Thakurji Enterprises v. The Union of India

Judgment

6. Versus The Union of India through the Secretary, Ministry of Railways New Delhi. The General Manager, East Central Railway, Zonal Office Hazipur, Vaishali. The Principal Chief Commercial Manager/FM, East Central Railway, Zonal Office Hazipur, Vaishali. The Chief Commercial Manager/FM, East Central Railway, Zonal Office Hazipur, Vaishali. The Deputy Chief Commercial Manager/FM, East Central Railway, Zonal Office Hazipur, Vaishali. The Senior Divisional Commercial Manager, Sonepur Division, East Central Railway, Zonal Office Hazipur, Vaishali. ... ... Respondent/s ====================================================== Appearance : For the Petitioner/s : For the Union of India Railway : M/s Gautam Kumar Kejriwal Alok Kumar Jha Mukund Kumar Akash Kumar, Advocates M/s Subodh Kumar Jha, Sr.CGC Punam Kumari Singh, CGC Pranav Kumar Jha, Advocate ====================================================== 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 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 In view of the aforesaid, the petitioner has withdrawn the reliefs (a) and (b) of the Writ petition.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 impugned Circular

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.

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 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 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 209 (paragraph Nos. 53 and 56) and (6) M/s Monghyr Construction Co. and 8 ors. Vs. The State of Bihar & Ors. reported in (1992) 1 PLJR 44 (paragraph Nos. 24 and 25).

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 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 this Court have held in paragraph Nos. 24 and 25 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 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 CAV DATE Uploading Date Transmission Date NAFR NA 15.02.2025