Patna High Court
Thakurji Enterprises vs The Union Of India on 15 February, 2025
IN THE HIGH COURT OF JUDICATURE AT PATNA
Civil Writ Jurisdiction Case No.8971 of 2019
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Thakurji Enterprises a Proprietorship firm having its place of business at
2244, Gali Raghunandan, Naya Bazar, Delhi-6 through its authorized
representative namely Umang Aggarwal male aged about 29 years son of
Vinod Aggarwal resident of 85, East, Friend Enclave, Sultanpuri, B Block,
Delhi- 86.
... ... Petitioner/s
Versus
1. The Union of India through the Secretary, Ministry of Railways New Delhi.
2. The General Manager, East Central Railway, Zonal Office Hazipur, Vaishali.
3. The Principal Chief Commercial Manager/FM, East Central Railway, Zonal
Office Hazipur, Vaishali.
4. The Chief Commercial Manager/FM, East Central Railway, Zonal Office
Hazipur, Vaishali.
5. The Deputy Chief Commercial Manager/FM, East Central Railway, Zonal
Office Hazipur, Vaishali.
6. The Senior Divisional Commercial Manager, Sonepur Division, East Central
Railway, Zonal Office Hazipur, Vaishali.
... ... Respondent/s
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Appearance :
For the Petitioner/s : M/s Gautam Kumar Kejriwal
Alok Kumar Jha
Mukund Kumar
Akash Kumar, Advocates
For the Union of India : M/s Subodh Kumar Jha, Sr.CGC
Railway Punam Kumari Singh, CGC
Pranav Kumar Jha, Advocate
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CORAM: HONOURABLE JUSTICE SMT. G. ANUPAMA CHAKRAVARTHY
ORAL JUDGMENT
1. At the outset, it is relevant to mention
here that a preliminary objection has been raised
by the Learned counsel for the Railways that the
matters have to be heard before the Division
Bench as the petitioner have challenged Circulars
of the Railway Board in the Writ petition. At this
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
2/21
juncture, the Learned counsel for the petitioner
submitted that they have made alternative prayers
in these cases and, therefore, they intend to
withdraw the prayer of quashing of the Circulars.
Accordingly, the Learned counsel for the petitioner
was directed to make an endorsement in the Writ
petition, in which Circulars have been challenged,
so as to enable this Court to further proceed in the
matters. In view of the aforesaid, the petitioner has
withdrawn the reliefs (a) and (b) of the Writ
petition.
2. The petitioner has filed the instant
application for the following reliefs:
"c) For issuance of a Writ in the
nature of mandamus as directing
respondents specially the respondent
number 2 to 6 to refund the
difference of penal demurrage
charges recoverable from the
petitioner as per the impugned rate
Circular dated 18.03.2019 and
29.03.2019
to that recoverable in
terms ECR/CRM/FMS/02/GS/Misc. of
Circular number dated 10.09.2018
(hereinafter referred to as the Circular
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
dated 10.09.2018 for short) issued by
the Respondent Principal Chief
Commercial Manager on account of
the impugned rate Circular dated
18.03.2019 and 29.03.2019 being not
applicable to the case of the
petitioner or In The Alternative;
d) For holding and a declaration that
the impugned rate Circular dated
18.03.2019 as well as the Circular
dated 29.03.2019 would be
prospective in operation and would
not apply retrospectively to the indent
registered on or before expiration of
48 hours of publication of the said
Circulars in the respective divisions;
e) For holding and a declaration that
the impugned rate Circular dated
18.03.2019 as well as the Circular
dated 29.03.2019 being penal in
nature and carrying the effect of
enhancement of penal consequences
ought to have preceded by due notice
upon the parties bound to be affected
by such variation/alteration in the
penal consequences and as such both
the Circulars suffers from violation of
principles of natural justice:
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
f) For holding and a declaration that
the impugned Circular dated
29.03.2019 is not sustainable for
another vital and relevant reason of
there being no registration of indent
having taken place between
18.03.2019 till 29.03.2019 inviting
application of such harsher conditions
of complete reduction of stacking
period coupled with imposition of
extreme penal demurrage charges of
6 times the normal charges;
g) For holding and a declaration that
the petitioner having registered
indent before the impugned rate
Circular dated 18.03.2019 was issued
and published the case of the
petitioner would be governed and
guided by the Circular number
ECR/CRM/FMS/02/GS/Misc. dated
10.09.2018 as the petitioner having
relied upon the said Circular
consisting of all parameters of penal
consequences in case of no loading of
wagons had registered indent with
the respondent East Central Railway;
h) For holding and a declaration that
the impugned Circulars dated
18.03.2019 and 29.03.2019 cannot be
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
made retroactive in operation and
cannot apply against the indent
registered by the petitioner much
prior to the issuance and publication
of the said impugned Circulars;
i) For grant of any other relief or
reliefs to which the petitioner is found
entitled in the facts and
circumstances of the case."
3. The key facts derived from the petition
are that the petitioner is a proprietorship firm
registered under the Goods and Service Tax Act,
2017 and engaged in trading of foodgrains. The
petitioner purchases maize in bulk from Bihar and
supplies it to various consumers across the
country. To facilitate this, the stock is transported
from different purchase points in Bihar to the
desired destinations via railway rakes consisting of
wagons.
4. It is contended by the the petitioner
that on 17.03.2019, they booked 12 indents based
on the parameters of stacking period, demurrage
charges, and wharfage indicated in the rate
Circular dated 10.09.2018. Subsequently, the
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
respondent Railways issued new rate Circulars
dated 18.03.2019 and 29.03.2019, with revised
parameters for stacking period, demurrage
charges, and wharfage. However, the respondents
raised demurrage bills against the petitioner for
the rakes booked on 17.03.2019 (based on the
previous rate Circular dated 10.09.2018) in
accordance with the new, more stringent
parameters stipulated in the rate Circulars dated
18.03.2019 and 29.03.2019. The petitioner further
contended that this action by the respondents is
wholly illegal, as it contradicts the well-settled
principle of law that modifications or amendments
in rules cannot be applied to transactions that
occurred prior to such modifications, especially
when the changes introduced are penal and more
rigorous in nature.
5. It is further contended by the petitioner
that out of the 12 indents booked, 8 were
withdrawn because the rakes were placed in
September, November, and December 2019, when
there was no longer a requirement for supply to
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
customers. The remaining 4 rakes were cancelled
by the respondents, resulting in the forfeiture of
Rs.50,000 for each such rake, which had been
deposited by the petitioner as a registration
amount. As a result, the respondents charged
demurrage for all 4 rakes, along with the forfeiture
of Rs.50,000 for each rake due to the petitioner's
inability to load them. The petitioner further
submitted that for the 4 rakes cancelled by the
respondents due to non-loading, demurrage
charges were levied according to the new rate
Circulars dated 18.03.2019 and 29.03.2019, while
in fact, the demurrage should have been charged
as per the rate Circular dated 10.09.2018 and
consequently, the respondents have recovered
excess demurrage charges from the petitioner,
which were in excess of what the petitioner would
have been liable for under the rate Circular dated
10.09.2018. It is contended by the Learned counsel
for the petitioner that the petitioner is, therefore,
entitled to a refund of Rs.3,55,500, representing
the difference in the demurrage charges. The
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
petitioner prays that this amount of Rs.3,55,500 be
considered refundable, as it represents the excess
demurrage recovered, and that the Court may
issue necessary directions in this regard.
6. The Learned counsel for the petitioners
submits that the expression "free time" in the
context of demurrage and wharfage, as defined in
Section 2(11) and Section 2(41) of the Railways
Act, 1989, is explained in detail in Clause 2.2.2 of
the Railway Board's Circular No. TC 1/2016/201/1
dated 19.05.2016 (hereafter referred to as the
Circular). According to this clause, "free time" for
railway terminals, goods sheds, railway sidings,
public sidings, and private/assisted sidings refers
to the period allowed by the railways for loading or
unloading activities without incurring penalty
charges. Demurrage charges apply if there is
excessive detention of a rake beyond this free
time. Excess detention is calculated as: (time of
release minus time of placement) - free time.
Clause 3.0 of the Circular details how and at what
rate demurrage charges are levied for detention
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
beyond the permissible free time. Clause 3.1 states
that demurrage charges at the prescribed rate
apply in cases of excessive detention for loading or
unloading. Clause 3.4 indicates that the
respondent railways may impose penal demurrage
charges, which can be up to six times the normal
rate, depending on the situation at a particular
siding. Clause 3.4.1 specifies that penal demurrage
charges require a 48-hour notice to inform the
concerned parties, and Clause 3.4.2 mandates that
any increase in these charges should be gradual,
ranging from 2 to 6 times the normal rate, with the
maximum only applied in extreme cases. It is
submitted by the Learned counsel for the
petitioner that the peak business period for
agricultural products like maize is from April to July,
with the crop being harvested in April. During this
period, the frequency of rake placements and bulk
loading of maize increases. To ensure the
availability of railway wagons during peak business
hours, maize suppliers typically make advance
bookings with the railways. Under the Railway
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
Board's Circulars, the respondent railways at the
East Central Railway zonal office have the
authority to classify a terminal as congested and
set demurrage and wharfage charges accordingly.
Stacking periods and penal demurrage charges are
prescribed for specific sidings based on these
powers.
7. The Learned counsel for the petitioner
further submits that before the Circulars dated
18.03.2019 and 29.03.2019, Circular No.
ECR/CRM/FMS/02/GS/Misc. dated 10.09.2018
outlined the stacking periods and penal demurrage
charges for maize loading during the 2018-19
period. Key points from this Circular include:
(I) It applied to the Sonepur and Samastipur
divisions.
(ii) Stacking periods were set to 48 hours for
indents of 1-10 rakes and 24 hours for indents
above 11.
(iii) Penal demurrage charges were applied at
the normal rate for the first 4 hours, doubled
for the next 4 hours, and further increased for
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
subsequent hours.
8. Counter affidavits were filed on behalf
of the respondents.
9. Upon perusal of the records, it appears
that a detailed counter-affidavit was filed on behalf
of the respondents on 23.08.2019. However,
following a preliminary objection raised by the
respondents Railway, asserting that the matters
involved in the Writ petition should be heard before
a Division Bench, the petitioner withdrew the
prayers in paragraphs 1(a) and (b). Subsequently,
the petitioner filed a supplementary affidavit,
bringing on record the main grievance. In
response, the respondents filed a second counter-
affidavit addressing the points involved in the Writ
petition.
10. It is submitted on behalf of the
respondents that the petitioner has withdrawn the
prayers in paragraph 1(a) and (b), which
challenged the Circulars dated 18.03.2019 and
29.03.2019. Therefore, the Writ petition no longer
holds merit and should be dismissed on this
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
ground alone. Furthermore, the petitioner's claim
regarding the retrospective applicability of the
Circular is incorrect, as the Respondent Railway
charged demurrage and detention as per the
applicable rules and Circulars at the time. It is also
stated in the counter affidavit that the petitioner
and others have misused the registration process
for wagon demand. On 17.03.2019, within 25
minutes, 272 indents were electronically placed,
including the petitioner's. Registration of indents is
essentially a queue for wagon allocation. Despite
registering 12 indents, the petitioner's wagon was
supplied by the Respondent Railway on
23.03.2019. If goods are not loaded within the
prescribed 9-hour loading window, the registration
fee is forfeited. If the railway fails to supply a
rake/wagon within 10 days, the registration fee
should be refunded. It is further submitted that if
the wagon is supplied but the customer fails to
load the goods and intends to manipulate market
dynamics, the railway may forfeit the fee and
charge demurrage as per the existing rules. It is
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
the contention of the respondents that in this case,
the petitioner could not load the maize within the
designated time frame and requested to withdraw
the placed rake. As a result, the Respondent
Railway forfeited the registration fee and applied
demurrage as per the prevailing Circular.
11. It is further submitted by the the
Learned counsel for the respondents that the
Respondent Railway did not charge excess penal
demurrage beyond the prevailing Circular and did
so prospectively. Additionally, the petitioner did not
request a waiver of the penal demurrage within the
prescribed 10-day period, as per paragraph 2.3 of
the Demurrage-Wharfage Rate Master Circular
(19.05.2016). The Learned counsel for the
respondents submitted that the petitioner failed to
avail of this remedy within the prescribed time.
Accordingly the respondents submitted that the
petitioner's statement in the Supplementary
Affidavit is not in accordance with the law and is
therefore disputed and denied.
12. Heard the rival contentions of the
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
Learned counsel for the petitioner as well as the
Learned Counsel for the Respondents and also
perused the record.
13. The main point for consideration in
this Writ petition is whether the Circular dated
18.03.2019 and 29.03.2019 can apply
retrospectively?
14. Contention of the Learned counsel for
the petitioner is that as against 12 indents booked
by the petitioner, 8 such indents were withdrawn
as the rakes were placed in the month of
September, November and December 2019 when
there was no more requirement of supply of
product to the customers and the remaining 4
rakes were cancelled by the respondents with a
consequence of forfeiture of the registration
amount of Rs. 50,000 deposited by the petitioner
with respect to each such rake. Accordingly, the
respondents charged demurrage with respect to all
such 4 rakes along with forfeiture of 50,000 made
while cancelling the rakes due to inability of the
petitioner to load them. It is further submitted that
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
as against the 4 rakes which were cancelled by the
respondents due to non- loading by the petitioner,
demurrage charges have been levied as per the
Circular dated 18.03.2019 and 29.03.2019 whereas
the demurrage ought to have been charged as per
the rate Circular dated 10.09.2018. Therefore, the
respondents have recovered excess of demurrage
charges from the petitioner by applying the new
rate Circular dated 18.03.2019 and 29.03.2019
which entitles the petitioner to a refund of Rs.
3,55,500/- being the differential of the demurrage
recovered from the petitioner in excess to what the
petitioner would be actually liable as per the rate
Circular dated 10.09.2018.
15. In support of its contention, the
Learned counsel for the petitioner placed reliance
on the decisions of Hon'ble Supreme Court as well
as of this Court, i.e., (1). Star India Private
Limited Vs. CCE reported in (2005) 7 SCC 203,
(Paragraph Nos. 7 and 9) (2). Monnet Ispat &
Energy Limited Vs. Union of India reported in
(2012) 11 SCC 1, (Paragraph No. 153) (3). State
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
of Rajasthan Vs. Ucchab Lal Chhanwal
reported in (2014) 1 SCC 144 = 2014(1) PLJR
SC 350, (Paragraph Nos. 9 and 10) (4). Rajendra
Kumar Barjatya & Anr. Vs. U.P. Awas Evam
Vikas Parishad & Ors. (Civil Appeal No. 14604
of 2024), (5). Anushka Rengunthwar & Ors.
Vs. Union of India reported in (2023) 11 SCC
Monghyr Construction Co. and 8 ors. Vs. The
State of Bihar & Ors. reported in (1992) 1 PLJR
16. In the case of Star India (P) Ltd.
(supra), the Hon'ble Supreme Court has held in
paragraph nos. 7 and 9 as follows:
"7. In any event, it is clear
from the language of the validation
clause, as quoted by us earlier, that
the liability was extended not by way
of clarification but by way of
amendment to the Finance Act with
retrospective effect. It is well
established that while it is permissible
for the legislature to retrospectively
legislate, such retrospectivity is
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
normally not permissible to create an
offence retrospectively. There were
clearly judgments, decrees or orders of
courts and tribunals or other
authorities, which were required to be
neutralised by the validation clause.
We can only assume that the
judgments, decrees or orders, etc. had,
in fact, held that persons situate like
the appellants were not liable as
service providers. This is also clear
from the Explanation to the validation
section which says that no act or acts
on the part of any person shall be
punishable as an offence which would
have been so punishable if the section
had not come into force.
9. It is also to be noted that
the Tribunal itself deleted the
imposition of penalty imposed by the
Commissioner (Appeals) on the
appellants on this ground."
17. In the case of M/s Monghyr
Construction Co. (supra), a Division Bench of
as follows:
"24. In view of the principle
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
laid down by the Supreme Court in
the cases mentioned above. I am of
the view that the impugned order by
itself does not create any liability on
the petitioners or on other
contractors to pay royalty and cess
for the minor minerals used by them
in execution of the contract work. It
does not levy any tax on the
petitioners. The provision has been
incorporated in the said Circular in
the larger interest of the public to
prevent evasion and to ensure
payment of royalty and cess and so it
is regulatory in nature.
25. Lastly, it was argued
that the impugned order came in
existence on 14-4-88 and it could not
justify deduction of any amount as
royalty and cess from the bills earlier
submitted by the petitioners. It was
submitted that it would not be legal
and proper to give effect to the
impugned order with retrospective
effect. There is considerable force in
the argument. It is well settled that
the restrictions imposed by a
Notification issued by the
Government in general language can
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
only be exercised prospectively and it
cannot be given retrospective effect.
Consequently the amount deducted
so far from the bills of the contractors
prior to the date of issuance of
impugned Circular dated 14-4-88
cannot be justified and as such the
respondents are legally obliged to
refund the same."
18. From bare perusal of the aforesaid
judgments, this Court is of the considered view
that the impugned rate Circulars dated 18.03.2019
and 29.03.2019 would operate prospectively, not
retrospectively.
19. Upon reviewing the Circulars dated
18.03.2019, 29.03.2019, and 10.09.2018, along
with the tabulated details placed in Annexure-11, it
appears that out of the 12 indents booked by the
petitioner, 8 were withdrawn because the rakes
were placed in September, November, and
December 2019, when there was no longer a need
to supply the product to customers. The remaining
4 rakes were cancelled by the respondents,
resulting in the forfeiture of the Rs. 50,000
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
registration amount deposited by the petitioner for
each rake. As a result, the respondents charged
demurrage on all 4 cancelled rakes, along with the
forfeiture of Rs. 50,000 for each, due to the
petitioner's inability to load them. Furthermore, for
the 4 rakes cancelled due to non-loading by the
petitioner, demurrage charges were applied based
on the Circulars dated 18.03.2019 and 29.03.2019.
However, these charges should have been
calculated according to the rate Circular dated
10.09.2018. In my view, the respondents have
recovered excess demurrage charges from the
petitioner by applying the new rate Circulars. This
entitles the petitioner to a refund of Rs. 3,55,500,
which represents the differential between the
demurrage charges levied and what the petitioner
would have actually been liable for under the rate
Circular dated 10.09.2018.
20. Therefore, I direct the respondents to
refund Rs. 3,55,500 to the petitioner forthwith,
which represents the excess demurrage recovered
for the rakes not loaded by the petitioner for
Patna High Court CWJC No.8971 of 2019 dt.15-02-2025
unavoidable reasons. This Court is also of the
considered view that the impugned rate Circulars
dated 18.03.2019 and 29.03.2019 would operate
prospectively not retrospectively.
21. With the aforesaid observations, the
Writ petition stands disposed of.
22. Interlocutory Application(s), if any,
shall stand disposed of.
(G. Anupama Chakravarthy, J)
Spd/-
AFR/NAFR NAFR
CAV DATE NA
Uploading Date 15.02.2025
Transmission Date
