Facts Of The Case:
The case involves appeals filed by the Union of India against M/s Kamakhya Transport Pvt. Ltd. and others, stemming from a judgment by the Gauhati High Court on December 20, 2021. This judgment affirmed an earlier order from the Railway Claims Tribunal, Guwahati Bench, dated January 19, 2016. The dispute arose after the Appellant (Union of India) issued demand notices to the respondents between October 2011 and April 2012, alleging mis-declaration of goods transported via Indian Railways.The respondents paid these demands and then sought refunds from the Railway Claims Tribunal, arguing that the demand notices, issued after the goods were delivered, were illegal under Sections 73 and 74 of the Railways Act, 1989. The Tribunal ruled in favor of the respondents, ordering a refund with 6% interest, citing the Gauhati High Court’s judgment in Union of India v. Megha Technical & Engineers Pvt. Limited, which stated that demands under Section 83 of the Act must be raised before delivery.The Appellant appealed to the Gauhati High Court, contending that the Tribunal failed to acknowledge that the loaded items differed from their declared category. However, the High Court dismissed the appeals, observing that both Section 74 of the Act and Rule 1820 of the Railway Commercial Manual II, 1991, permit recovery of dues before delivery. It also referenced Jagjit Cotton Textile Mills v. Chief Commercial Superintendent N.R., which held that punitive charges should be raised prior to delivery, and concluded that Sections 73 and 78 of the Act allow penal charges only before, not after, delivery. Dissatisfied with this decision, the Appellant approached the Supreme Court.
Procedural History:
The present appeals originate from the final judgment and order of the Gauhati High Court, dated December 20, 2021. This High Court decision affirmed an earlier common order issued by the Railway Claims Tribunal, Guwahati Bench, on January 19, 2016. The Railway Claims Tribunal had allowed claim petitions seeking a refund of amounts paid by the respondents, along with interest at 6% per annum, after they challenged demand notices issued by the Union of India. The Tribunal’s decision was based on the premise that the demand notices were issued after the delivery of goods, which it deemed illegal in light of Sections 73 and 74 of the Railways Act, 1989. Aggrieved by the Tribunal’s order, the appellant (Union of India) preferred an appeal before the Gauhati High Court. The High Court subsequently dismissed these appeals, upholding the Tribunal’s view that recovery of dues should occur before the delivery of goods, citing Sections 74 and 83 of the Act and relevant railway manual rules. Dissatisfied with the High Court’s judgment, the appellant-Railway authorities then filed the current appeals before the Supreme Court of India.
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Court Observation:
The Supreme Court observed that the High Court erroneously treated the dispute as one concerning the overloading of a wagon, governed by Section 73 of the Railways Act, when the appellant’s case was based on misdeclaration of goods, which falls under Section 66 of the Act. The Court noted that Section 66, unlike Sections 73 and 78, does not specify whether charges for misdeclaration must be levied before or after delivery, implying that legislative intent permits such a levy at either stage. The Court further highlighted that the demand notices clearly indicated misdeclaration, not overloading, and even the original claim petitions did not suggest overloading as the basis for the demand.Regarding the High Court’s reliance on Jagjit Cotton Textile Mills v. Chief Commercial Superintendent N.R., the Supreme Court found it erroneous, stating that the factual matrix of that case pertained to overloading and the right of lien, and the exposition therein was made in the context of Section 54, not Section 66 of the Act. The Court clarified that the statement in Jagjit Cotton Textile that “penal charges could be collected before delivering the goods” was merely a suggestion for conditions under Section 54(1), not a mandatory rule applicable to all sections of the Act. The Supreme Court also accepted the genuineness of the demand notices, noting that the respondents had not provided evidence to the contrary and their claim petitions were silent on such averments.
Final Decision & Judgement:
The Supreme Court, in its final decision, set aside the impugned judgment and order of the Gauhati High Court dated December 20, 2021 , which had affirmed the Railway Claims Tribunal’s order of January 19, 2016. The Court concluded that the lower courts had erred in holding that the railway authorities could not raise demand notices for misdeclaration of goods under Section 66 of the Railways Act, 1989, after the delivery of goods. The Supreme Court clarified that Section 66 does not specify a stage (before or after delivery) for imposing charges related to misdeclaration. Consequently, the civil appeals filed by the Union of India were allowed. All pending applications, if any, were also disposed of. The judgment was delivered by Justices Sanjay Karol and Prashant Kumar Mishra on June 5, 2025.
Case Details:
Case Title: UNION OF INDIA Versus M/S KAMAKHYA TRANSPORT PVT. LTD. ETC.ETC. Citation: 2025 INSC 805 Civil Appeal No.: CIVIL APPEAL NOS.7376-7379 OF 2025 Date of Judgment: June 5, 2025 Judges/Justice Name: SANJAY KAROL & PRASHANT KUMAR MISHRA
Download The Judgement Here