2015 (12) TMI 1697 - SC - Indian Laws

Supreme Court affirms legality of train tender notice, emphasizes tariff compliance & public interest

S.K.L. Co. Versus Chief Commercial Officer & ors.

The Supreme Court upheld the Division Bench's decision, affirming the legality of the tender notice for leasing Front Second Class Luggage Rake (FSLR) and ... Eligibility of awarding of contract of lease of FSLR and VP - lease the luggage space in FSLR to traders and other interested persons after inviting tenders from them - Held that:- 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. 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. 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 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. Issues Involved:1. Legality of the tender notice for leasing Front Second Class Luggage Rake (FSLR) and Ventilated Parcel Van (VP).2. Authority of the Respondents under Sections 30, 31, and 32 of the Indian Railways Act, 1989.3. Applicability of Sections 70 and 71 of the Indian Railways Act, 1989.4. Impact of leasing on public interest and alleged creation of monopoly.5. Delegation of power to fix tariff rates.6. Compliance with judicial directions regarding tariff regulation.Detailed Analysis:1. Legality of the Tender Notice:The case revolves around the legality of the tender notice issued for leasing FSLR and VP in trains. The Appellant challenged the tender notice, arguing that it denied them the facility of transporting goods at the rates specified in Coaching Tariff No. 24 Part III. The learned Single Judge quashed the impugned notification, but the Division Bench reversed this decision, stating that the tender notice was a policy decision aimed at augmenting revenue and was not opposed to Sections 30 and 31 of the Indian Railways Act.2. Authority under Sections 30, 31, and 32 of the Indian Railways Act, 1989:The Respondents contended that their authority to lease carrying capacity in trains was not confined to Sections 30 and 32 of the Act. These sections allow the Central Government to fix rates for carriage and other charges, and the railway administration to quote station-to-station rates or charge lump sum rates. The Division Bench held that the impugned notification was a policy decision to increase revenue and was not issued under Sections 30 and 31.3. Applicability of Sections 70 and 71:Section 70 prohibits the railway administration from giving undue or unreasonable preference to any person. Section 71 allows the Central Government to direct the railway administration to give special facilities for the carriage of certain goods in public interest. The Appellant argued that the tender notice created a monopoly and violated Section 70. The Division Bench rejected this argument, stating that the Appellant failed to provide evidence of undue preference and that the lease was granted through an auction process.4. Impact on Public Interest and Alleged Monopoly:The Appellant contended that leasing FSLR and VP created a monopoly and was detrimental to public interest. The Division Bench observed that the Respondents had assured that adequate space would be provided for the general public and that more space could be ordained if needed. The High Court directed the Respondents to incorporate regulatory checks on the lessee's power to fix tariffs, ensuring public interest was safeguarded.5. Delegation of Power to Fix Tariff Rates:The Appellant argued that the power to fix tariff rates was conferred on the Central Government and the Respondent-Railways under Sections 30 to 32, and delegating this authority to a third party violated the principle that a delegatee cannot sub-delegate. The Division Bench directed the Respondents to fix the upper limit of rates chargeable by contractors, ensuring compliance with statutory provisions.6. Compliance with Judicial Directions:The Division Bench's direction to fix the upper limit of rates chargeable by contractors was not challenged by the Respondents. The Supreme Court emphasized the need for the Respondents to comply with this direction, stating that the Respondents must follow and implement the ethos and parameters set by the Railways Act. The Court permitted a period of three months for compliance and directed that the successful tenderer should not charge prices exceeding those prescribed in Coaching Tariff No. 24 Part III.Conclusion:The Supreme Court upheld the Division Bench's judgment, affirming the policy decision to lease FSLR and VP, provided the tariff rates adhered to statutory procedures. The Court directed the Respondents to ensure compliance with the prescribed tariff rates, thereby balancing revenue generation with public interest.