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REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVILAPPELLATE JURISDICTION

CIVIL APPEAL No. 6905 OF 2005   

M/S. S.K.L. CO.                  .….. APPELLANT

Vs.

CHIEF COMMERCIAL OFFICER & ORS.          .….. RESPONDENTS

  J U D G M E N T

VIKRAMAJIT SEN,J.

1 This Appeal assails the Judgment dated 15.7.2004 of the High Court of

Karnataka in Writ Appeal Nos. 5722-5723 of 2001 setting aside the judgment of

the  learned  Single  Judge  dated  25.7.2001  who  had  allowed  both  the  Writ

Petitions and quashed the impugned Notification, holding that the awarding of

contract  of  lease  of  FSLR and VP is  bad in  law. The factual  matrix  of  the

present case is that in pursuance of the budget speech of the Hon’ble Minister

for Railways in the year 1999-2000, the Respondents issued a tender notice no.

3/2000-2001  (hereinafter  referred  to  as  ‘impugned  notice’)  on  19.6.2000,

inviting sealed tenders from traders and other interested parties for leasing of

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Front Second class Luggage Rake of 4 or 8 tons and Ventilated Parcel Van of 18

tons capacity on the Broad Gauge on payment of lump sum rate for loading of

parcels by certain trains for a period of two years.  

2 The first compartment, immediately after the engine, is known as Front

Second Class Luggage Rake (FSLR) and each FSLR consist of four different

sections.   The  first  section  is  meant  for  carrying  goods/parcels  of  4  tons

capacity, followed by the section known as the ‘Brake Van’ which is occupied

only by the guard.  The third section is for carrying unreserved passengers, and

the  last  section  is  again  a  luggage  compartment  with  a  capacity  of  4  tons.

Similarly, the last compartment in each train is known as Rear Second Class

Luggage  Rake  (RSLR),  which  also  consists  of  four  sections  similar  to  the

FSLR.  Further, if there is excess demand, a Ventilated Parcel Van (VP) is added

to the train after reducing, if necessary, a passenger compartment so as not to

exceed  the  maximum  hauling  capacity  of  the  engine.  The  VP  is  meant

exclusively for the purpose of carrying parcels and its normal capacity is 18

tons. The Respondents had noticed that in some trains, most of the time, the

luggage capacity  available  in  FSLR and RSLR was not  being fully  utilized

resulting in loss of revenue.  In view of this, as a matter of policy, it was decided

by the Government of India to lease the luggage space in FSLR to traders and

other interested persons after inviting tenders from them.  

3 FSLR  of  Train  no.  2627  Bangalore-  New  Delhi-  Karnataka  Express

(Daily) [hereinafter ‘Karnataka Express’] was leased for a period of two years at

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Rs. 19,800/- per 4 metric ton space per day.  The lease was given on 24.7.2000

in favour  of  a  company known as BIC Logistic  Limited,  in  pursuance  to  a

tender issued by the Respondents.  The lessees agreed to pay for the two spaces

each of 4 tons at that rate aggregating to Rs. 39,600/- per 8 tons per day.  The

Appellant  filed  Writ  Petition  No.  27568  of  2000  before  the  High  Court  of

Karnataka,  challenging  the  impugned  notice.  The  Appellant  is  engaged  in

trading of grapes who contended that as a result of the Respondents leasing out

the FSLR in the Karnataka Express, the Appellant was denied the facility of

transporting grapes from Bangalore to New Delhi at the rates specified in the

Coaching Tariff no. 24 Part III (Rates for Parcels & Luggage Traffic), which

came into effect on 1.4.2000. Another trader of grapes filed Writ Petition No.

37150 of 2000 before the High Court of Karnataka on 27.11.2000 seeking to

restrain  the  Respondent-  Railways  from  charging  any  tariff  other  than  that

specified  in  Coaching  Tariff  No.24  Part  III.   The  learned  Single  Judge  by

common Judgment dated 25.7.2001 allowed both the Writ Petitions and quashed

the impugned notification,  holding that  the awarding of  contract  of  lease of

FSLR and VP is bad in law.  Aggrieved by the decision of the learned Single

Judge, the Respondents preferred two appeals.

4 Before the Division Bench, the Respondents contended that the learned

Single Judge erred in holding that the authority of the Respondents to lease the

carrying capacity in the trains is only in accordance with Section 30 and 32 of

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the Indian Railways Act, 1989 (for brevity the ‘Act’) which, for convenience,

are reproduced below:

30.  (1)  The  Central  Government  may,  from  time  to  time,  by general  or  special  order  fix,  for  the  carriage  of  passengers  and goods, rates for the whole or any part of the railway and different rates may be fixed for different  classes of goods and specify in such order the conditions subject to which such rates shall apply.  (2) The Central Government may, by a like order, fix the rates of any other charges incidental  to  or  connected with such carriage including demurrage and wharfage for the whole or any part of the railway and specify in the order the conditions subject to which such rates shall apply.  

31. The Central Government shall have power to— (a)  classify  or  reclassify  any  commodity  for  the  purpose  of

determining the rates to be charged for the carriage of such commodities; and

(b)   increase or reduce the class rates and other charges.

32. Notwithstanding anything contained in this Chapter, a railway administration may, in respect of the carriage of any commodity and subject to such conditions as may be specified,—  (a)   quote a station to station rate;  (b)  increase or reduce or cancel, after due notice in the manner

determined by the Central  Government,  a  station  to  station rate,  not  being  a  station  to  station  rate  introduced  in compliance with an order made by the Tribunal;

(c)  withdraw, alter or amend the conditions attached to a station to station rate,  other  than conditions introduced in compliance with an order made by the Tribunal; and  

(d)   charge any lump sum rate.

5 The  Respondents  contended  that  the  learned  Single  Judge  failed  to

understand the objective and purpose with which the available parcel space in

FSLR and VP was being sought to be exploited. The Respondents stated that it

aimed to benefit by getting maximum rate without affecting the interests of the

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general public, for whom there was still adequate provision of space available

in every train. The Respondents further stated that in pursuance of an order of

the High Court dated 28.1.2002, an affidavit had been filed by the Respondents

which would allay any apprehension of the Appellant, with respect to it being

inconvenienced  in  transporting  its  commodities.  The  Respondents  will  not

hesitate  to consider  adding another  wagon to meet  the needs of  the general

public. Finally, the Respondents contended that there was no express provision

permitting them to give the wagon on lease, however, au contraire, neither was

there any provision under the Act which prohibited the Respondents from doing

so. The Appellant while supporting the order of the learned Single Judge, placed

reliance  on Section  70 and  71 of  the  Act,  which is  being provided for  the

facility of reference.  

70. A railway administration shall not make or give any undue or unreasonable  preference  or  advantage  to,  or  in  favour  of,  any particular  person  or  any  particular  description  of  traffic  in  the carriage of goods.  

71. (1) The Central Government may, if it is of the opinion that it is necessary  in  the  public  interest  so  to  do,  by  general  or  special order, direct any railway administration—  

(a) to give special facilities for, or preference to, the carriage of such,  goods  or  class  of  goods  consigned  by  or  to  the  Central Government  or  the  Government  of  any  State  or  of  such  other goods or class of goods;  (b) to carry any goods or class of goods by such route or routes and at such rates;  (c) to restrict or refuse acceptance of such goods or class of goods at or to such station for carriage, as may be specified in the order.

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(2) Any order made under sub-section (1) shall cease to have effect after the expiration of a period of one year from the date of such order, but may, by a like order, be renewed from time to time for such period not exceeding one year at a time as may be specified in the order.  

(3) Notwithstanding anything contained in this Act, every railway administration  shall  be  bound  to  comply  with  any  order  given under  sub-section  (1)  and  any  action  taken  by  a  railway administration in pursuance of any such order shall not be deemed to be a contravention of section 70.

6 The Appellant contended that Section 70 was an implied restriction on the

Respondents capacity to call for such tenders.  The only exception to Section 70

is  Section 71,  which can be exercised only on the discretion of  the Central

Government, for the purpose of public interest. The Appellant contended that by

inviting such tenders, no public interest was being served and instead has led to

the creation of a monopoly in favour of one person with respect to the mode of

transportation, which in turn was detrimental to public interest. Extending the

line  of  argument  on  Section  71,  the  Appellant  contended  that  the  Central

Government  had  not  issued  any  special  or  general  order,  enabling  the

Respondents to give special or preferential facility in the carriage of goods to

anyone who offers the highest lump sum rate. The Appellant submitted that the

content of the affidavit filed by the Respondent ran counter to the impugned

Notification.  As  a  result,  the  assurance  sought  to  be  given by means  of  an

affidavit appeared to be an imaginary one. Finally, the Appellant submitted that

the contractors are charging an exorbitant rate of Rs.8 per kg for transporting

the consignment, whereas the Railways were charging only Rs.2.38 per kg for

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the transport of perishables from Bangalore to Delhi. This power to revise the

tariff rates was bestowed exclusively on the Central Government under Section

32, and thus its delegation to a third party by entering into a lease agreement is

in contravention of the statutory provisions.  

7 In its reply, the Respondents contended that Section 70 of the Act stated

that  the  Railway  Administration  shall  not  give  any  undue  or  unreasonable

preference. It was submitted that the Respondent-Railways, by inviting tenders

pursuant  to  a  policy  decision  will  not  amount  to  giving  any  undue  or

unreasonable  preference  to  one  competitor  over  another.  Further,  it  was

submitted that even in the absence of Section 70, the Railway Administration

being an Authority postulated by Article 12 of the Constitution, could not have

discriminated between similarly placed parties, as that would tantamount to a

violation of Article 14 of the Constitution.   

8 The  Division  Bench  of  the  High  Court  opined  that  the  impugned

Notification was not issued under Section 30 and 31 of the Act, but instead was

a  product  of  a  policy decision  of  the Government  of  India  which aimed to

augment the earnings of the Respondent-Railways by leasing the FSLR and VP

in  different  trains.  The  Respondent-Railways  are  run  as  a  commercial

undertaking, and its  administration cannot be prevented from taking steps to

increase its revenue, as long as they are not detrimental to the interest of the

general  public.  It  was  held  that  the  action  of  inviting  tenders  could  not  be

quashed as being opposed to Section 30 and 31.  The High Court observed that

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to prove that Section 70 had been violated, the Appellant had to establish that

undue preference had been given to  one over  another, and as the  Appellant

failed  to  provide  any  cogent  evidence  to  that  effect,  this  contention  was

dismissed. The apprehension of the Appellant was that due to the leasing out of

space to a third party, there was less than adequate space for the general public,

and that, as a result they would have no choice but to approach the third party

and  pay  any  rate  that  he  may  quote.  The  High  Court  observed  that  this

apprehension of the Appellant had been allayed by the affidavit  filed by the

Respondents wherein they had stated that if the need arises they would ordain

more space for the parcel service. Thus, the High Court allowed the appeals.

However, with the intention of safeguarding the interest of the general public, it

also  issued  directions  to  the  Respondent  to  incorporate  certain  Regulatory

checks on the unbridled power of the lessee. The checks were meant to be in the

form of an upper limit on the tariff that could be charged by the contractors for

different trains. Aggrieved by the decision of the High Court, the Appellant has

filed the present appeal.

9 The arguments  of  the  learned Counsel  for  the  Appellant  are  fourfold.

Firstly, Babu Verghese v. Bar Council of Kerala, (1999) 3 SCC 422 reiterates

that if the manner of taking a particular action is prescribed under a statute, that

action must be undertaken and performed in that manner or not at all; as there is

no  provision  under  the  statute  to  lease  out  space  to  a  third  party,  the

Respondents  are  hit  by  the  said  principle.   Secondly,  the  decision  of  the

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Respondent-Railways  to  lease  the  parcel  space  in  favour  of  a  particular

individual  amounted  to  an  unreasonable  preference  being  given  to  that

individual  and  therefore  violated  Section  70  (supra).   Thirdly,  the  learned

counsel relied on the maxim delegatus non potest delegare and submitted that

under Sections 30 to 32, the power to fix the tariff rate is conferred only on the

Central Government and the Respondent-Railways. Thus, by further delegating

their  authority,  they  violate  the  established  legal  principle  that  a  delegatee

cannot sub-delegate. Finally, the learned Counsel for the Appellant elaborated

on the role of the Railways as a social vehicle, by citing the case of Viklad Coal

Merchant v. Union of India, (1984) 1 SCC 619, the relevant paragraph reads

thus:

13. Re Ground 1: Railway is a common carrier and being State owned it is subject not only to the provisions of the Act but also the fundamental  rights  guaranteed  by  Part  III  of  the  Constitution. However  much  before  the  advent  of  the  Constitution  when different railways were owned by incorporated companies, Section 28 of the Act precluded the different railway administrations from granting  undue  preference  to  any  particular  person  or  any particular  traffic  or  to  any  particular  railway  administration,  or subject  anyone  to  any  undue  or  unreasonable  prejudice  or disadvantage  in  the  matter  of  transport  of  goods or  passengers. Railway being a State  monopoly, to checkmate its  monopolistic power  in  the  larger  public  interest  it  has  to  be  subjected  to regulatory measures. Simultaneously it became necessary to arm Central Government with power to direct railway administration to give  preference  in  the  matter  of  transport  of  the  goods  of  the Government,  Central  or  State  or  specified  goods  to  meet  the demands  of  various  regions  as  well  as  needs  of  Government. Intention was to classify Government in a class by itself for the purpose of Article.

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14.  To  meet  the  challenge  of  Article  19(1)(g)  the  Central Government was armed with power to accord priority in transport of  goods  in  larger  public  interest.  Soon after  the  advent  of  the Constitution, to arm the Central Government with requisite power to direct the railway administration to give special facilities for or preference to the transport of  any such goods or  class of goods consigned to the Central Government or to the Government of any State or such other goods or class of goods as may be specified in the order, Section 27-A was introduced in the Act which enabled it by a general or special order to direct the railway administration to grant special facilities for or preference to the transport of goods. Such  a  general  or  special  order  can  be  issued  by  the  Central Government if in its opinion it is necessary in the public interest to do  so.  Now  indisputably  the  goods  consigned  to  the  Central Government or to Government of any State must obviously have a priority over what we may loosely describe as private transporters, because it is well-settled that the Central or the State Government is in a class by itself. This view is founded on the assumption that all activities of the State are in public interest in the sense that they are either undertaken on behalf of the public or that the loss or gain arising from them falls upon the public. The goods consigned to the  Central  or  the  State  Government  are,  unless  shown  to  the contrary necessarily to be used to carry on governmental activity undertaken for the benefit  of public or  to subserve some public interest and which may as well include the efficient administration of the governmental agencies. Section 27-A also confers power to direct any railway administration to give special facilities for or preference to the transport of goods or a class of goods as may be specified in a general or special order that may be issued in this behalf. The Central Government is better equipped to know what class  of  goods  are  required  to  be  sent  to  any  particular  area expeditiously to meet some shortage, or for national security or to meet an emergency or any natural or man-made catastrophe so as to accord special treatment in the matter of transport. Section 28 can  be  said  to  some  extent  to  be  a  corollary  to  Section  27-A inasmuch as the railway administration on its  own is prohibited from giving undue or unreasonable preference or advantage to, or in favour of,  any particular person or railway administration,  or any particular description of traffic, in any respect whatsoever, or subject  any  particular  person  or  railway  administration  or  any particular  description  of  traffic  to  any  undue  or  unreasonable prejudice  or  disadvantage  in  any  respect  whatsoever.  To repeat railway  being  a  State  monopoly  undertaking,  it  had  to  be

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statutorily controlled from abusing its  monopolistic character by prohibiting it from giving any undue or unreasonable preference or advantage or acting in any manner which would evidence undue or unreasonable prejudice or disadvantage in any respect whatsoever. Equality  guaranteed  by  Article  14  is  translated  into  statutory provision  in  Section  28.  A  State  monopoly  like  the  railway administration cannot be trusted to act fairly and that is the object underlying Section 28.  If  everyone was to get  equal  facility for transport of his goods by railway without anyone claiming priority or anyone having power to grant preference or special facility, in an  emergency  this  equal  opportunity  would  create  a  havoc. Therefore on the other hand, the Central Government to meet the needs of the country arising in any eventuality can give directions for  giving special  facilities  for  or  preference to the transport  of goods  or  any  class  of  goods.  In  the  absence  of  power  such  as conferred  by  Section  27-A,  floods,  droughts,  national  security requirements, unscrupulous hoarders, artificial shortages, materials for national projects in a country of the dimensions of India cannot be effectively and adequately tackled.  This is the genesis of the power conferred by Section 27-A.

The judgment discusses the Indian Railways Act, 1890 in which, Sections 27

and 28 correspond to Section 70 and 71 of the present Act. To further buttress

his final submission on the role of the Railways, the learned Counsel for the

Appellant also cited P. Nalla Thampy Thera v. Union of India, (1983) 4 SCC

598, the relevant paragraph has been provided below:

25.  We have  said  earlier  that  the  Railways  are  a  public  utility service run on monopoly basis. Since it is a public utility, there is no justification to run it merely as a commercial venture with a view to making profits. We do not know — at any rate it does not fall for consideration here — if a monopoly based public utility should ever be a commercial venture geared to support the general revenue of the State but there is not an iota of hesitation in us to say that the common man’s mode of transport closely connected with the free play of his fundamental right should not be. We agree that  the  Union Government  should  be  free  to  collect  the  entire operational  cost  which would include the interest  on the capital

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outlay out of the national exchequer. Small marginal profits cannot be  ruled  out.  The  massive  operation  will  require  a  margin  of adjustment and, therefore, marginal profits should be admissible.  

10 Per contra, learned Senior Counsel for the Respondents contended that

the  Appellant  has  only  challenged  the  impugned Notification.  However,  the

impugned  notification  was  only  an  extension  of  what  was  envisaged  in  the

policy of the Government, and that the Appellant erred by not challenging the

said policy decision of the Government.  The learned Counsel relied on Article

73  of  the  Constitution  and  submitted  that  the  Central  Government  had  full

power to deal with the property of the Respondent-Railways in any manner it

found appropriate or beneficial. Further, it was contended that the onus to prove

unreasonableness was on the Appellant. This contention was supplemented with

the case of DCM v. Union of India (1988) 1 SCC 86, the relevant portion has

been reproduced below:

12. The relevant provisions of the Railways Act, 1890, which have a material bearing on the question are these: Section  41  provides  for  filing  complaints  against  Railway Administration.  The  section  provides  as  follows,  so  far  as  it  is material: “41. (1) Any complaint that a railway administration (a) is contravening the provisions of Section 28 or (b)  is  charging for  the carriage of  any commodity between two stations a rate which is unreasonable, or (c) ** * may be made to the Tribunal and the Tribunal shall hear and decide any  such  complaint  in  accordance  with  the  provisions  of  this chapter.”

Section 28 provides:

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28. A Railway administration shall not make or give any undue or unreasonable  preference  or  advantage  to,  or  in  favour  of,  any particular  person  or  railway  administration,  or  any  particular description  of  traffic,  in  any respect  whatsoever, or  subject  any particular  person  or  railway  administration  or  any  particular description of  traffic to any undue or  unreasonable prejudice or disadvantage in any respect whatsoever.

13. The third question formulated by us relates to the contravention of Section 28 of the Railways Act. The scope of this section has been considered by this Court in Rajgarh Jute Mills Ltd. v. Eastern Railway. There it was observed that a party who complains against the railway administration that the provisions of Section 28 have been  contravened  must  establish  that  there  has  been  preference between himself and his goods on the one hand and his competitor and his goods on the other. Gajendragadkar, J.  (as he then was) observed:

“Section  28 is  obviously  based  on the  principle  that  the  power derived from the monopoly of railway carriage must be used in a fair and just manner in respect of all persons and all descriptions of traffic passing over the railway area. In other words, equal charges should normally be levied against persons or goods of the same or similar kinds passing over the same or similar area of the railway lines and under the same or similar circumstances;  but this rule does not mean that, if the railway administration charges unequal rates in respect of the same or similar class of goods travelling over the same or similar areas, the inequality of rates necessarily attracts the  provisions  of  Section  28.  All  cases  of  unequal  rates  cannot necessarily  be  treated  as  cases  of  preference  because  the  very concept of preference postulates competition between the person or traffic  receiving  preference  and  the  person  or  traffic  suffering prejudice in consequence. It is only as between competitors in the same trade that a complaint of preference can be made by one in reference to the other.”

14. In the light of these principles, the Tribunal considering the material on record held that there is no evidence produced by the company to  justify  any grievance  under  Section  28.  We see  no reason  to  disagree  with  this  conclusion.  It  is,  in  our  opinion, perfectly justified. In fact Mr K.K. Jain learned Counsel for the appellant  also  did  not  seriously  dispute  the  correctness  of  that finding recorded by the Tribunal.

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15. We may now turn to the second question. Mr K.K. Jain urged that  the  rate  charged  by  the  Railway  Administration  is  per  se unreasonable.  Here  again  the  onus  to  prove  the  alleged unreasonableness of the freight rests on the company. It is for the company  to  establish  that  the  rate  charged  by  the  Railway Administration  for  the  carriage  of  Naptha  is  unreasonable.  Of course, this onus could be discharged by relying upon the material produced  by  the  Railways.  Mr  Jain,  therefore,  relied  upon  a statement Exhibit C-46 in support of his case. Exhibit C-46 is a statement  of  surplus  “working  cost”  in  respect  of  carriage  of Naptha from Bajuva to Dadhevi. It is, in our opinion, not necessary to  analyse  the  statement.  Even  assuming  that  the  Railways  are earning some surplus  income after  deducting the  operation cost that by itself is no ground to hold that the freight charged is per se unreasonable. It must be borne in mind that the Railways are run as a  commercial  undertaking  and  at  the  same  time  it  being  an instrumentality of the State, should serve the national interest as well. There is however, no obligation on the Railways to pass on the extra amount realised by the carriage of goods to customers. Nor it is necessary to share the profit with the commuters. As Mr Barua learned Counsel for the Railways said that in the case of commodities of national needs such as foodgrains, crude oil etc., it may be necessary for the Railways to charge below the operation cost. To offset such a loss the Railways may charge higher freight for certain other classified commodities. Therefore, it seems to us, that the cost of operation cannot by itself be the basis for judging the reasonableness of the rate charged.

11 The Learned Senior Counsel submitted that the Appellant had failed to

furnish any evidence to justify his claim that the Respondents had acted in an

unreasonable manner by favouring one person over another.

12 We have carefully considered all the arguments addressed before us.  We

do not find any force in the contention of the Appellant on the applicability of

the Taylor vs. Taylor principle applied by this Court in most recently in Hussein

Ghadially vs. State of Gujarat (2014) 8 SCC 425.  In the instant case the statute

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does not prescribe any particular manner in which the wagons are to be leased.

On the issue of Section 70 and 71, we are in agreement with the contention of

the Respondent, that the onus to prove that there has been a violation of the said

section is on the Appellant, who failed to adduce any evidence to establish that

the Respondent – Railways had given undue preference in favour of any person.

This is especially so in light of the fact that the lease was given after an auction

process.  The Division Bench directed the Railway Administration that when

calling  for  tenders,  it  should  fix  the  outer  limit  or  the  upper  limit  of  rates

chargeable by the contractor  for  different  trains.    This ensures a regulatory

check upon the unbridled power of the contractor in fixing the tariff rates while

accepting the parcel  service of  the third parties.   This direction has attained

finality so far as the Respondents are concerned inasmuch as they have failed to

challenge them by filing an appeal.   As far back as on 5.8.2015 we had brought

this  state  of  affairs  to  the  notice  of  the  learned  Senior  Counsel  for  the

Respondents.  A challenge to this direction could have been made in any legally

known manner to rectify the position.  This is sought to be salvaged by learned

Senior Counsel  by relying on certain observations of  a coordinate  Bench in

Nalakath Sainuddin v. Koorikadan Sulaiman  2002 (6) SCC 1.  However, the

question which has to be addressed by us is whether or not the Respondent is “a

person  aggrieved”  by the  impugned Judgment.   In  our  opinion,  we  are  not

confronted  by  multiple  possibilities  on  this  aspect  other  than  that  the

Respondents  are  persons  aggrieved  in  view  of  the  explicit  direction  of  the

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Division Bench in the impugned Judgment extracted above.   What we have

before us is not an instance of the Respondents earning an entirely favourable

Judgment, even though some of the arguments proffered by them may not have

found favour with the Court.  The settled position in law as is evident from a

proper perusal of  Nalakath is that even though several points pressed by the

victor of a litigation may have been viewed with favour, and the Respondent

may have succeeded only one or some, if the matter is taken by the vanquished

party to the portals of a superior forum, the victor may still press all the points

argued  by  it  earlier.   The  Judgments  of  the  High  Courts  which  have  been

analysed by this Court  in Nalakath do not  go to the extent,  as they clearly

cannot, that a critical direction which is unfavourable to the Respondent can be

assailed even in the absence of filing a cross or a separate appeal.  A holistic

reading of the impugned Judgment discloses that this direction was not given en

passant or  casually  in  that  in  the  penultimate  paragraph  of  the  impugned

Judgment the Division Bench emphasised that although they were allowing two

writ appeals, they were at pains to reiterate that the success of the Respondents

was subject to compliance with the aforementioned directions which we entirely

affirm.  

13 Instead of complying with the directions a futile effort has been made by

the Respondents to dilute them, nay render nugatory by a side wind in terms of

the additional affidavit dated 3.9.2015 a perusal of which makes it abundantly

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clear  that  it  should  have  assailed  the  directions  in  the  impugned  Judgment.

These asseverations, inter alia, are as follows:

“That it is respectfully submitted that fixing of outer/upper limit cannot

be done by Railways for the reasons listed as follows:

(i) The  contracts  for  leasing  parcel  space  of  the  Brakevans  is  an

activity which comes under earnings contract in which price is not

regulated by Railways. (ii) The  parcel  leasing  policy  is  introduced  to  maximize  revenue

through parcel traffic and to avoid underutilization of Parcel space

available in each train.  (iii) The leaseholder takes the parcel space of the Brakevans after going

through the competitive bids and he also incurs expenses towards

ancillary services provided to his customers. (iv) The leaseholder cannot charge exorbitant rates because there are

alternative trains for the public in which in which parcel space is

held by other lease holders as well as Railway. The customers can

move their cargo either by road or by air. Thus in effect, these rates

are  actually  market  determined  rates  and  no  leaseholder  can

increase it beyond a point that traffic can bear in view of presence

of  other  competing  modes  i.e.  trucks  flights  and  other  trains

wherein both leased and departmental parcel portions are available.

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(v) The leaseholder takes the responsibility for safe custody of goods

entrusted to him and compensates for any loss or damages on his

own during transit.  (vi) If the charges levied by the leaseholder are high then there is every

chance for the customers to move the traffic by road or air. Hence,

the leaseholder is constrained to keep the rates low after ensuring

his marginal profit.  (vii) Since introduction of Parcel Leasing Policy in the year 1991 and

till  date,  except  for  this  petition  there  is  no  other  case  pending

before  any  of  the  Hon’ble  Court  with  regard  to  fixation  of

outer/upper limit.  (viii) Parcel  Leasing  Policy  is  well  patronized  among  the  merchant

community and running successfully for the last 25 years all over

India and all the parties viz., the merchant community, leaseholder

and Railways are benefited by this scheme.”  

14 The  Appeal  before  us  can  be  disposed  of  by  us  without  any  further

complaint or grievance by the Appellant, by directing the Respondents to fix the

outer or upper limit of rates chargeable by contractors for different trains.   We

say this for the simple reason that the Respondents are bound to follow and

implement  the  ethos  and  parameters  set  by  the  Railways Act.   The  learned

Single Judge had followed and applied decisions of this Court when called upon

to interpret different sections of the Act.  Over a quarter of a century ago it has

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been  emphasised  that  the  Railways  enjoy  a  monopolistic  character,  the

justification of corollary of which would be the fulfilment and attainment of

public interest.  The Railway Budget, presented each year, is studied threadbare

with special interest and emphasis on what the Central Government hopes to

achieve in the coming year, and the most prominent and predominant feature

whereof is the advancement of social interests.  That the intendment behind a

statue can be metamorphosed or diluted by Parliament but not by a sub-delegate

has  been unequivocally  reiterated  by this  Court.   Avinder  Singh v. State  of

Punjab 1979 (1) SCC 137 enunciates that the Legislature cannot efface itself; it

cannot delegate the plenary or essential legislative function; and even if there is

delegation, the delegate must function under its supervision otherwise “if the

delegate  is  free  to  switch  policy  it  may  be  usurpation  of  legislative  power

itself”.  In Agricultural Market Committee v. Shalimar Chemical Works Ltd.

(1997)  5  SCC  516  we  have  restated  that  “the  legislature  cannot  abdicate

essential legislative function in favour of another.  Power to make subsidiary

legislation may be entrusted by the legislature to another body of its choice but

the  legislature  should,  before  delegating,  enunciate  either  expressly  or  by

implication, the policy and the principles for the guidance of the delegates”.  In

applying this dicta, it seems to us that if a shift from the Railways being a social

vehicle to it being essentially a milch cow towards was intended, that mutation

was only within the province of Parliament.  This is especially so keeping in

perspective the observations made by this Court in P. Nalla Thampy Thera and

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Viklad  Coal  Merchant.   In  saying  so,  we  do  not  intend,  even  a  whit,  to

interfere with the right of the executive to formulate policy, but while doing so

the  Rubicon  dividing  the  power  of  the  principal  and  the  delegate  or

sub-delegatee should not be ignored.

15 Railway tariff no doubt has to be realistic and keep pace with time and if

the State so perceives, need not be a losing financial proposition.  While it may

be both pragmatic and sagacious to auction FSLR & VP it can be done with an

objective of gathering the optimum revenue.  It has not been contended before

us nor is any material available disclosing that the tariff itself has been increased

by adherence to the statutory procedure.  

16 We are, however, unable to accept the argument articulated on behalf of

the Appellant that the Respondents are not entitled or empowered to auction the

space for a particular period.   It may do so provided the auction contractor

adheres to the prescribed tariff.   We permit  a period of  three months to the

Respondents to comply with the impugned Judgment of the Division Bench.

17 The Appeal is accordingly disposed of in these terms.  The Respondents

are directed to ensure that the successful tenderer, in our case, Respondent No.4,

does not charge carriage prices in excess of those prescribed by the Respondents

in Coaching Tariff No. 24 Part III.  It  will be seen that this direction is not

drastically  different  to  that  contained  in  the  impugned  Judgment  since  the

fixation  of  “the  outer  limit  or  the  upper  limit  of  rates  chargeable  by  the

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contractor”  would  have  been  carried  out  by  complying  with  a  procedure

envisaged by law.  The Judgment of the Division Bench is upheld, but to this

extent only.  

…………………………J [VIKRAMAJIT SEN]

…………………………J [SHIVA KIRTI SINGH]

New Delhi; December 29,  2015.