Railways – Freight Charges – Difference between Overcharge against Illegal Charge – Refund of Freight charges on account of change in policy and revision of distance table – Section 106(3) of the Railways Act, 1989
Transportation of consignment of furnace oil of the IOC between 2002 and 2005 via Railway from Baad to Hisar. The freight charges were calculated for total distance of 444 kms as per the then prevailing distance table plying for the said route.
On 7.4.2004, the Railways had rationalized the method of calculating the “chargeable distance” by rounding the chargeable distance between the pairs of station routes by rounding off the aggregate of the actual engineering distance to the next higher kilometer only once at the end. This new methodology was being adopted in order to ensure uniformity and accordingly the zonal railways were to revise the distance tables with effect from 1.6.2004.
On 5.7.2005, the Chief Commercial Manager informed the Chief Goods Supervisor that the earlier distance of 444 kms. should be changed to 334 kms.
In this background, the Company sent notice dated 7.11.2005 under Section 78B of the erstwhile Railways Act, 1890, for refund of difference of freight charges erroneously charged.
The Railway Claims Tribunal dismissed claim applications as time barred. The High Court in appeals held that it was a case of illegal charge and not that of overcharge.
In appeal, the Supreme Court held that “overcharge” is any sum charged in excess or more than what was payable as per law. However, “illegal charge” is any sum not permitted by law or lacks authority of law or unlawful. In other words, overcharge is effectively concerned with the error in the quantum of charges payable and illegal charge is without authority of law. Section 106(3) of the Railways Act, 1989, applies to the claim for refund of overcharge and for all other charges including illegal, it has no application. In this case, the change in the policy is the change in methodology for calculation of chargeable distance which has direct bearing on chargeable distance. Thus, mere change in the policy resulting in change of charge payable as per law will not render the original charge illegal. The chargeable distance of 444 kms was illegal since the effect of the change in methodology would not have resulted in huge difference of 110 kms, there was neither any change nor in the track length of the said route, the letter dated 5.7.2005 itself shows that the change in the chargeable distance of 444 kms was due to an error and the failure of the appellant to establish that the chargeable distance of 444 kms was correct. Thus, the chargeable distance of 444 kms was illegal. No infirmity in the judgment of the High Court.
Judgment dated 21.3.2024 in Civil Appeal Nos.1891-1966 of 2024 of Union of India Vs. M/s. Indian Oil Corporation Ltd.
