Legal battle over freight charges: supreme court rules against Indian Oil Corporation
Case title: Union of India vs. M/S Indian Oil Corporation Ltd.
Case Number: Civil Appeal No(s). 1891-1966 of 2024
Decided on: 21.03.2024
Quorum: Hon’ble Justice J.B. Pardiwala, and Hon’ble Justice Sandeep Mehta.
FACTS OF THE CASE:
The case involves a dispute regarding freight charges between the Appellant-Union and the Respondent-IOCL. The Respondent sent a legal notice under Section 106 of the Railway Act, 1989, seeking a refund of excess freight charges for a consignment dated 25.08.2022. The dispute arose due to a change in methodology applied from 01.01.2005, resulting in variations in fares and freights compared to the existing rates. The Appellant-Union argued that Section 106 of the Railway Act does not apply to this case, citing circulars issued in 2004 that governed the change in freight charges. The Respondent claimed that the freight charges were based on the distance of 444 km as per the old distance table, which was later corrected to 333.18 km. The Respondent promptly filed claims after the corrected distance was notified, demonstrating diligence in seeking a refund for the illegally realized freight amount.
LEGAL PROVISIONS:
Section 106(3) of the Railways Act, 1989: This section pertains to the refund of overcharges and sets a time limit for making claims for such refunds.
Section 72 of the Indian Contract Act, 1872: This section deals with the restitution of benefits conferred under a contract that is subsequently found to be void or illegal.
Railway Act, 1989: Various provisions of this Act govern the regulation of railways, including matters related to freight charges, compensation for loss or damage of goods, and offenses under the Act.
APPELLANTS CONTENTION:
The Appellant challenged the final orders passed by the High Court in 75 appeals involving a total sum of approximately Rs. 1,55,03,652. They argued that the High Court’s reliance on a judgment dated 23.02.2018 was illegal and perverse as it ignored answering questions of law. The Appellant claimed that the order challenged in the present case was dismissed by the Supreme Court on the ground of a very low claim amount, which differs from the total amount involved in the batch matters. They contended that the charges were prospective as per circulars issued in 2004 and that no refund would be provided for undercharging.
RESPONDENTS CONTENTION:
The Respondent’s case pertained to the alleged illegal charge or realization of freight amounts by the Petitioner (Appellant). They argued that the circular under which inflated distance charges were levied had been withdrawn and was not operative during the relevant period. The Respondent claimed that they were charged more than what they should have been due to the withdrawn circular, leading to the payment of inflated distance charges. They cited legal principles laid down by the Supreme Court in support of their submission that they were compelled to pay the inflated charges despite the circular being withdrawn.
COURT ANALYSIS AND JUDGMENT:
The Court found that the chargeable distance of 444 km was illegal, and there was no error in the High Court’s judgment and order.The appeals filed by the Appellant railway were dismissed, and each party was directed to bear their own costs. The Court upheld the findings of both the Railway Claims Tribunal and the High Court regarding the actual distance being 333.18 km. The Court concluded that the chargeable distance of 444 km was illegal, leading to the dismissal of the appeals filed by the Appellant railway. The Court disposed of any pending applications and affirmed the decision that the chargeable distance was incorrect and illegal.
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Judgement reviewed by – Ayush Shrivastava