Union of India versus State of Rajasthan

C1J11stltution of India-Artical 131-0riginal jurisdf,;tion ofthe Supreme Court-Scope of-Jurisdiction when attracted. Held: attracted only when dispute arises between or amongst the States and the Union of India in the context of the constitutional relationship that exists between them and the powers, ri'ghts, duties, fmmunities, liabilities, disabilities, etc., flowing therefrom. Whethef a suit filed D by the State against the Union of India for recovery of compensation for loss on account of da1nage caused to goods despatched through the b1dfan Railways could be filed in a civil court-Whether suit Maintainable. Held: yes.

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Indian Railways Act, 1890-Section 80-Suit filed under section 80 is one b~tween Railway Administration and the person instituting the suit even though Union of India is impleaded as a party.

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The respondent, State of Rajasthan through its District Rehabilitation Officer, Barmer filed a suit in the court of the District Judge, Balotra against the appellant, Union of India, and the Railway Adrr1inistration claiming damages for the loss suffered by it on account of the damage caused to the goods transported by rail through the Railway Administration. The appellant contended that the suit was not maintainable in the District Court in view of Article 131 of the Constitution which, according to it conferred exclusive jurisdiction on the Supreme Court to decide all disputes arhing b_etween a State and the Union. The District Judge held that he hadjurisdii;tion to try the suit. A Revision Petition filed against the order of the District Judge was dis1nissed by the High Court. Hence this petition for special leave to appeal.

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Dismissing the petition,

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HELD : The suit was entertainable by the District Court.

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On a careful consideration of the whole matter in the light of the decisions of this Court, it is felt that Article 131 of the Constitution is attracted only when a dispute arises between or amongst lthe States and the Union in the context of the constitutional relationship that exists between them and the powers, rights, duties. immunities, liabilities, disabilities etc. flowing the[efrom. Any dispute

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UNION V. RAJASTHAN

which may arise between a State in the capacity of an employer in a factory, a manufacturer of goods subject to exercise duty, a holder of a permit to run a stage carriage, a trader or businessman carrying on business not incidental to the ordinary functions of Government, a consumer of railway services. etc. like any other private party on the one hand and the Union of India on the other Cannot be construed as a dispute arising between the State and the Union in discharge of their respective executive powers attracting Article 131 of the Constitution. It could never have been the intention of the framers of the Constitution that any ordinary dispute of this nature would have to be decided exclusi•ely by the Supreme Court. [708G·H ; 709A-BJ

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State of Bihar v. Union of India & Anr., [1970] 2 S.C.R. 522, Union of India y, State of Mysore, [1977] S.C.R. 842. Stale of Mysore v. Union of India & Ors. · A.I.R. 1968 Mysore 237 at pages 239-240, State of Rajasthan & Ors., etc. v. Union of India etc. etc., [1978J l S.C.R. 1. State of Karnataka v. Union of India & Anr., !1978] 2 S.C.R. l at page 92 and The Framing of India's Constitution-A Study by Shri B. Shiva Rao at page 483, referred to.

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In the instant case, the State Government has made a claim like any other consignee of goods despatched through the railway for compensation and its success or failure in the suit depends on proof of facts which have to be established in the same way in which a private person would have to establish. This is not even a case where a forrn:il contract is entered into between the Union of India and the State of Rajasthan in _accordance with the requirements of Article 299 of the Constitutlon. It is just a commercial contract under which an officer of the State of Rajas than was entitled to claim delivery of the goods consigned as any ordinary consignee. The claim involved in this case is one based on section 80 of the Indian Railways Act, 1890; Section 80 of the Indian Railways Act, 1890 indicates that the claim made under it is essentially against the Railway Administration concerned. The Union of India is impleaded as a party to suits instituted thereunder being the owner of the Indian Railways by virtue of Article 300 of the Constitution. The statute, however, treats the dispute as one between the Railway Administration concerned and the person insti· tuting the suit. Neither of the parties to these proceedings is questioning the applicability of the provisions of the Indian Railways Act, 1890 to these procee. dings. It is, therefore, difficult to hold that in these proceedings there is any question which falls within the scope of Article 131 of the Constitution. ·

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CIVIL APPELLATE JURiSDICTION : Special Leave Petition (Civil) No. 284 OF 1982.

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From the Judgment and Order dated the 2nd September 1981 of the Rajasthan High Court in Civil Revision Petition No. 273 of 1981

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K.G. Bhagat, Addi. Sol General, Miss A. Suhhashini and Vijay Panjwani for the Petitioners.

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The Judgment of the Court was delivered by

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VeNKATARAMIAH, J. The precise question which arises for consideration in this petition is whether a suit filed by the State of Rajasthan against the Union of India for recovery of compensation for loss on account of the damage caused to the goods despatched through the Indian Railways in a civil court at Rajasthan is maintainable or whether it should be filed in this Court under Article 131 of the Constitution.

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The facts of the case are these. The District Administrator of Barmer in Rajasthan was in need of a certain number of tents and their accessories and at his request 170 bundles of tents and their accessories were despatched by Chief Commandant, Mana Shivir (Raipur) Madhya Pradesh to the Collector, Barmer through the Indian Railways under R.R. No. 423978 dated February 17, 1972 to be delivered at Barmer. No intimation was received about the arrival of the consignment at Barme:r till August 6,1972. On hearing that the consignment had reached Barmer on August 6, 1972, the Additional Collector and the District Rehabilitation Officer went to Barmer on August 6, 1972 for taking delivery but it was found that the packings of the goods had been seriously damaged and as a consequence thereof the tents as well a• the accessories had become unfit for use. The delivery was not, therefore, taken and a request was u.ade for assessing the damages. The goods were auctioned and a sum of Rs. 15,000 was fetched in the auction. Since the claim of the consignee was not settled by the Railway Administration, after issuing necessary notice to the General Manager, Northern Railway, New Delhi, a suit was filed by the State of Rajasthan through the District Rehabilitation Officer Barmer claiming damages amounting to Rs. I, 57,825.80 against the Union oflndia in the Court of the District Judge, Balotra on July 23,1977. The suit was contested by the Union of India and the Railway Administration on various grounds and one of them was that the suit was not maintainable in tbe District Court in view of Article 131 of the Constitution which according to them conferred exclusive jurisdiction on the Supreme Court to decide all disputes arising between a State and the Union. The 6th issue framed in the suit related to the competence of the District Court to entertain the said suit. The above issue was heard as a preliminary issue and the District Judge held by his order dated April 16, 1981 that he

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UNION v. RAJASTHAN (Venkataramiah, J.) 703

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had jurisdiction to try the suit. Against the order of tlae Bistrict Judge a revision petition was filed before the High Court of Rajasthan and that petition came '.to be dismissed on September 2,1981. This petition for Special Leave is preferred under Article 136 of the Constitution against the order of the High Court.

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After the case was heard foe some time, the learned Additional Solicitor General very fairly stated that the. suit could be allowed to be proceeded with before the District Court. Since the question was of importance and that every suit instituted by any State Government against the Railway Administration may give rise to a similar issue, we propose to dispose of this Special Leave Petition with our reasons.

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Article 131 of the Constitution reads thus :

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"131. Subject to the provisions of this Constitution, the Supreme Court shall, to the exclusion of any other court have original jurisdiction in any dispute-

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(a) between the Government of India one or more States ; or

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(b) between the Government of India and any State or States on one side and one or more other States on the other; or

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(c) between two or more States ifand in so far as the dispute involves any question (whether of law or fact) on which the existence or extent of a legal right depends :

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Provided that the said jurisdiction Shall not extend to a dispute arising out of any treaty, agreement, covenant, engagement, sanad or other similar instrument which, hav· ing been entered into or executed before the commencement of this Constitution, continues in operation after . Jr such commencement, or which provides that the said jurisdiction shall not extened to such a dispute."

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The provision corresponding to Article 131 of the Constitution in the Government of India Act, 1935 was section 204 of that Act. That section prior to its amendment by the India (Provisional Constitution) Order, 1947, read as :

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"204. Original jurisdiction cf Federal Court. (I) Subject to the provisions of this Act, the Federal Court shall to the e~clusion of any other court, have an original jurisdiction in any dispute between any two or more of the following parties, that is to say, the Federation, any of the provinces or any of the Federated States, if and in so far as the dispute involves any question (whether of law or fact) on which the existence or extent of a legal right depends :

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Provided that the said jurisdiction shall not extend to-

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(a) a dispute to which a State is a party, unless the dispute-

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(i) concerns the interpretation of this Act or of an Order in Council made thereunder, or the extent of the legislative or executive authority vested in the Federation by virtue of the Instrument of Accession of that State ; or

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(ii) arises under an agreement made under Part VI of this Act in relation to the administration in that States of a law of the Federal Legislature, or otherwise concerns some matter with respect to which the Federal Legisbture has power to make

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laws for that State ; or

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(iii) arises under an agreement made after the establishment of the Federation, with the approval of His Majesty's Rep, esentative for the exercise of the functions of the Crown in its relations with Indian States, between that State and the Federation or a Province, being an agreement which expressly provides that the said jurisdiction shall extend to such a dispute,

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(b) a dispute arising under any agreement which expressly provides that the said jurisdiction shall not extend to such a dispute.

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(2) The Federal Court in the exercise of its original jurisdiction shall not pronounce any judgment other than a H declaratory judgment."

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UNION v. RAJASTHAN (Venkataramiah, J.) 705

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It may be noted that while the main part of sub-section (I) of section 204 of the Government of India Act, 1935 is more or less similar to Article 131 of the Constitution, there is a difference between the structure of the proviso to Article 131 and the structure of the proviso to section 204 (I). Article 131 of the Constitution provides that subject to the provisions of the Constitution, the Supreme Court shall to the exclusion of any other Court, have original jurisdiction in any dispute-Ca) between the Government of India and one or more States; or (b) between the Government of India and any State or States on one side and one or more other States on the other ; or ( c) between two or more States, if and in so far as the dispute involves any question (whether of law or fact) on which the existence or extent of a legal right depends. Tha !means that if there is any dispute involving any question about the existence of a legal right or even where the existence of legal right is admitted if there is a dispute about its scope between or amongst the States and the Government of India as stated therein, the Supreme Court would have exclusive jurisdiction to decide the question whether of law or fact. No other court has jurisdiction to deal with it. Similarly under section 204 of the Government of India Act, 1935 the Federal Court had exclusive jurisdiction to decide similar questions which arose between or amongst the Federation, any of the Provinces "or any of the Federated States. Under the proviso to that section, however, it was provided that the said jurisdiction would not extend to dispute to which a State (a Federated State) was a party, unless the dispute concerned matters mentioned in clauses (i) to (iii) thereof. Under the proviso to Article 131 of the Constitution the original jurisdiction of the Supreme Court does not extend to matters referred to therein. In the State of Bihar v. Union of India & Anr.(¹ ) after reviewing the consititutional history which led to the enactment of Article 131 of the Constitution, a Constitution Bench of this Court observed at pages 529-530 thus :

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"Although Art. 131 does not define the scope of the disputes which this Court may be called upon to determine in the same way as section 204 of the Government of India Act, and we do not find it necessary to do so, this much is certain that the legal right cwhieh is the subject of disput• must arise in the context of the Consti-

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(I) f1970] 2 S.C.R. 522.

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tution and the Federation it sets up. However, there can be no doubt that so far as the parties to the dispute arc concerned, the framers of the Constitution did intend that they could only be the constituent units of the Union of India and the Government of India itself arrayed on one side or the other either singly or jointly with another unit or the Government of India." (Underlining by us)

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The Constitution· Bench ultimately held in the above case that if a private person, firm or corporation was also impleaded as a party the dispute could not be tried by the Supreme Court under Article 131 of the Constitution.

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In Union of India v. State of Mysore,(¹ ) the question was whether a writ petition filed in the High Court by a State against the Union of India questioning the correctness of the order of the Central Government passed on a revision petition filed under the Central Excises and Salt Act, 1944 rejecting the contention of the State Government against the levy of excise duty on goods in stock with the state's Implements Factory was maintainable. The High Court held that the Central Government being a Tribunal as such while disposing of the revision petition in the exercise of power conferred on it by Section 36 of the Central Excises and Salt Act, 1944 could not be a disputant in the dispute it decided. The Central Government was only interested in the recovery of duty which was properly payable but that by itself did not transform it from a Tribunal Into a disputant. The High Court observed that:

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"A dispute falls within Article 131 of the Constitution only when the Central Government is a disputant as such. The dispute must directly arise between the State and the Central Government as the repository of the executive power of the Union. An indirect interest in the collection of the revenue in the form of excise duty if the excise duty demanded by the Central Excise is exigible, is far too slender a foundation for the postulate that in every controversy arising under the provisions of the Central Excise Act the Central Government is necessarily a disputant. The acceptance of such interpretation would make the Central Government a party to every proceeding under the Central

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ff (!). [19771 I S.C,R. 842.

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UNION v. RAIASTHAN (Venkataramiah, J.) 707

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Excise Act in the role of a disputant, and, that consequence can scarcely fit into its constitution as a tribunal under section 36 of the Act." (Vide State of Mysore. v. Union of india & Ors.) (¹ )

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Accordingly the contention raised by the Union of India was negatived by the High Court. This Court affirmed the above view of the High Court in the case of Union of India v. State of Mysore (supra) at page 845 thus:

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"Mr. Raman tried to argue that the High Court erred in not applying article 131 of the Constitution to the controversy even though the writ petition was barred thereunder as it fell exclusively within the jurisdiction of this Court under article 131 of the Constitution as a dispute between the Government of India and the State of Mysore. The argument is however futile because there is nothing on the record to show that there was any such dispute between the Central and the State Government. As the High Court has pointed out, the Union of India was made a party to the writ petition merely because it had dismissed the revision application of the State Government."

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Jn State of Rajasthan & Ors. etc. etc. v. •union of India etc. etc.(² ) while explaining the scope of Article 131 of the Constitution Chandrachud, J. (as he then was) said at page 54:

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"The dispute between the Union of India and a State cannot but be a dispute which arises out of the differences between the Government in office at the Centre and the Government in office in the State. 'In office' means 'in power' but the use of the latter expression may prudently be avoided with the realization of what goes with power. But there is a further prerequisite which narrows down the ambit of the class of dispute which fall wihtin Art. 131. That requirement is that the dispute must involve a question whether of law or fact, on which the existence or extent of a legal right depends. It is this qualification which affords the true guide for detremining whether a particular

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(2) [19781 I S.C.R. I.

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A dispute is comprehended with art. 13J. ........ The purpose of art. 131 is to afford a forum for the resolution of disputes which depend for their decision on the existence or extent of a legal right."

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In State of Karnataka v. Union of India & Anr.(¹ ) Beg C.J. Stated 8 as under:

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"It has to be remembered that Article 131 is traceable to section 204 of the Government of!ndia Act. The jurisdiction conferred by it thus originated in what was part of the federal structure set up by the Government of India Act, 1935. c It is a remnant of the Federalism found in that Act. It . should, therefore, be widely and generously interpreted for that reason too so as to advance the intended remedy. It can be invoked, in my opinion, whenever a State and other States or the Union differ on a question of interpretation of the Constitution so that a decision of it will affect the scope D or exercise of governmental powers which are attributes of a State. It makes no difference to the maintainability of the action if the powers of the State, which are Executive, Legislative and Judicial, are exercised through particular individuals as they necessarily must be. lt is true that a criminal act 'Committed by a Minister is no part of his E official duties. But, if any of the organs of the State claim exclusive power to take cognizance of it, the state, such, becomes interested in the dispute about the legal competence or extent of powers of one of its organs which may emerge."

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On a careful consideration of the whole matter in the light of F the decisions of this Court referred to above, we feel that Article 131 of the Constitution is attracted only when a dispute arises between or amongst the States. and the Union in the context of the constitutional relationship that exists between them and the powers, rights, duties, immunities, liabilities, disabilities etc. flowing therefrom. Any dispute which may arise between a G State in the capacity of an employer in a factory, a manufacturer of goods subject to excise duty, a holder of a permit to run a stage carriage, a trader or businessman carrying on business not incidental

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UNION'.•· RAJASTHAN (Venkataramiah, J.)

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to the ordinary functions of Government, a consumer of railway services etc. like any other private party on the one hand and the Union of India on the other cannot be construed as a dispute arising between the State and the Union in discharge of their respective executive powers attracting Article 131 of the Constitution. It could never have been the intention of the framers of the Constitution that any ordinary dispute of this nature would have to be decided exclusively by the Supreme Court. It is well to remember that the constitutional proposals of the Sapru Committee advocated the strengthening of the position of the. Federal Court in India and widening its jurisdiction on the original side so that the Federal Court could act as an interpreter and guardian of the Constitution and as a tribunal for the determination of the disputes between the constituent units of the Federation. The Joint Committee on Indian Constitutional Reforms was also of opinion that the object of conferring exclusive original jurisdiction on the Federal Court was that the disputes of the kind specified between the Federation and the Provinces as the constituent units of the Federation should not be left to be decided by courts of law of a particular unit but be adjudicated upon only by the highest tribunal in the land which would be beyond the influence of any one constituent unit. The Special Committee consisting of Sriyuts S. Varadachariar, Aliadi Krishnaswami Ayyar, B.L. Mitter. K.M. Munshi and B.N. Rau appointed by the constituent Assembly to consider and report on the constitution and powers of the Supreme Court suggested 'that the Supreme Court, like the Federal Court under the 1935 constitution, would be the best available forum for the adjudication of all disputes between the Union and a unit and between one unit and another and proposed that the court should have an exclusive original jurisdiction in such disputes'. (Vide The Framing of India's Constitution-A Study by Shri B. Shiva Rao at p. 483)._ Considered in the light of the foregoing the conclusion becomes inevitable that disputes of the nature involved in this case could not have been in the contemplation of the framers of the constitution when they adopted Article 131 of the Constitution.

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In the instant case the legal right of the State of Rajasthan to sue for damages for the loss suffered by it on account of the damage caused to the goods transported through the Railway Administration as such is not in dispute between the Union Government and like State of Rajasthan. The State Government has made a claim the any other consignee of good£ despatched through the railway for

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compensation and its success or failure in the suit depends on proof of facts which have to be established in the same way in which a private person would have to establish. This is not even a case where a formal contract is entered into between the Union of India and the State of Rajasthan in accordance with the requirements of Article 299 of the Constitution. Jt is just a commercial contract under which an officer of the State of Rajasthan was entitled to claim delivery of the goods consigned as any ordinary consignee. It may be noticed that the jurisdiction of the Supreme Court under Article 131 of the Constitution is subject to the other provisions of the Constitution. Under Article 298 of the Constitution the executive power of the Union and of each State extends to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purpose. That Article further provides that the said executive power of the Union shall, in so far such trade or business or such purpose is not one with respect to which Parliament may make laws, be subject in each State to legislation by the State and said executive power of each State shall, in so far as such trade or business or such pur· pose is not one with respect to which the State Legislature may make laws, be subject to legislation by Parliament. The claim involved in this case is one based 011 section 80 of the Indian Rail· ways Act 1890. Under that section a suit for compensation for loss of life of, damage, deterioration or non-delivery of animals or goods may be instituted 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 and if the passenger was or the animals of goods were booked through over the railways 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 Joss, injury, destruction or damage or deterioration occurred and in either case the suit may be instituted in a court having jurisdiction over the place at which the passenger obtained his pass or purchased his ticket or the animals or goods were delivered for carriage, as the case may be, or over the place in which the destination station lies or the Joss, injury, destruction, damage or deterioration occurred Section 80 of the Indian Railways Act 1890 indicates that the claim made under it is essentially against the Railway Administration concerned. The Union of Indian is impleaded as a party to suits instituted thereunder being the owner of the Indian Railways by

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IJNloN v. RAiASTiiAN (Venkaiaramlah, J.) 111

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virtue of Article 300 of the Constitution. The statute, however, treats the dispute as one between the Railway Administration concerned and the person instituting the suit. Neither of the parties to these proceeding; is questioning the applicability of the provisions of the Indian Railways Act, 1890 to these proceedings. It is, therefore, dfficult to hold that in these proceedings is any question which falls within the scope of Article 131 of the Constitution.

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The High Court and the District Judge were, therefore, right in holding that the snit was entertainable by the District Court.

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For the foregoing reasons, this Special Leave Petition fails and hereby dismissed.

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