Dismissed

The Union of India v. M/S.Bharath Trading Company

Madras HC17 Oct 2014CMA/1986/2010

Case brief

AI extract

What is this about?

Appeal against Railway Claims Tribunal order allowing refund of freight charges which were not used for transporting rice. Court held no illegality existed at contract inception; Railway liable to refund under Sections 65 and 70 of Contract Act.

What did the court decide?

Civil Miscellaneous Appeal dismissed; Railway Claims Tribunal order confirming refund of freight charges to Respondent left unimpugned.

The Union of India Vs M/S.Bharath Trading… — Contract and Commercial Disputes | Madras HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 17.10.2014

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CORAM:

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THE HONOURABLE MR.JUSTICE M.JAICHANDREN

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AND

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THE HONOURABLE MRS.JUSTICE ARUNA JAGADEESAN

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CMA.No.1986/2010 MP.No.1/2010

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The Union of India owning Southern Railway by its General Manager, Chennai-3

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Appellant(Respondent)

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M/s.Bharath Trading Company by its Proprietor Pradeep Mittal, Delhi-110006 Respondent(Applicant)

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Prayer:- This Civil Miscellaneous Appeal is filed against the order of the Railway Claims Tribunal, Chennai Bench, dated 13.10.2009 made in OR.No.2006 00001.

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JUDGEMENT

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(Judgement of the Court was made by ARUNA JAGADEESAN, J.)

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This Civil Miscellaneous Appeal is filed against the order of the Railway Claims Tribunal, Chennai Bench, dated 13.10.2009 made in OR.No.2006 00001.

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The Respondent, a wholesale trader in rice, booked Railway Wagons on payment of necessary charges on 14.8.2004 for transport of rice from Tuticorin to New Delhi. The Respondent also paid full freight charges of Rs.27,83,695/-, in advance, vide receipt No.D975294. The rice, for which Railway Wagons were booked, was not transported, as the Inspector of Police, Civil Supplies, CID, Tirunelveli, had registered a case for the offence under the Essential Commodities Act, 1955 in Cr.No.176/2004 on the file of the learned Judicial Magistrate II, Tuticorin. The Respondent requested the Appellant to refund the freight charges, as no transport had taken place. The Inspector of Police, Civil Supplies CID, https://hcservices.ecourts.gov.in/hcservices/

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Tirunelveli had raised objection, pointing out that the claim for refund has to be made before the learned Judicial Magistrate, Tuticorin, on the basis of which, the Appellant had written a letter dated 28.9.2005 to the Respondent, stating that it is not in a position to process the claim of the Respondent for refund. Aggrieved against the said communication, the Respondent moved this court in WP.No.40284/2005, for quashing the said letter dated 28.9.2005, with a miscellaneous petition in WPMP.No.43202/2005 seeking for interim direction to refund the freight charges. Since the said prayer was declined, the Respondent filed an appeal in WA.No.1048/2005, which was disposed of by the Division Bench of this Court, with a liberty to the Respondent to approach the Tribunal for appropriate relief. The Respondent herein filed an application before the Railway Claims Tribunal, under Section 16 of the Railway Claims Tribunal Act, 1987, claiming refund of freight charges, amounting to Rs.27,83,695/- for transport of 23416 quintals of boiled rice from Tuticorin to Naya Azadpur, Delhi, with interest at 18% p.a. from the date of filing till the date of repayment.

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Before the Tribunal, it was contended by the Appellant that Section 23 of the Contract Act applies to the facts of the case and that the contract executed by the Respondent with the Railways, who had no knowledge of the nature of the consignment, is ab initio void, as it is against the public policy. It was further contended that the Respondent and his agents were conspirators in entering into an illegal contract and as such, Section 23 of the Contract Act would squarely apply to the case, as the Respondent illegally tried to move the PDS rice, which was forbidden by law and a fraudulent act, to which, the Railway was not a party and thus, the railway is lawfully entitled to retain the freight charges paid, till the disposal of the criminal case, pending before the learned Judicial Magistrate court, Tuticorin.

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On the other hand, it was contended by the Respondent before the Tribunal that Section 23 of the Contract Act cannot be applied, since there was no illegality at the inception of the said contract and only Section 65 of the said Act should come into play. It was further contended that the Railway is liable to refund the freight charges claimed, as they have not discharged their obligation under the contract of moving the goods, as agreed and in such an event, the provisions of Section 70 of the Indian Contract Act are attracted, which prevents unjust enrichment. It was, further, contended that the Respondent, in good faith, booked railway rake, through its agent, for the transportation and payment of freight was made legally, through banker's cheque and had acted bona fide and there was no intention of entering into illegal contract. It was submitted that only when a case was registered against the Respondent, following the loading of the rice on to the wagons and the stoppage of its movement for the first time, they became aware that the goods loaded could have been different from the goods intended for purchase and the object of the contract, at the time of inception, was not at all illegal. It was also contended that the https://hcservices.ecourts.gov.in/hcservices/

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Respondent, having lawfully entered into the contract for transportation of the consignment, the Railways cannot be permitted to retain the consideration paid, without rendering the service of transportation and delivery at the other end, thereby, unjustly enrich themselves of the Respondent's money. It was submitted that the pendency of a criminal case cannot be a ground for retention, by the Railways, of the freight charges paid by the Respondent for a service agreed to, but not delivered by the railways.

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The learned counsel for the parties cited various decisions before the Tribunal. The Tribunal, after considering the pleadings as well as the evidence of the parties, held that there was no illegality at the time of entrustment of goods to the Railways for carriage and allowed the application filed by the Respondent, by the impugned order. As against the same, this appeal has been filed.

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The very same contentions were reiterated before us, by the learned counsel for the parties. We have gone through the materials place on record and also the impugned order.

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The contention of the learned counsel for the Respondent that Section 23 of the Contract Act would not attract, as there was no illegality in the transaction and no fraudulent means was adopted by the Respondent, as the entire transaction was routed through their bankers, merits acceptance. Section 65 of the Contract Act states that when an agreement is discovered to be void or null, a contract becomes void, any person, who has received any advantage under such agreement or contract, is bound to restore it, or to make compensation for it to the person, from whom he received. Therefore, once Section 23 of the Contract Act is taken out of the scope of this case, then Section 65 becomes operative automatically. As per Section 70 of the Contract Act, when a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously and such another person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered.

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In the present case, the Railway Administration, having collected the charges on the basis of Ex.R2, forwarding note, Ex.A5 railway receipt and as there was no movement made, though it was beyond their control, still we find that in so far as the contract between the Appellant and the Respondent is concerned, there was a clear breach of the contract and so, the Respondent is certainly entitled for a direction for refund of the freight charges paid by them from the Railways.

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The Tribunal, after considering the evidence of the parties, has found that there was no illegality, at the time of entrustment of goods to the Railways for carriage and thus, Section 23 of the Indian Contract Act would not be applicable to the facts of this case and by applying Sections 65 and 70 of the Indian Contract Act, the amount collected from the Respondent as freight charges was https://hcservices.ecourts.gov.in/hcservices/

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directed to be refunded. The Tribunal has found that the Railways have not come out with any quantum of deduction towards demurrage or other charges for engaging the wagons by the Respondent. We do not find any reason to interfere with the impugned order passed by the Tribunal and therefore, the same is liable to be confirmed.

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In the result, this Civil Miscellaneous Appeal is
dismissed. No costs. Consequently, the connected MP is closed.
Sd/-
Assistant Registrar(CS-IV)
//True Copy//
Sub Assistant Registrar
Srcm
To:
1.Railway Claims Tribunal, Chennai Bench
2.The Record Keeper, VR Section, High Court, Madras.
+1cc to M/s. Surana & Surana, Advocate Sr 50085
+2ccs to Mr.M.Udhaya Kumar, Advocate Sr 49757
PUR(CO)
km/2.12.
CMA.No.1986/2010

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https://hcservices.ecourts.gov.in/hcservices/

The Union of India v. M/S.Bharath Trading Company

Case brief

What is this about?

What did the court decide?

The Union of India v. M/S.Bharath Trading Company

Case brief

What is this about?

What did the court decide?

What the court decided

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Statutes considered

Parties & counsel

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Case details

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