w w w . L a w y e r S e r v i c e s . i n

IFB Agro Industries Ltd. & Another v/s Chief Commercial Manager (FM) Eastern Railway

    APO No. 381 of 2014 & W.P. No. 479 of 2009 (Original Side)
    Decided On, 16 May 2017
    At, High Court of Judicature at Calcutta
    For the Appellants: Shyamal Sarkar, Sr. Advocate, Bidyut Dutta, Rajesh Gupta, Bijon Dutta, Advocates. For the Respondent: Malay Kumar Das, Sanajit Kumar Ghosh, Advocates.

Judgment Text
Rakesh Tiwari, J.

1. Petitioner No. 1 is a Company incorporated under the Companies Act, 1956 having its office at Plot No. IND-5 Sector-I, East Calcutta Township, Kolkata- 700 107. Petitioner No. 2 is Sr. Manager of petitioner No. 1 above named and also is the principal officer thereof.

2. Facts culled out from records are that petitions are manufacturers of Rectified Spirit in their distillery at Noorpur, village-Durgapur in the district of South 24 Parganas, having a capacity of production of 50000 litres per day. Rectified spirit is made from molasses under the supervision of Bengal Excise Department of the State Government. Its entire production is re-acquisitioned by the Government which also fixed its sale price. As margin allowed to the manufacture is very low, the petitioners transport molasses by railway rakes to make its business viable.

3. The State of West Bengal is 'Molasses Deficit State' being a negligible producer of molasses. Therefore, the petitioners have to import molasses from ‘Molasses surplus State’ like Uttar Pradesh, Andhra Pradesh, Bihar, Maharashtra, Gujrat, Karnataka and Tamilnadu.

4. There is no railway track up to the factory of the writ petitioners at Noorpur. The Eastern Railway has provided a siding at Budge (BGP) for loading and unloading facility. The petitioner also has constructed a goods shed near Calcutta for storage from where the stored molasses is transported to the factory of the petitioner at Noorpur for manufacture of Rectified sprit. Since the capacity of siding at Budge (hereinafter referred to as BGB) is very limited one full rake consisting of about 75 wagons or even half a rake cannot be unloaded at the siding and only 17 wagons can be unloaded at a time. Therefore as per rules of Railway Board, freight on rake-load basis on goods with destination to BGB goods shed are not permitted by the Railways but charges higher freight on wagonload basis at the booking station.

5. Railway board published Rate Circular No. 74 providing for levy of demurrage on wagons as provided in (Para 2.1.2) and on rakes as per (Para 2.2.2) These are reproduced for ready reference:-

'2.1.2 The entire group of wagons placed for loading/unloading shall be treated as one until for the purpose of levy of demurrage charges i.e. even if one wagon our of the group is detained for loading/unloading beyond the prescribed free time, demurrage will be leviable on all the wagons in the group.

2.2.2. In case of goods sheds and railway sidings where the placement capacity is less than a rake, the free time will start with the placement of 1st part of the rake. However, intervening periods between the time of completion of loading/unloading of the 1st part and time of placement of 2nd part of the same rake for loading/unloading between the time of completion of loading/unloading of the 2nd part and placement of 3rd part of the same rake for loading/unloading and so on, should be treated as diesnon. Demurrage for excess detention will be levied on entire rake. Excess detention should be calculated by deducting the permissible free time and periods of dies-non from the period of total detention (i.e. period from the time of placement of 1st part to the release time of last wagon) of the rake.'

6. The petitioners are aggrieved by the demand of demurrage by the Railways on the goods of the petitioner booked to BGB on wagon basis have been levied demurrage on rake basis which is higher on delivery point. The petitioners deny that demurrage is at all payable by them for delay in unloading their goods as they are not responsible for it for the reason that as siding facility at BGB can accommodate only about 17(seventeen) wagons at a time. They are entitled to 5 times for unloading a rake.

7. After exchange of correspondence the petitioner aggrieved by the alleged illegal demand of the Railways preferred writ petition No. 479 of 2009 (IFB Agro Industries Limited and Anr. Vs. The Chief Commercial Manager (FM), Eastern Railway and Ors.) inter alia that since they booked molasses on wagon wise at the loading station, they are liable to pay in accordance with Para 2.1.2. and not according to Para 2.2.2. of the Railway Boards Circular No. 74 dated 19th December, 2005 which is applicable to rakes.

8. In addition to aforesaid, the petitioners have also relied upon a memorandum dated 16th February, 2006 which provides that demurrage charges are to be calculated as per the Railway Board Circular dated 19th December, 2005. After exchange of affidavits, the writ petition was dismissed vide order and Judgment dated 8.08.2014 holding that:-

'the records, however, reveal that the petitioners dis apply to the respondent No. 5 by a letter dated 18th July, 2008 and the subject of the said letter categorically reveals that the same was an appeal on the part of the petitioners for waiving 100% demurrage and that the said communication was replied to by the respondents through a letter dated 11th August, 2008 stating inter alia that application for condonation of delay in preferring an appeal for waiver of demurrage, shall be entertained only after the demurrage charges have been paid in full and the application is supported with proof of such payment. In the backdrop of the said records, this Court in unable to accept that the petitioners, having appealed for waiver of the demurrage charges and having not proceeded with the same, can approach this Court for challenging the demand towards demurrage charges through the instant application under Article 226 of the Constitution of India. For the reasons stated above, no interference in called for and the writ application is, accordingly, dismissed and all interim orders are vacated.'

9. Aggrieved by the Judgment and Order dated August 8, 2014 aforesaid passed in Writ petition No. 479 of 2009 (IFB Agro Industries Limited and Anr. Vs. The Chief Commercial Manager (FM), Eastern Railway and Ors.) appellants preferred an instant appeal, inter alia, on the ground that the writ Court committed an error in dismissing the writ petition as the circular dated 16th February, 2006 issued by the Sr. Divisional Operational Manager, Sealdah; that demurrage charges for CP oil, molasses and other traffic which are dealt with at the BGB station Goods shed ought to be calculated as provided in Para 2.1.2 of the Railway Boards Rate Circular no. 74 of 2005 dated December 19, 2005 as the circular letter dated 16th February, 2006 was not issued by any competent authority and that the same being an inter departmental communication had no statutory force as a Divisional Assistant Manager would only issue administrative instruction to the BGB goods shed which cannot overrule Railway Boards Circular.

10. According to the learned Counsel for the appellants, a circular issued by a higher officer that is from senior Divisional Operation Manager to a subordinate authority at Budge Goods Shed has binding effect upon the lower authority because the claim for demurrage by the railway not in accordance with Para 2.1.2 of the Rate Circular issued by the Railway Board, was raised without jurisdiction or authority in law. As such the order impugned in a nullity and liable to be set aside.

11. Learned Counsel for the appellants also argued that any inconsistency or contradiction in the communication dated 16th February, 2006 cannot confer any right upon the appellants to deny payment of demurrage charges quantified on the basis of Railway Board Circular. It is stated that since the loading was on Wagon wise basis, demurrage on rake wise basis cannot be charged or claimed by the railways at the destination station.

12. The second leg of the contention is that since the siding could accommodate only 17 wagons at a time, and the rake which consist of 75 wagons, the railway cannot enrich itself by levying demurrage on rake load basis as it had itself not provided the facilities for unloading a complete rake at one go at the siding point at BGB where only 17 wagons can be accommodated at a time. Therefore, time required for unloading a rake consisting of about 75 wagons requires five times more at BGB siding.

13. Concluding his arguments, he submitted that rate circular No. 74 of 2005 itself provides that demurrage is to be charged wagon load basis under Para 2.2.1. for train load and rake-load of goods is to be charged under para 2.1.2. of the Circular but in no case where the rate charge is on wagon wise at loading station, demurrage can be charged on rake wise.

14. He has further drawn our attention to paragraph 24 of the affidavit- in-opposition wherein the respondents have taken a stand that circular dated 16 February, 2006 was erroneously issued. Therefore, the judgment did not consider the decisions cited by the appellant in proper perspective and were brushed aside by merely saying that circular was issued by mistake. One cannot make the circular otiose because so long as the circular continues to remain in force and not withdrawn, it continues to be binding. Hence circular No. 39 of 2004 construed by the writ Court as a Rules for appeal against levy of demurrage is illegal for the said circular relates to waiver of demurrage as provided in Para 2.2 of the circular which reads:-

'In case the consignor. Consignee feels that demurrage/wharfage was due to reasons beyond his control, he could apply for waiver giving all relevant details with documentary evidence wherever necessary.'

15. Per contra, learned Counsel appearing for respondent railways has drawn our attention to the prayer, extracted below:-


(b) A writ of and/or in the nature of Mandamus do issue commanding the respondents and each of them:-

(ii) to recall, rescind, set aside and/or quash the impugned charges on train-load basis from the petitioner No. 1 up to September 8, 2008 including the letters dated January 5, 2009, January 19, 2009, January 22/27, 2009 and April 20, 2009 being annexure- 'P-8' to the petition.'

16. Annexure P8 is the objection dated October 5, 2007 from the petitioner IFB Agro Industries Limited to the Sr. DCM/Sealdah. The subject matter of the aforesaid letter is ‘Objection against illegal imposition of demurrage bills on molasses tank wagons from March 2007 to August 2007 amounting to Rs. 17,77,392/-.

17. It is submitted that the objections raised by the appellant relying upon annexure P5 is without basis for the reason that the said letter was on the file, it was never issued upon the appellant and as such the petitioner/appellant has no cause of action merely because they have procured the said letter in the manner best known to them.

18. It is vehemently argued that against the imposition of illegal demurrage or a dispute in this regard appeal has been provided in Rules for waiver of 100 per cent demurrage on tank/wagons carrying molasses between March 2007 to June 2008. These Rules are contained in Government of India Ministry of Railway, Vide Railway Board’s letter No. Tc- 1/2004/201/a dated 11.10.2004 and that in accordance with the said letter the petitioner/appellant has already preferred appeal dated December 24, 2007 and that apart from it, the petitioners have an expeditious statutory and alternative remedy to get the disputed question of facts resolved by the Railway Rate Tribunal under provision of Section 37 of the Railway Act of 1989.

20. It is lastly submitted that the petitioner/appellant in the same circumstances had paid demurrage charges on same ground as has been noted in the Judgment impugned in this appeal.

21. Upon hearing the counsel for the parties and on perusal of record, we find from the correspondence exchanged between the parties that petitioner had already preferred an appeal dated December 24, 2007 which reads:

'Date : December 24, 2007


The CCM/Fm

Eastern Railway

3, Koilaghat Street

Kolkata 700 001

Kind attention : Mr. Upadhya

Dear Sir,

Sub: Appeal for judicious decision against the illegal imposition of Demurrage Charges on molasses tank wagons from March 2007-October 2007 of Rs. 2177367/-


1. Our objection letter no. Nil dated 05.10.2007

2. Senior DCM/Sealdah’s letter No. C/OS/TC/WC/POL/MISC/Pt-1 dated 14.12.2007

Our company is bringing molasses at Budge from various India States as well as imported molasses from Bangladesh via GEDE. The molasses we bring caters to our distillery at Noorpur South 24 Pgns. For making Rectified Sprit under the License from the Govt. Of West Bengal and our produce is solely distributed to other State Govt. Licensees for making country sprit for the poorer section of the society. As such we have to operate at a very nominal and prescribed rate of the Excise Department of the State Government

We have been able to bring molasses to BGB smoothly till recently with the active cooperation of your esteemed department and we remain thankful for that. However, we are facing certain demands from the Railways that we consider unjust and beyond our expectation and capacity. We had earlier written the subject ref. 1 letter vide Ref. 2 which simply advised to make payment observing that freight and demurrage are two separate entities. The basic point that we wanted to make in our said letter was that there should be one and only on basis for calculating the freight and the demurrage, either T/L or W/L but not both as was in our case. For your convenience we are stating our case in brief while the photocopies of above letters are enclosed for your detailed perusal In short the case history is as follows:

TM wagons containing molasses arrived at BGB from different station of Indian Railways having the T/L facilities. In this regard detail particulars have been furnished in our earlier objection letter dated 5.10. 2007 which may kindly be seen.

We are enjoying the T/L facilities since about 02 decades but in the recent past at BGB the T/L facility has been with drawn and undercharges raised on wagon load class treating the rakes as piecemeal loading. Naturally the D/C should not be charged on rake basis. It is needless to mention here that only after observance of all commercial facilities the T/L facility has been granted at the forwarding station.

So our earnest appeal to you is for allowing us to avail rakeloading facilities as well as to consider the D/C on the merit of the case.

Thanking you,

Yours Truly,



(S.K. Kundu)

Sr. Manager (Raw Material and Import)'

22. In reply thereto, the Sr. Commercial Manager (rates), on behalf of the Chief General Manager thus replied to the petitioner by letter vide letter dated 19.03.2008:-


Sub:- Appeal for judicious decision against the illegal imposition

Demurrage Charges on molasses tank wagons from March 2007- October

2007 of Rs. 21,77,367/-

Ref: Your letter No. Nil dated 24.12.2007 Your letter under reference has been examined at appropriate level. It has revealed that objections have been raised on two points viz (i) charging of freight by wagon load rate instead of train load rate (ii) computation of detention hours for charging of D/C.

1. For availing trainload rate, both forwarding station and destination station require to be notified as either full rake handling station or half rake handling station. Budge Goods is neither notified for full rake handling station nor half rake handling station for inward traffic. However, for outward traffic (TV wagons only) Budge is notified for full rake handling station. In these circumstances, freight charging of inward consignment of molasses by Budge Station at wagon load rate is found to be as per Board’s norms.

2. Demurrage charge rule is independent and has no connection/relation with freight charging. Irrespective of whether the consignments are booked in trainloaded class or wagon load class, procedure of demurrage charge, rate etc., are same. It has revealed that the computation of chargable hours for demurrage is in accordance with Railway Board’s extant guidelines.

In these circumstances you are earnestly requested to kindly clear the station outstanding on account of demurrage at Budge within this financial year.

Thanking you,

Yours faithfully


(D.S. Nandy)

Sr. Comml. Manager (Rates)

For Chief Comml. Manager

C/- Sr. Divi. Comml. Manager/E. Rly./SDAH for information and necessary action.

For Chief Comml. Manager

23. It appears that subsequently the petitioner vide his letter dated July 18, 2008 addressed to the Sr. Divisional Commercial Manager, applied for waiver of 100 % demurrage on molasses Tank wagons which is reproduced for the ready reference:-

'Sir, if you go through the record it will be found that our company was never a defaulter in nature. We always demand ourselves as a law binding company and always try to make payment in time. But in this case there is a lot of confussions are in our mind in connection with the prescribed demurrage rule etc. We have pleaded our case to your department in No of times. In our letters dated 5th October, 2007 and 24th December, 2007 we have stated our position.

But after received the letter No. C144/o/ Vol. XVIII/BG? Notification dated 19.03.2008 from the Sr. Commercial Manager 9Rates) for CCM we were rather surprised to note that the demurrage change rule is independent and has no connection/relation with freight charging and as per Railway Board’s extent guidlines irrespective of whether the consignments are booked in trainload class or wagonload class procedure for demurrage charge, rates etc. Are same. For this reason, though there is enough ground for praying 100 per cent waiver of demurrage on molasses tank wagons has not been submitted to your esteem department in time.

So under the circumstances we have nothing but to make payment. Sir our company is a small public limited company and we do not get any reimburse from the Govt. Of West Bengal and also for under noted ground we are requesting you to waive 100 % demurrage which has been imposed on us till date.

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/>Since the demurrage in the said period was due to various reasons which were beyond our control including but not limited to the following: a) Molasses is a sticky and viscous material; b) During the above mentioned period there were several breakdown in our pumps an other equipments at out installation at the time of unloading the molasses rakes; c) On many occasion there were severe power cuts at Budge including our installation. d) Acute labour problems on certain occasions hampered the unloading process; e) Due to torrential rain and flooding of the adjacent area to our installation etc.; f) Other unavoidable circumstances were the principal reasons for the demurrage on which we had no control. Therefore, once again we request you to kindly waive 100% of the total demurrage amount imposed on us during above mentioned period and oblige. Thanking you, Yours faithfully For IFB AGRO INDUSTRIES LIMITED Sd/- (S.K. Kundu) Sr. Manager Raw material & Import' 24. Perusal of the aforesaid communication between the parties shows that the demurrages in the relevant period were requested by the company, to be waived due to reasons beyond its control which were enumerated in Clause a to f of the above letter. The petitioner had already succumbed to the jurisdiction and authority of the Railway and had paid the demurrage in the past-years imposed upon it. Therefore, a new case which has been made out by the petitioner at this stage that the demurrage is wrongly been charged because of the fault of the railway or that demurrage is not independent of the wagon or rake charges cannot be sustained. 25. Since the matter has already been settled by the writ Court and as we do not find any illegality or infirmity in the order, hence, for all the reasons given by the writ Court and also recorded by us in foregoing paragraphs the appeal is liable to be dismissed and is accordingly dismissed. 26. No order as to costs.