NO ESCAPE AFTER DELIVERY: SC ALLOWS
RAILWAYS TO FINE FOR WRONG DECLARATIONS
Case Name: Union of India vs. M/s Kamakhya Transport Pvt. Ltd. Etc. Etc.
Case Number: Civil Appeal Nos. 7376-7379 of 2025
Date of Judgment: 20th December 2021
Quorum: Hon’ble Justice Sanjay Karol
FACTUAL BACKGROUND
The appellant, the Union of India, raised demand notices against the respondents, alleging
misdeclaration of goods transported through Indian Railways. The demand notices were issued
after the delivery of goods in 2011 and 2012. The Railway Authorities, after inspection of the
goods, discovered that the goods were different from the goods that were actually loaded. The
appellant issued demand notices on 13th October 2011, 29th October 2011, and 7th April 2012,
seeking payment and alleging misdeclaration. The demand notices were issued by the appellant
after the goods were delivered to the consignees. Although the respondents paid the amount,
they filed a petition seeking a refund under Section 16 of the Railway Claims Tribunal, 1987,
before the Guwahati Bench of the Railway Claims Tribunal.
The respondent contended that the demand notices made are illegal, as such penalties can be
made only prior to the delivery of the goods, as per Sections 73 and 74 of the Railways Act,
1989. The tribunal accepted the contentions made by the appellants and asked the Railway
Authorities to refund the amount along with 6% interest per annum. Further, the UOI
challenged the decision made by the tribunal before the Guwahati High Court, stating that the
present suit deals with a misdeclaration under Section 66 of the Railways Act, and also not
overloading covered under Section 73 of the Railways Act. The Guwahati High Court upheld
the decision given by the Tribunal in this regard. Henceforth, the UOI approached the Apex
Court for the matter in appeal.
ISSUES FOR DETERMINATION
1. Whether the demand notices issued by the Railway Authorities for misdeclaration of
goods under section 66 of the Railways Act is legal?
2. Whether the High Court made a mistake by applying Sections 73 and 74 for
misdeclaration?
LEGAL PROVISIONS INVOLVED
Section 66 of the Railways Act, 1989: Power to require statements relating to the description
of goods being transported by railway.
APPELLANT’S CONTENTIONS
The UOI, representing the railway authorities, contended that the present suit does not deal
with the overloading of railway wagons (under Section 73 of the Railways Act), but rather it
deals with the misdeclaration of goods (under Section 66 of the Railways Act). The appellants
stated that the goods were wrongly described during booking, and after the verification, the
goods turned out to be different from what was agreed. Such misrepresentation clearly justifies
why there has to be imposition of penal charges under Section 66 of the Railways Act. The
appellant further put forward that the High Court took relevance from the judgment given in
Jagjit Cotton Mills vs. CCS N.R., which is not maintainable in the present scenario as the
above-mentioned case deals with overloading of goods and not misdeclaration. Henceforth, the
UOI argued that the demand notices made by them were valid, and that the refunds ordered by
the tribunal, which was also upheld by the High Court, are unlawful and unsustainable.
RESPONDENT’S CONTENTION
The respondent, Kamakhya Transport Pvt. Ltd., argued that the demand notices issued by the
Railway Authorities are unenforceable, as it was issued after the goods had already been
delivered. They contended that such charges should be levied before the delivery of goods to
the consignee. The respondent rightfully took into consideration the judgment given by the
Guwahati High Court in UOI vs. Meghna Technical & Engineers Pvt. Ltd., where the court
held that the penalties should be issued before the delivery of goods. It was argued that the
allowance of post-delivery charges may amount to an arbitrary exercise of power. Henceforth,
the respondents contended that they are entitled to full refund along with interest amount to be
paid by the railway authorities.
ANALYSIS
While addressing the legal issues in this case, the Apex Court conducted a detailed analysis of
the statutory provisions of the Railways Act, 1989, explicitly focusing on the difference
between misdeclaration of goods and overloading of goods. The court examined section 66 of
the Act, which governs the power to require statements relating to the description of goods
being transported by railway. The court observed that section 66 of the Act does not restrict the
imposition of penalties to the pre-delivery stage.
On the other hand, Section 73 of the Railways Act deals with charges that can be levied for the
overloading of goods. The court opined that section 73 of the Act has been wrongfully applied
in the case, as the suit deals with misdeclaration of goods and not overloading of goods. The
dispute revolves around the description of goods and the weight of goods. Also, the court
observed that the notice issued by the Railway authorities was about the misdeclaration of
goods and not the overloading of goods.
Further, the Supreme Court relied on the judgment given by the Guwahati High Court in the
case of Jagjit Cotton Textile Mills vs. CCS N.R., that the case dealt with overloading of goods
and right of lien, and not misdeclaration of goods. The Supreme Court rejected the arguments
made by the respondents as there is no substantive proof, and the court accepted the demand
notices as issued under Section 66 of the Railways Act.
JUDGMENT
The Supreme Court set aside the order passed by the Railway Claims Tribunal, which was also
upheld by the Guwahati High Court. The Apex Court stated that Section 66 of the Act does not
bar the imposition of penalties after delivery, and hence the demand notice for refund, although
made post-delivery, is valid and maintainable.
CONCLUSION
In my opinion, the Supreme Court’s ruling makes a clear distinction between the misdeclaration
of goods (under section 66 of the Act) and the overloading of goods (under sections 73 and 78
of the Act). It is rightfully stated that the railway authorities have the power to impose penal
charges for misdeclaration of goods even after the delivery is made, making sure that the due
procedures are being followed.
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WRITTEN BY SAUMYA GUPTA
