Railways Can Raise Demand Over Misdeclaration Of Goods Before Or After Delivery: SC

The Supreme Court has ruled that the Indian Railways is legally empowered to raise charges for misdeclaration of goods either before or after the delivery of consignments. The Court clarified that under Section 66 of the Railways Act, there is no restriction as to when such charges can be imposed.

A bench comprising Justices Sanjay Karol and Prashant Kumar Mishra held that a consignee, owner, or person in charge of goods is obligated to provide a written statement accurately describing the goods for transportation. If the description is materially false, Railways can levy the appropriate charges at any stage.

“No reference is made to the stage at which such a charge can be made, i.e., either before or after delivery. Consequently, the legislative intent was to permit levy of charge at either stage,” the Court observed.

The bench was deciding a batch of civil appeals filed by the Union of India challenging the Gauhati High Court’s 2021 judgment, which had upheld the Railway Tribunal’s 2016 direction to refund the penal amount paid by the respondent, M/s Kamakhya Transport Pvt. Ltd., along with 6% interest per annum. The Railway authorities had earlier issued demand notices citing misdeclaration of goods carried through Indian Railways.

The Union government argued that the dispute was wrongly treated by the lower courts as one of overloading, which is governed by Section 73 of the Act. Instead, it was a case of misdeclaration, attracting penalty under Section 66. The respondents contended that since the demand notices were raised post-delivery, Section 66 would not apply.

Rejecting this argument, the Court found that the demand notices clearly cited misdeclaration and made no reference to overloading. The claim petitions also did not allege overloading.

“Section 66 applies to the present lis. No evidence has been led to suggest that the demand notices were not genuine, nor do the claim petitions question their authenticity,” the Court held.

It further held that the High Court’s view that penal charges can only be levied prior to delivery, was legally flawed.

The bench also clarified that the reliance placed by the respondents on Jagjit Cotton Textile Mills v. Chief Commercial Superintendent N.R. (1998) was misplaced. That ruling pertained to Section 54 and not Section 66, and the Court’s observations there were merely illustrative.

Accordingly, the Supreme Court set aside the High Court’s judgment and allowed the Union’s appeals.

Case Title: Union of India v. M/s Kamakhya Transport Pvt. Ltd.