, 1990.

24. We accordingly dispose of this petition by granting liberty to the

petitioner to, if so desires, within two months herefrom file a fresh petition

with appropriate parties and claiming appropriate reliefs and by further

directing that if the petition is preferred within the time of two months, the

same shall not be rejected / dismissed on the ground of delay and laches.

Though Union of India is not a party to the writ petition, a copy of this order

be forwarded to the Chairman, Railway Board as well as to the Secretary,

Railways, Government of India for consideration.

No costs.

RAJIV SAHAI ENDLAW, J.

CHIEF JUSTICE FEBRUARY 3, 2015 „bs‟