FA/1394/2003 of UNION OF INDIA Vs STATE TRADING CORPORATION LTD. AND ANR. on 22 December 2006

1. FIRST APPEAL NO.1394 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

2. FIRST APPEAL NO.1395 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

3. FIRST APPEAL NO.1396 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

4. FIRST APPEAL NO.1397 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

5. FIRST APPEAL NO.1398 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

6. FIRST APPEAL NO.1399 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

7. FIRST APPEAL NO.1400 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

8. FIRST APPEAL NO.1401 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

9. FIRST APPEAL NO.1402 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

10. FIRST APPEAL NO.1403 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

11. FIRST APPEAL NO.1404 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

12. FIRST APPEAL NO.1405 OF 2003

Union of India, .. Appellants.

Vs.

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

13. FIRST APPEAL NO.1406 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

14. FIRST APPEAL NO.1407 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

15. FIRST APPEAL NO.1410 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

16. FIRST APPEAL NO.1411 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

17. FIRST APPEAL NO.1412 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

18. FIRST APPEAL NO.1413 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

19. FIRST APPEAL NO.670 OF 2005

Union of India, .. Appellants.

Vs

New India Assurance Co.Ltd.

and anr. .. Respondents.

WITH

20. FIRST APPEAL NO.671 OF 2005

Union of India, .. Appellants.

Vs

New India Assurance Co.Ltd.

and anr. .. Respondents.

WITH

21. FIRST APPEAL NO.672 OF 2005

Union of India, .. Appellants.

Vs

New India Assurance Co.Ltd.

and anr. .. Respondents.

WITH

22. FIRST APPEAL NO.673 OF 2005

Union of India, .. Appellants.

Vs

New India Assurance Co.Ltd.

and anr. .. Respondents.

WITH

23. FIRST APPEAL NO.674 OF 2005

Union of India, .. Appellants.

Vs

New India Assurance Co.Ltd.

and anr. .. Respondents.

WITH

24. FIRST APPEAL NO.675 OF 2005

Union of India, .. Appellants.

Vs

New India Assurance Co.Ltd.

and anr. .. Respondents.

WITH

25. FIRST APPEAL NO.676 OF 2005

Union of India, .. Appellants.

Vs

New India Assurance Co.Ltd.

and anr. .. Respondents.

WITH

26. FIRST APPEAL NO.677 OF 2005

Union of India, .. Appellants.

Vs

New India Assurance Co.Ltd.

and anr. .. Respondents.

WITH

27. FIRST APPEAL NO.678 OF 2005

Union of India, .. Appellants.

Vs

New India Assurance Co.Ltd.

and anr. .. Respondents.

WITH

28. FIRST APPEAL NO.679 OF 2005

Union of India, .. Appellants.

Vs

New India Assurance Co.Ltd.

and anr. .. Respondents.

WITH

29. FIRST APPEAL NO.680 OF 2005

Union of India, .. Appellants.

Vs

New India Assurance Co.Ltd.

and anr. .. Respondents.

WITH

30. FIRST APPEAL NO.681 OF 2005

Union of India, .. Appellants.

Vs

State Trading Corporation Ltd

and anr. .. Respondents.

WITH

31. FIRST APPEAL NO.682 OF 2005

Union of India, .. Appellants.

Vs

State Trading Corporation Ltd

and anr. .. Respondents.

WITH

32. FIRST APPEAL NO.684 OF 2005

Union of India, .. Appellants.

Vs

State Trading Corporation Ltd

and anr. .. Respondents.

WITH

33. FIRST APPEAL NO.685 OF 2005

Union of India, .. Appellants.

Vs

State Trading Corporation Ltd

and anr. .. Respondents.

WITH

34. FIRST APPEAL NO.686 OF 2005

Union of India, .. Appellants.

Vs

State Trading Corporation Ltd

and anr. .. Respondents.

WITH

35. FIRST APPEAL NO.1839 OF 2006

Union of India, .. Appellants.

Vs

State Trading Corporation Ltd

and anr. .. Respondents.

WITH

36. FIRST APPEAL NO. 1840 OF 2006

Union of India, .. Appellants.

Vs

State Trading Corporation Ltd

and anr. .. Respondents.

WITH

37. FIRST APPEAL NO. 1844 OF 2006

Union of India, .. Appellants.

Vs

The New India Assurance Co Ltd

and anr. .. Respondents.

WITH

38. FIRST APPEAL NO.130 OF 2003

Union of India, .. Appellants.

Vs

1. State Trading Corporation

Ltd, and anr. .. Respondents.

WITH

39. FIRST APPEAL NO.132 OF 2003

Union of India, .. Appellants.

Vs

1. New India Assurance Co

Ltd, and anr. .. Respondents.

WITH

40. FIRST APPEAL NO.943 OF 2004

Union of India, .. Appellants.

Vs

1. New India Assurance Co

Ltd, and anr. .. Respondents.

Mr A.N.Samant, for the appellants-Union of India.

Mr R.V.Govilkar with Mr A.A.Motwani,

for the respondent-New India Assurance Co.

Mr Gurjar for the respondent-State Trading Corporation.

CORAM : D.B.BHOSALE,J.

CORAM : D.B.BHOSALE,J.

CORAM : D.B.BHOSALE,J.

DATE : 22.12.2006

ORAL JUDGEMNT:

ORAL JUDGEMNT:

ORAL JUDGEMNT:

1. This group of First Appeals raises common questions of law. The factul matrix against which the questions are raised and the parties in all the appeals are similar and, therefore, this group of the Appeals is being disposed of by this common judgment.

2. The Appeals are by the Union of India, owning and administering different Railway Administrations including Central Railway, North East Frontier Railway, South East Railway and Eastern Railway, with which we are concerned in these appeals. Respondent no.1- State Trading Corporation Ltd, the company registered under the Indian Companies Act and having its registered office at New Delhi, is a Government of India Undertaking ("the STC", for short). Respondent no.2, the New India Assurance Co.Ltd, is a company incorporated under the Indian Companies Act and having its registered office at Mumbai, ("the Assurance Company", for short) with whom the goods in transit were insured by the STC and which, ultimately, reimbursed the STC by paying the amount which was claimed in the suit.

3. The STC entrusted the Central Railway at Mulund goods, Mumbai consignments of refined Soyabin Oil for despatch and delivery to the Central Ware-Housing Corporation at different destination railway stations on "North East" and "Eastern" and "South East" Railways. At the destination stations on arrival of wagons, the STC noticed a shortage. On their written request for At the destination stations on arrival of wagons, the STC noticed a shortage. On their written request for re-weighing the consignment the respondent-railway authorities allowed re-weighment and the shortage was accordingly detected. The railway staff issued shortage certificates in all these cases. The STC on the basis of the shortage certificates, approached the appellants railway administrations claiming compensation for the shortages and since the compensation was not paid, they initially instituted suits in this court. However, the suits were transferred to Railway Claims Tribunal, after it was established under the Railway Claims Tribunal Act, 1987. In all the claim applications, the STC

alleged that the railway administrations have failed to use reasonable foresight and caution as a man of ordinary prudence takes for his own goods and as a

Conclusion

result of gross negligence and failure to protect goods, they have suffered heavy loss due to shortage of product at the time of delivery and hence they are liable to pay compensation.

4. All the claims were contested by the railway administrations by filing written statements. They have denied all the allegations and have specifically challenged the claim on the ground of territorial jurisdiction and noncompliance of the provisions of section 78-B of the Indian Railways Act, 1890 (for short, "Act of 1890"). In all the claim cases somewhat similar issues were framed. It would be advantageous to reproduce the issues framed by the Tribunal in one of the cases bearing No.O.A.149/90. The issues read thus:

1. Whether the Applicants prove that

they had sent the statutory notice to

the respondents in order to pursue their present claim ?

2. Whether the applicants prove that

they suffered loss by way of short

delivery of Refined Rape Seed Oil in the present case on account of negligence and/or misconduct on the part of the respondent railways ?

3. Whether the applicants prove that

they are entitled to the compensation as claimed for in the present claim Application ?

4. Whether the respondent railways

proves that the present Claim

Application is not maintainable under

the law ?

All the four issues were answered in favour of the respondents and the railway administrations were directed to pay compensation as claimed in each of the cases/claim applications. In some of the cases an interest at the rate of six per cent per annum from the date of filing of the applications was granted and in some nine percent. The Railway Administrations were granted three months time to make the payment.

5. I heard the learned counsel for the parties at length. Perused the impugned judgments and all other material to which my attention was specifically drawn.

Mr Samant, learned counsel for the appellants, submitted that the STC having subrogated their rights in favour of the Assurance company and having been received their monetary claim have no subsisting claim against the appellants. He then submitted that no decree can be passed against the two railway administrations by the Tribunal. He submitted that the Tribunal at Mumbai has no territorial jurisdiction over the second railway administration, as contemplated under Section 80 read with section 78-B of the Act of 1890. The second railway administration is beyond the territorial limits of the Tribunal at Mumbai. Section 80 of the Act of 1890, according to Mr Samant, provides that only one railway administration can be sued. He also referred to Section 33 of the Railway Claims Tribunal Act, 1987 (for short, "The Tribunal Act") in support of this contention. Mr Samant placed reliance upon the judgment of this Court in Union of India Vs. Indian Hume Pipe,AIR 1981 Bombay 414 and unreported judgment of the learned Single Judge in First Appeal No.1136 of 1992 in of this Court in Union of India Vs. Indian Hume Pipe, Union of India Vs. M/s Eknath Khemchand decided on 6.5.2005. Mr Samant then submitted that the decree against other Railway Administrations must be set aside since the Tribunal at Mumbai has no jurisdiction over them and even the decree against the Central Railway also must fail since admittedly notice, contemplated under section 78-B of the Act, 1890, was not given to the Central Railway. In other words, he submitted that the claim applications of respondent no.1 against

Central Railway must fail and the impugned orders passed by the Tribunal deserve to be set aside for want of valid notice under section 78-B of the Act, 1890. In support of this contention, he placed reliance upon the unreported judgment of this Court in Union of India Vs.Cummins Diesel in F.A.No.1150 of 1991 decided on 2nd may

2005. He then invited my attention to the operative part of the judgments in some of the appeals to contend that the interest awarded at the rate of nine percent per annum deserve to be set aside and brought down to six per cent only as held by this Court in the case of Maharashtra State Electricity Board Vs. Union of India,2005 (1) Mah.L.J.165. Mr Samant, then fairly submitted that in view of the unreported judgment of this Court inUnion of India Vs. Century Textiles in First Appeal No.

Maharashtra State Electricity Board Vs. Union of India, 2005 (1) Mah.L.J.165

that in view of the unreported judgment of this Court in Union of India Vs. Century Textiles 14 of 1995 decided on 17.2.2005, and followed in several other appeals, the question of the "said to contain"

railway receipts and the liability of the railways thereunder he cannot carry it further.

6. Mr Govilkar, learned counsel for the Assurance Company in reply to the submissions of Mr Samant on the question of territorial jurisdiction, submitted that he has instructions to press the decree only against the central railway and in view thereof he fairly stated that I need not enter into the question of territorial jurisdiction. In effect, Mr Govilkar deemed to have conceded that the Tribunal at Mumbai has no jurisdiction over North East Railway. Mr Samant, though raised several questions in view of the submission of Mr.Govilkar, on the point of jurisdiction, ultimately confined the challenge only on the ground that the claim applications must be rejected for want of service of notice to the Central Railway as contemplated under Section 78-B of the Act of 1890 as also under section 106 read with section 107 of Railways Act, 1989 (for short, "Act of 1989"). In the circumstances, I do not deem it necessary to enter into the question of territorial jurisdiction.

7. Mr Govilkar, however, insofar as the question of notice contemplated under section 78-B of the Act of 1890 is concerned, placed heavy reliance upon the judgment of this Court in Union of India vs. Kalinga Union of India vs. KalingaTextiles, AIR 1969 Bombay 401 to contend that the notice Textiles, AIR 1969 Bombay 401

under section 78-B to North East Railway is deemed to be the notice under that provision to the Central Railway and on the basis thereof the Tribunal has rightly awarded the compensation. Mr Govilkar submitted that the notice to one railway administration is notice to other railway administration also and the claim application would not fail on the ground that the notice under section 78-B has not been given to the other railway. Admittedly, in the present case, the notice contemplated by section 78-B was given to other Railway

Administration and not to the Central Railway against whom the respondents press confirmation of the order of compensation passed by the Tribunal. In support of this contention he placed reliance upon the judgments of other High Courts in Fir Devkisan Vs. Union of India,AIR 1966 Allahabad 16, Traders Syndicate Vs Union ofIndia, AIR 1983 Calcutta 337 and Union of India Vs.Panipat Wollen and General Mills Co Ltd AIR 1967 Punjaband Haryana 497. Insofar as interest is concerned, Mr.

India, AIR 1983 Calcutta 337 and Union of India Vs.

Panipat Wollen and General Mills Co Ltd AIR 1967 Punjab and Haryana 497.

Govilkar submitted that the Tribunal has rightly awarded 9 % interest and deserves no intereference by this court. Mr Gurjar, learned counsel for the STC, adopted the submissions advanced by Mr Govilkar.

8. In view of the arguments advanced by the learned counsel for the parties in this group of the appeals, I

now proceed to address the questions of service of notice contemplated under section 78-B of the Act of 1890 and the interest.

9. Mr Govilkar, placed heavy reliance upon the judgment of the Division Bench of this Court in Kalinga KalingaTextiles (supra). In that case the Division Bench was Textiles (supra)

Textiles (supra). In that case the Division Bench was considering a plea that there was no notice at all served upon either of the two railways, namely, the central railway and the South Eastern Railway. After considering merits of the submission, in paragraph 18 of the judgment it was held that a notice of claim under section 77 was issued by plaintiff no.1 therein and it was duly served upon the General Manager of the South

Eastern Railway and that no such notice had been served upon the General Manager of the Central Railway. It is against this backdrop the Division Bench was considering whether notice to South-Eastern Railway under Section 77

could be treated as notice to Central Railway and/or whether claim would fail for want of notice to Central Railway. The suit was filed in Bombay. In that case provisions of section 77 which was subsequently replaced by section 78-B of the Act of 1890, fell for the consideration of the Division Bench. Section 78-B of the Act of 1890 was introduced in 1961. Sections 77 and 78-B need to be reproduced for better appreciation of the submissions advanced by the learned counsel for the parties and also the law laid down by this Court in Kalinga Textiles Kalinga Textiles. The provisions contained in old Kalinga Textiles Section 77 and new section 78-B read thus; "77. Notification of claims to refunds of overcharges and to compensation for losses.- A person shall not be entitled to a refund of an overcharge in respect of animals or goods carried by railway or to compensation for the loss, destruction, or deterioration of animals or goods delivered to be carried, unless his claim to the refund or compensation has been preferred in writing by him or on his behalf to the railway administration within six months from

the date of the delivery of the animals

or goods for carriage by railway."

"78-B. Notification of claims to

refunds of overcharges and to

compensation for losses.

. A person shall not be entitled to a

refund of an overcharge in respect of

animals of goods carried by railway or

to compensation for the loss,

destruction, damage, deterioration or

non-delivery of animals or goods

delivered to be carried unless his claim to the refund or compensation has been preferred in writing by him or on his behalf - . (a) to the railway administration to which the animals or goods were delivered to be carried by railway, or . (b) to the railway administration on whose railway the destination station lies, or the loss, destruction, damage or deterioration occurred, . within six months from the date of the delivery of the animals or goods for carriage by railway:

. Provided that any information

demanded or inquiry made in writing

from, or any complaint made in writing

to, any of the railway administration

mentioned above by or on behalf of the

person within that said period of six

months regarding the non-delivery or

delay in delivery of the animals or

goods with particulars sufficient to

identify the consignment of such animals or goods shall, for the purposes of this section, be deemed to be a claim to the refund or compensation."

Amendments. This section has been

inserted by Act 39 of 1961. The

corresponding old section was 77 which

ran as follows:

Provisions of Section 80 also would be necessary and relevant and need to be reproduced. Section 80 reads thus; "80. Application for compensation. An application to the Claims Tribunal for compensation for loss of the life of, or personal injury to, a passenger or for loss, destruction, damage, deterioration or non-delivery of animals or goods may be made - (a) if the passenger was, or the animals or goods were, booked from one station to another on the railway of the same railway administration, against that railway administration; (b) if the passenger was, or the animals or goods were, booked, through over the railway of two or more railway administrations against the railway administration from which the passenger obtained his pass or purchased his ticket or to which the animals or goods were delivered for carriage, as the case may be, or against the railway administration on whose railway the destination station lies, or the loss, injury, destruction, damage or deterioration occurred."

10. Section 78-B of the Act of 1890 had been inserted by Act 39 of 1961. The corresponding old section was section 77 which provided for notification of the claims to refund of overcharges and to compensation for loss.

Under this provision, a person was entitled to compensation for the loss of goods delivered to be carried, unless his claim has been preferred in writing to the "railway administration" within six months. It

does not make any distinction between railway administrations to which goods were delivered to be carried by the railway and the railway administration on whose railway the destination station lies, or the loss, destruction, damage or deterioration occurred as we find it in section 78B. Even the proviso to section 77 uses the expression "railway administration" only. Whereas section 80 clearly makes distinction between different railway administrations. These provisions were under consideration before the Division Bench in Kalinga KalingaTextiles and even in Devkisan Vs Union of India andTraders Syndicte Vs Union of India (supra).

Textiles

Traders Syndicte Vs Union of India (supra)

11. In the present case, admittedly all the consignments were booked prior to 1.7.1990 and, therefore, there is no dispute that the contracts between the parties in all the cases took place prior to this date and, therefore, all the cases are governed by the Act of 1890. Mr Samant vehemently submitted that the provisions with which we are concerned in these appeals being procedural and do not create any kind of substantive right and obligation between the parties, provisions of Sections 106 and 107 of the Act of 1989

are attracted. In short, he submitted that the provisions of sections 106 and 107 of the Act of 1989

have retrospective operation. In support of this submission, he placed heavy reliance upon the judgment Sudhiraj G. Angur and others Vs. M. Sanjeev andors, 2006 (1) SCC 141.

of Sudhiraj G. Angur and others Vs. M. Sanjeev and ors, 2006 (1) SCC 141

12. The Act of 1890 was amended by the Act of 39 of 1961 and section 77 therein was replaced with effect from 1.1.1962 by section 78-B. Section 78-B and the old section 77 provide for notification of claims to refunds of overcharges and to compensation for losses. Under section 77 a person entitled to compensation for the loss was required to give notice in writing to the "railway administration" within six months from the date of delivery of the goods for carriage by railway. By new section 78-B choice was given to the aggrieved person to serve notice on any of the three railway administrations, namely, to the railway administration to which the goods were delivered to be carried by railway, or the railway administration on whose railway the destination station lies or the loss, destruction, damage or deterioration occurred. Proviso to section 78-B provides that any complaint made in writing to any of the railway administrations mentioned in clauses (a)

and (b) thereof by person within the period of six months be deemed to be a claim to the compensation. It is thus clear that by section 78-B the claimant is given choice/option to give notice to one of the railway administrations mentioned in clauses (a) and (b) of section 78-B. The object of service of notice is obvious, to enable the railway administration to make an enquiry and investigate as to whether the loss, destruction etc was due to the plaintiff’s latches or

due to wilful neglect of the railway or its servants or due to theft or robbery committed by their servants and to determine the claim and pay the compensation accordingly. This provision does not contemplate filing of any suit/claim application before the appropriate forum. It provides that a person who has suffered a loss can bring it to the notice of one of the railway administrations in writing as mentioned in clauses (a)

and (b) of section 78-B and claim the compensation further expecting the railway administration to determine the loss and pay the compensation for which one need not necessarily approach the court/tribunal.

13. As against this, section 80 provides for filing of a suit for compensation for loss , destruction, damage, deterioration of goods delivered to the railway to be carried to the destination railway station. This section clearly gives choice to the claimant to institute a suit against the railway administration where the goods were booked from one station to another on the railway of same railway administration, against that railway administration or if goods were booked, through over the railway of two or more railway administrations, against the railway administration to which the goods were delivered for carriage, or against the railway administration on whose railway the destination station lies, or the loss, injury, destruction, damage or deterioration occurred. In either case, a suit may be instituted in a court having jurisdiction over the place at which goods were delivered for carriage, as the case may be, or over the place in which destination station lies or the loss, injury, destruction, damage or deterioration occurred.

This section does not make any reference to the notice to be given before filing of the suit. A conjoint reading of section 78-B and section 80 would, however, show that a notice to the concerned railway administration is necessary for the railway administration to know and enquire and investigate as to whether the loss, destruction etc occurred due to whose fault and to determine the compensation to be paid to the claimant. If the railway administration does not pay the compensation as contemplated by section 78-B or if pay less compensation it may be open for the complainant to institute a suit as provided for under section 80 of the Act of 1890 either for compensation or for enhancement of the compensation awarded by the railway administration, as the case may be. Keeping the purport of both these provisions in view the submission will have to be examined whether a suit can be instituted against a particular railway administration even if the notice contemplated under section 78-B is given to other railway administration.

14. The Division Bench in Kalinga Textiles had exhaustively dealt with the provisions contained in section 77, section 80 as also the expression "railway administration". The observations made by the Division

Bench in paragraphs 38,41,45,46 and 47, may be necessary and relevant to appreciate the submissions advanced by the learned counsel for the parties. The relevant paragraphs read thus:

"38. According to us, the provisions of

Section 77 of the Railways Act must be

independently examined and effect must

be given to them as they are found in

that section. Section 80 of the

Railways Act may have relevance in

understanding which administration is

liable. However, Section 80 must be

understood in the manner in which it

came to be introduced in the Act. The

legislative history of Section 80 as

also the history of ownership and

administration of the various major

railways in this country by the Union of

India must be remembered for the purpose of understanding the import of each of these sections. There was considerable controversy before 1890 over the liability of the various company-owned and administered railways. Many company railways were in the habit of inserting a clause by which their liability was restricted to their handling of the goods and until they were travelling on their lines. In spite of such a clause, the contract of carriage was from one station to another, which many times fell upon the railway owned and administered by another company. The consignor or the consignee had not always the means to know where precisely the loss or damage occurred. In the circumstances, various shades of opinion were current in the decisions of the different High Courts. Some held that the contracting railway was an agent of the other administration over whose rails the goods were ultimately carried and delivered. Some held that the other administration was an agent for and on behalf of the contracting railway. The liability was accordingly being fixed either in the capacity of principal or agent. In order to set at rest this controversy, Section 80 came to be introduced in the Railways Act. The provisions of Section 80 are overriding provisions. That section opens with the clause "Notwithstanding anything in any agreement, etc." This means that whatever the contract of carriage, the liability in damages is statutorily fixed under the provisions of Section

80. Even if a clause of terminating the

liability of the contracting railway

after the goods are handed over to the

other railway were to be introduced in

the contract, after 1890 the provisions

of Section 80 would override such a

contract. Undoubtedly, the

administration of the various

company-railways vested in various

companies when that section was

introduced. Each company-railway was a

separate railway administration in the eye of law. Each one of them was a

separate legal entity capable of suing

and being sued as such. This being the

purpose for which section 80 was

introduced even today that section has

to serve the very purpose for which it

was enacted."

"41. According to us, in the matter of

claim for damages, what is mainly

relevant is the incident of these

damages. In other words, who is really

the contracting party and who is really

responsible to a claimant? The claimant

no doubt deals primarily with some

portion of the railway which is known by one of the names given to the zonal railways. However, the definition of the expression "railway administration"

being an inclusive definition, it

appears to us that the Manager of any of these railways always includes the Government. It may be noted that the expression "railway" means a railway or any portion of the railways. The entire system of Indian railways should be "railway". as also any portion of it.

The expression "Manager of the railway"

would mean the Manager of a particular

portion which may have been separated

for the purpose of administrative

convenience. Even if there is a small

unit which is also "railway", in the

smaller unit would always include the

Government. The responsibility for

loss, destruction etc. arises under the

Indian Contract Act, as we have already

pointed out and not under the Indian

Railways Act. It is the Union of India

or the Government which is included in

all the Managers representing the

various portions of railways that is the contracting party and that is ultimately responsible for making good the loss due to destruction or otherwise. This basic fact, according to us, is the main factor which must be taken into account in understanding the function, propose and sufficiency of notice under Section 77 of the Railways Act."

"45. The other two questions relate to

the service of notice on a particular

officer. On whom the notice should be

served is also a question open to

debate. We have already pointed out

that in this appeal we are not deciding

the question whether a notice upon a

subordinate officer of a high rank but

not upon the Manager himself is or is

not sufficient notice. The third

question is whether in the case of

through traffic each of the managers is

entitled to a notice or in the case of

railways owned and administered by the

Union of India, preferring of such a

claim to one of the Managers whose

railway has dealt with the consignment

is sufficient compliance with Section

77. So far as the last point is

concerned, we have already pointed out

the purpose and the intention of Section

77. We have also pointed out that today

most of the major railways are owned and administered by the Union of India. It is the Union of India that is ultimately responsible in damages. With this background, if we look at the fact that the railways are administered by the Government, we find that there is nothing in the provisions of the Railways Act which gives each of the zonal railways which is headed by a Manager a separate legal existence.

Neither the definition contained in

Section 3(6) nor any other provisions

seems to give an independent legal

existence to such separate zonal

railways. According to us, emphasis

must be laid on the unity of

administration and unity of ownership of the railways. It may be that there are certain functions to be performed by the Manager of a railway administration which are laid down in the Act. For the purpose of carrying out those functions, a Manager has to be provided for and the fact that such a Manager is the head of each section of the railways which is styled as a zone does not give him any separate legal existence in the eye of law. We do not think that each such zonal railway can sue or be sued in its

own name."

"46. A claimant, who ultimately must

file a suit against the Union of India

for recovering his claim relating to

loss or destruction during the course of the consignment being handled by the State-owned and administered railway, has to comply with two distinct provisions. He must prefer a claim under Section 77 of the Railways Act and he must again serve a notice under Section 80 of the Code of Civil Procedure. The purpose and function of both these notices is more or less similar. Section 77 is primarily meant to make the railway administration aware of the claim, so that immediate investigation is started. The notice under Section 80 of the Code is also meant to enable the Government to consider whether the claim is just and should be compounded. Both the sections conceive of the possibility of compounding of just claims and avoidance of unnecessary litigation. According to us, therefore, two important conclusions are now reached. One is that each zonal railway is not a separate legal entity and the other is that the purpose and functions of the notice under Section 77

of the Railways Act, as also Section 80

of the Code of Civil procedure, are

primarily to avoid fraudulent and

delayed claims, and in the second place, to enable just claims being compounded."

"47. We have also pointed out that so

far as the content of the notice under

section 77 of the Railways Act is

concerned, it is now accepted as a

uniform role that notice has to be

liberally construed. Whether the

contents of a particular notice are

sufficient compliance with the

provisions of Sec.77 may be, in the

facts and circumstances of each case, a

question to be decided independently.

However, the principle on which that question has to be decided appears to be a settled one. If that is the primary purpose of Section 77 of the Railways Act, we think that the service of notice upon the Manager of any of the railways which have handled the goods would serve the purpose of Section 77 and would be sufficient compliance with it. Since all the railways are now owned an administered by the Government, the Manager of any of those railways which has dealt with the goods and gets enough particulars from the claimant about the number of the railway receipt, the nature of the goods and the date of booking etc. should be in a position to

Facts

know from the record of his own section

what has happened to the goods. It

should be possible for him to

immediately communicate with the Manager of other sections or zones on whose rails the goods have also passed. A

notice to any of these Managers through

whose railway systems the goods has

passed is a sufficient notice to the

Government which is administering all

these railways. Emphasis is laid upon

the Article "the" used before the

expression "railway administration" in

Section 77. Mr.Tambe for the appellants

argued that the intention is that the

particular railway which is responsible

must alone be served. If more than one

railways are sought to be made liable,

then each one of them must be served

with a notice. We think that the only

import of the expression "the railway

administration" used in Section 77 is to point out to the claimant that he must serve a notice upon that railway which has handled the goods. Any portion of a railway is also "railway" according to the definition contained in Section 3(4). Therefore, the reference in Section 77 is only meant to emphasise the fact that the notice must go out to some railway which has actually dealt with the goods and not to others. In this approach, we do not think that Section 80 of the Railways Act either furnishes a clue or controls the interpretation. Section 80 is an

independent provision made to point out

the statutory liability irrespective of

a contract."

Jetmull Bhojraj V.

15. The Supreme Court in Jetmull Bhojraj V.

D.H.Railway, AIR 1962 SC 1879 points out that in D.H.Railway, AIR 1962 SC 1879

D.H.Railway, AIR 1962 SC 1879

enacting section 77 the intention of the legislature must have been to afford only a protection to the railway administration against fraud and not to prove a means for depriving the consignors of their legitimate claims for compensation for the loss of or damage caused to their consignments during the course of transit on the railways. They, therefore, pointed out that bearing this object in mind, the provisions of Section 77 should be liberally construed. The Supreme Court further says that the purpose or the object of section 77 being to make the railway administration aware of the claim so that stale and fraudulent claims may not be lodged against it. In Premprakash Gupta Vs. Union of India, Premprakash Gupta Vs. Union of India,AIR 1977 Allahabd 482, the learned Single Judge, after AIR 1977 Allahabd 482

considering section 78-B which replaced old section 77, observed that section 78-B which replaced the old section 77 gives the choice to the aggrieved person to serve a notice on any one of the three railway administrations contemplated in clauses (a) and (b) of

Firm

section 78-B. In yet another judgment, namely Firm Deokishan Vs. Union of India, AIR 1966 All. 16 the Deokishan Vs. Union of India, AIR 1966 All. 16

Deokishan Vs. Union of India, AIR 1966 All. 16

very same High Court took a similar view that a notice

to one of the railways meets the requirement of section Niranjanlal Vs. Union of

77. The Supreme Court in Niranjanlal Vs. Union of India, 1968 (3) SCR 415 while dealing with the India, 1968 (3) SCR 415

India, 1968 (3) SCR 415

provisions of section 77 held that the requirement of compliance with the terms of section 77 should be liberally construed as the object of notice was only to enable the railway administration to make an enquiry and investigate into the cause of loss of the goods, consigned to it. In Traders Syndicate Vs. Union of Traders Syndicate Vs. Union ofIndia, AIR 1983 Calcutta 337, the learned Single Judge, India, AIR 1983 Calcutta 337

after considering the provisions of section 78-B, held that service of notice under section 78-B on one of the two railway administrations is sufficient under the said provision.

16. Mr Samant, learned counsel, for the respondents, however, invited my attention to the provisions of the old section 77 which was in force till September, 1961

and submitted that a person who claims compensation for the loss of goods was required to prefer his claim in writing to the "railway administration". He submitted that there was no reference to any particular railway administration. There existed more than four zonals railway administration in 1961 when it was found necessary to amend section 77 and accordingly new section 78-B was introduced. Under section 77 no distinction was made between two or more railway administrations, whereas section 78B, according to Mr.Samant, makes clear distinction between different railway administrations, and therefore, notice under section 78-B to the railway administration is necessary against whom claimant desires to proceed. In other words, notice to the railway administration against whom one desires to proceed is made mandatory and in the absence thereof the claim should fail. He submitted that the law laid down by the Division Bench in Kalinga KalingaTextiles would, therefore, not apply to the facts of the Textiles present case. In that case the court was dealing with old section 77.

17. It is true that section 77 was replaced by section 78-B and it came into force on 1st January,

1962. A plain reading of both the provisions would show that there is no difference between the two provisions except specifying that notice to one of the railway administrations contemplated in clauses (a) and (b) of section 78-B should be given. It does not state that a notice should be given to one railway administration which is responsible for the loss, destruction, damage or deterioration of goods delivered to be so carried.

The provisions of section 78-B must be independently examined and effect must be given to them as they are found in that section. There is nothing in this provision or any other provisions of the Railways Act which give each of the zonal railways which is headed by a General Manager, a separate legal existence, as Kalinga Textiles.

observed by the Division Bench in Kalinga Textiles Neither the definition contained in section 3(6) nor any other provision seems to give an independent legal existence to separate zonal railways. Each zonal railway, therefore, need not be sued in its own name.

The only import of the expression "railway administration" used in section 78-B is to point out to the claimant that he must serve a notice upon that railway which has handled the goods. Any portion of a railway is also "railway" according to the definition contained in section 3(4). Therefore, what is necessary is only that a notice must go out to one of the railways which had actually dealt with the goods and not to others.

18. The Statement of Objects and Reasons of the Act 39 of 1961 would show that the Railway Freight Structure Enquiry Committee had recommended that the responsibility of the railways in India as carriers of animals and goods, which is at present that of a bailee, should be changed to that of a common carrier. After a careful and detailed examination of the question the Government decided to accept the Committee’s recommendation and accordingly replaced section 77 by section 78-B. By introducing section 78-B the railways were given greater responsibility making them liable for loss or injury to the consignment in all cases arising when they are in the course of transit. In short by inserting section 78-B it was made clear that in the case of through booking of consignments over an Indian Railway and a Foreign Railway, the responsibility of the Indian railway as a common carrier would extent only over that portion of the carriage which is over the Indian Railway. This was made clear in the Statement of Objects and Reasons when the amendment by the Act 39 of 1961 was made.

19. By replacing section 77 by section 78-B of the Act of 1890 a complexion of both these sections, in my opinion, did not change and in view thereof the interpretation made by the Division Bench on the language of section 77, in Kalinga Textiles Kalinga Textiles, would apply with equal force to section 78-B. I, therefore, hold that even if there was no notice to the Central Railway the claims would not fail. In other words, notice to other railway meets the requirement of section 78-B and that there is sufficient compliance of the provisions contained in section 78-B of the Act of 1890. The judgments relied upon by Mr. Samant are of no avail to the appellants in view of the observations made in the foregoing paragraphs.

20. The next submission of Mr Samant, learned counsel for the railway that even if a notice under section 78-B

to the Central Railway in the instant appeals is held to be not necessary, the said provisions being procedural in character, the provisions contained in sections 106

and 107 of the Act of 1989 are attracted and since no notice under those provisions to the Central Railway was given by the claimants the decree is liable to be set aside.

21. The new Railways Act,1989 replaced the old Indian

Railways Act, 1890 and it came into force from 1.7.1990.

Sections 106 and 107 of the Act of 1989 correspond with section 78-B of the Act of 1890. The difference made in the language of these sections is clear. Under sections 106 and 107 that a a notice is made mandatory to one of the three railway administrations mentioned in clauses (a) and (b) of Section 106. Under sub-section (2) of section 106, any information demanded or enquiry made in writing from, or any complaint made in writing to, any of the railway administrations mentioned in sub-section

(1) (a) and (b) is deemed to be a notice of claim for compensation. Similarly, under sub-section (3) of section 106, a person shall not be entitled to a refund of an overcharge in respect of goods carried by railway unless a notice thereof has been served by him or on his behalf to the railway administration to which the overcharge has been paid, within the time specified thereunder. Section 107 of the Act of 1989 provides for an application to be filed for compensation for loss, destruction, damage, deterioration or nondelivery of goods against the railway administration "on whom a notice under section 106 has been served". A conjoint reading of sections 106 and 107 would thus show that a notice is made mandatory and an application for compensation is also required to be filed "only" against the railway administration on whom a notice under section 106 has been served. Mr Samant, learned counsel for the Railways, submitted that the provisions of sections 106 and 107 of the Act of 1989 being procedural in character, have reprospective application and are, therefore, attracted in the present case and since admittedly no notice to the Central Railway was given the claim against the Railways should fail.

22. Admittedly, the STC had filed the suits against the Union of India in this court which were subsequently transferred to the Tribunal after the same was established on 8.11.1989. There is no dispute that, the notices under section 78-B of the Act of 1890 were served on South East Railway, Eastern Railway and North Frontier Railway. The destination stations in all these cases are on one or two of these railways. In all these cases, the goods were despatched through Central Railway, from New Mulund Station, Mumbai. All the suits were instituted after section 77 was replaced by section 78-B by amending Act 39 of 1961. It is against this backdrop I would now like to consider the submissions of Mr Samant, learned counsel for the Railways.

23. Even assuming the correctness of the contention that a purely procedural amendment should ordinarily be construed to be retrospective, it cannot be said that the amendment in the present case was purely procedural construed to be retrospective, it cannot be said that the amendment in the present case was purely procedural and hence retrospective in operation. A plain reading of section 107 clearly demonstrate that a substantive liability is imposed on the claimant to make an

application for compensation for loss, destruction, damage, deterioration and nondelivery of goods to the railway administration on whom a notice under section 106 has been served. Such provision did not exist in the Act of 1890. That itself is an indication that such was not the condition precedent for making an application for compensation or under the Act of 1890 a notice to the railway administration against whom an application for compensation was filed, was not necessary. Section 107 is thus a substantive provision which obligates the claimant to proceed only against such railway administration on whom a notice under section 106 has been served. The suits or claim applications filed before the Act of 1989 was brought into force, would not fail in view of the fact that such provision was not in existence in the Act of 1890.

Moreover, there is no provision, express or implied, in the Act of 1989 giving retrospective effect to the provisions to all or any of the provisions therein and in particular sections 106 and 107 thereof. The provisions in the provisions whether procedural or otherwise, cannot be given retrospective effect, unless so expressed in the Act, which take away the rights of parties to the litigations who were entitled to enjoy or to maintain their litigations based on the provisions then in existence. If the Act of 1989 is held to be retrospective in operation, it would amount to relegislating the provisions of the Act of 1890 and in particular section 78-B therein by adding words which are not to be found in the said Act either expressly or by necessary intendment and it would amount to doing violence with the spirit of the Act of 1890. It may be borne in mind that the Act of 1989 is not the amending Act but it is a new legislation which repealed the Act of 1890. The judgment in Sudhir G. Angur and ors Vs.M.Sanjiv and ors, 2006(1) SCC 141 relied upon by Mr of 1890. The judgment in Sudhir G. Angur and ors Vs.

Samant, is of no avail to the appellants. In that case, the question of determining the jurisdiction of the court was under consideration and it was held that the Court is bound to take notice of the change in law and is bound to administer the law as it was when the suit came up for hearing. If the Court has jurisdiction to draw a suit when it comes for disposal it then cannot refuse to assume jurisdiction by reason of the fact that it had no jurisdiction to entertain it at the time of institution of the suit. This ratio would not help the appellants at all in view of the peculiar facts and circumstances of the case I have come across in the present case. For the selfsame reason the judgment relied upon by Mr Samant in Shiv Bhagwan Moti Ram Saraoji Vs Onkarmal Ishar Dass, 1951 VOL LIV The Bombay Law Reporters page 330 is also of no avail to the appellants. In the circumstances, the submissions of Mr Samant that the provisions of sections 106and 107 of the Act of 1989 apply and since notice under section 107 was

not served to the Central Railway, the suits should fail, must be rejected.

24. That takes me to the last submission of Mr.

Samant. In some of the cases, the same Tribunal has awarded six percent interest and in some nine percent interest. I do not see any logic or justification in making distinction while awarding interest. The Tribunal ought to have maintained uniformity in awarding the interest on the claim amount. This Court in Maharashtra State Electricity Board Vs. Union of India, 2005 (1) Mh.L.J.165 in similar circumstances, granted six percent interest. Hence, I pass the following order:

(i) All Appeals in which 9% interest has been awarded, namely, F.A.Nos.130/03, 132/03, 943/04, 1839/06, 670/05, 671/05, 672/05, 673/05, 674/05, 676/05, 677/05, 678/05, 679/05, 680/05, 1840/06, stand partly allowed. The rate of interest in all these Appeals stand reduced to 6%

p.a.to be paid from the date of filing of the claim applications. While allowing respondent no.1-Assurance Company to withdraw the amount of compensation that has already been deposited by the appellants, the difference, if any, due to reduction of the rate of interest, be deducted and it may be refunded to the appellants. Insofar as other appeals are concerned, the decrees against other Railways, that is, North East Frontier Railway, South East Railway and Eastern Railway, are set aside. The decrees against the Central Railway in all these appeals stand confirmed. All the appeals accordingly stand partly allowed in the aforesaid terms. The decrees in all these appeals be drawn up accordingly.

. Mr Samant, learned counsel for the appellants, prayed for stay of this judgment for a period of 16

weeks so as to enable the appellants to take up the matters in appeal before the Supreme Court. I am inclined to grant the stay, as prayed for. Order accordingly. The respondents shall not withdraw the amount, which has been deposited by the appellants, for a period of sixteen weeks from today.

(D.B.BHOSALE, J.)