Calcutta High Court (Appellete Side)
Union Of India vs Electrosteel Castings Ltd. & Anr on 27 February, 2025
Author: Harish Tandon
Bench: Harish Tandon
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IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
APPELLATE SIDE
Present:
THE HON'BLE JUSTICE HARISH TANDON
&
THE HON'BLE JUSTICE PRASENJIT BISWAS
FMA 658 of 2023
with
CAN 5 of 2022
CAN 6 of 2024
CAN 7 of 2024
Union of India
Vs.
Electrosteel Castings Ltd. & Anr.
Appearance:
For the Appellants : Mr. Pramit Kumar Ray, Sr. Adv.
Mr. Navneet Misra, Adv.
Ms. Atmaja Bandyopadhyay, Adv.
For the Respondent : Mr. Samrat Sen, Sr. Adv.
Mr. Mainak Bose, Adv.
Mr. Rajesh Gupta, Adv.
Mr. Nikhil Jhunjhunwala, Adv.
Mr. Sarthak Makkar, Adv.
Judgment on : 27.02.2025
HARISH TANDON, J.
The gamut of dispute involved in the instant appeal are basically
founded upon the levy of the registration fees to the tune of Rs. 10 crores on
the basis of a Freight Marketing Circular no. 12 of 2008 dated August 28,
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2008 which was conspicuously withdrawn by a Freight Marketing Circular
no. 24 of 2014 dated November 17, 2014 and the excess license fees charged
by the appellant and sought to be adjusted from the future license fees. For
the aforesaid charging of the registration fees and the licensing fees, the
claim was made for refund of the same along with an interest as according
to the writ petitioner/respondent the Railway has acted contrary to their
own policies, circulars and the other communications made in this regard.
The question, therefore, arises in this appeal is whether the levy and the
payment of the registration fees to the tune of Rs. 10 crores and charging of
an excess license fees are liable to be refunded to the writ petitioner or to be
adjusted against the future license fees or the freight chargeable on the writ
petitioner/respondent.
Before we proceed to decide the aforesaid disputes which, in fact, are
agreed by the appearing Counsels to have involved in the instant case; the
salient facts are succinctly narrated hereinafter. The writ
petitioners/respondent are the manufacturer of an iron steel products which
requires an iron ores from the different mines to be brought to the factory by
iron rakes. There was a spurt of demand of iron ore as the China being the
major importers for that the loading stations around the major mines
situated in Orissa and Jharkhand did not have the requisite capacity to load
the huge number of rakes. The Government of India formed the policy on
Public Private Partnership (PPP) Model permitting the intending users of the
Railway Rakes to construct the private siding either in their own land or the
land owned by the Railways at their cost and expenses to develop the
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infrastructure for mechanical loading of those products at their expenses.
Such policy was framed by the Ministry of Railways for licensing the Railway
land for commercial plots by virtue of a Master Circular dated February 10,
2005 providing that the rate of the license fee shall be 6 per cent of the land
value in relation to the land used for a private siding and the value of the
land shall be fixed on the basis of an adjacent areas as on January 1, 1985
which shall be increased by 7 per cent per year.
The writ petitioner/respondent, being in dire need of a huge numbers
of Railway rakes, applied for construction of a private siding which was
approved on February 6, 2006 by the Railways in principle. The said
proposal was approved and received a railway transport clearance on June
23, 2006. Subsequently, the writ petitioner/respondent submitted the
detailed project report for construction of a private siding which was
approved in the month of October, 2007. After the commissioning of the
project, the provisional bills towards land rent was raised by the appellant.
The writ petitioner/respondent deposited the same on the basis of the said
provisional bill under protest. Further demand was made for payment of a
non-refundable registration fees of Rs. 10 crores for the said siding in terms
of the Freight Marketing Circular no. 12 of 2008 which was also deposited
under protest. Subsequently, the writ petitioner/respondent raised dispute
with regard to the license fees calculated on the basis of a land value and
also charging the non-refundable registration fees in terms of the said
Freight Marketing Circular no. 12 of 2008 and claimed refund thereof.
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However, correspondences were exchanged between the parties herein
in relation to charging of the non-refundable registration fees as well as the
license fees on the basis of the land value so determined by the Railway
Authorities until the said Freight Market Circular no. 12 of 2008 was
withdrawn by the Ministry of Railways on the basis of a Freight Market
Circular no. 24 of 2014 dated 17.11.2014. After the withdrawal of the said
Freight Marketing Circular no. 12 of 2008, a further bill was raised for land
used for the said private siding for the year 2015-16 which was duly replied
to by the Respondent raising an issue that after the withdrawal of the said
Circular no. 12 of 2008, the excess payment made by the Respondent under
protest be refunded. In response to the objection so raised, the Railway by
letter dated September 23, 2018 acknowledged the payment of Rs. 10 crores
as registration fees in terms of the said FM 12 of 2008 and also assessed the
land licensing fees in terms thereof having paid but It would be deemed to
have been paid in compliance of the said FM Circular no. 12 of 2008 thereby
denying the claim of the writ petitioner/respondent on the aforesaid issues.
The challenge is made to the said communication in the writ petition with
further prayer for refund of the excess amount paid in respect of the license
fees and the registration fees together with an interest thereupon.
The Railway appellant took a stand that by virtue of a policy having
adopted for the development of the goods/sheds and siding by a private
investment on the Railway premise, the writ petitioner/respondent was
permitted to use the said Railway land under the PPP Model. By the Circular
no. 12 of 2008, the Ministry of Railway imposed certain conditions including
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the payment of the registration fees of Rs. 10 crores which had been
accepted by the writ petitioner/respondent. Subsequently, the said FM
Circular was withdrawn indicating the guidelines in relation thereto and,
therefore, the policy decisions should not be lightly interfered under Article
226 of the Constitution of India. Subsequently, a conscious decision was
taken that instead of refund of the excess amount in relation to the license
fees and the registration fees, the same shall be adjusted by 10 per cent
from the future bill and, therefore, the judgment of the Single Bench in
directing the refund is contrary to such decision. The Single Bench after
taking into account the circulars and the stands of the parties in relation
thereto directed the appellant to refund the said registration fees to the tune
of Rs. 10 crores and the excess land licensing fees within a specified period
together with an interest at the rate of 6 per cent.
During the pendency of the instant appeal, several applications are
filed by the respective parties seeking to rely upon certain documents which,
according to them, shall throw a light on the core issue involved in the
instant matter. We do not intend to go into the nitty-gritty of the aforesaid
documents as we find from the supplementary minute of PHOD’s level
committee’s meeting held on 18.02.2022 with regard to the review of the
land rate and the land license fees, the Railway land was licensed to the writ
petitioner/respondent. The appellant in the said meeting admitted that there
was an excess payment in relation to a land license fees and also the
charging of the registration fees in terms of the said withdrawn circular and
decided to adjust the said amount from the future license fees for 5 years.
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Admittedly, the agreement entered into between the parties provides
for a payment of the land license fees in advance for one year with the buffer
period of one year for payment which, according to the writ
petitioner/respondent has to be strictly adhere to and the decision of the
appellant in adjusting the same from the future license fees spanning over 5
years is in contravention therewith.
The facts adumbrated hereinabove leaves no ambiguity in our mind
that the appellant has also agreed that there has been an excess payment
on the aforesaid two counts but the dispute hinges upon whether the
aforesaid excess payment is required to be refunded or to be adjusted from
future bills.
The Counsel for the appellant vociferously submits that taking into
account the spirit of the policy and the decision taken therefrom, the Single
Bench ought not to have directed the refund of the excess amount but
should have passed an order directing the adjustment from the future bill
and placed reliance upon a judgment of the Apex Court in Maharashtra
State Electricity Distribution Co. Ltd. Vs. JSW Steel Ltd. & Ors.
reported in (2022) 2 SCC 742 and Ajmer Vidyut Vitran Nigam Ltd. Vs.
Hindustan Zinc Limited & Ors. reported in (2022) 6 SCC 282. The
Counsel for the appellant further submits that the moment a decision has
been taken for adjustment of the aforesaid amount unless the same is found
to be mala fide or unjustified, the Court should not pass an order for refund
of the said amount.
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On the other hand, the Counsel for the writ petitioner/respondent
submits that once it is found that the excess payment has been made de
hors the agreement as well as the circular issued by the Railways from time
to time, there is no fetter on the part of the Court to direct the refund of the
same with interest as the said amount was unreasonably withheld by the
appellant. It is further submitted that there is no fetter on the part of the
Writ Court to direct the refund of the said amount if the same has been
withheld arbitrarily and placed reliance upon a judgment of the Apex Court
in case of Surya Constructions vs. State of Uttar Pradesh & Ors.
reported in (2019) 16 SCC 794. The Counsel for the writ
petitioner/respondent audaciously submits that adjustment of an excess
amount unilaterally is per se illegal as held by the Co-ordinate Bench of this
Court in Kolkata Municipal Corporation and others. vs. Abas Nibas Pvt.
Ltd. & Ors. reported in (2023) SCC Online Cal 3609.
In reply to the aforesaid stand taken by the respondent, a preliminary
objection is raised by the appellant that the agreement entered into between
the parties contained an arbitration clause and, therefore, the Writ Court
should not have entertained the writ petition. It is thus submitted that the
Writ Court should have relegated the parties to the arbitration and,
therefore, the impugned order is not sustainable.
Taking into account the submissions so advanced before us, the point
has squeezed to whether the appellant was justified in adjusting the excess
payment made in relation to a land license fee and the registration fees from
the future bills. Admittedly there was no concept of payment of registration
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fees prior to the FM Circular no. 12 of 2008 dated August 28, 2008. The
said circular on its bare reading indicates that it will have its operation in
respect of a new site. The word “new” is considered as the fresh and,
therefore, has its applicability to a site given under the PPP Model on the
date of its existence or thereafter. It does not include within itself, the site
given prior to the said circular and having realised the same, the appellant
have also accepted the aforesaid position. The said Circular dated 28th
August, 2008 was subsequently withdrawn by another Circular dated 17 th
November, 2014 indicating that the site which was approved prior to the
said Circular dated 28th August, 2008 the licensees are not required to
deposit the registration fees with the rider that in the event it is so
deposited, it would be refunded by way of a rebate of 10 per cent in freight
for loading. In view of the said Circular dated 17th November, 2014, it is
manifestly clear that the imposition of the payment towards the registration
fees in respect of a siding approved/allotted prior to the Circular dated 28th
August, 2008 was unjustified. It appears from the record that even after the
withdrawal of the Circular dated 28th August, 2008, huge amount of freight
charges for loading was paid by the writ petitioner/respondent without any
adjustment. It does not appear that any attempt on the part of the
appellant to comply the mandate given under the Circular dated 17th
November, 2014 was ensured and the said amount towards the registration
fees was neither adjusted nor refunded. There is an unqualified admission
on the part of the appellant in relation to the wrongful charging of the
registration fees from the writ petitioner/respondent and the conduct does
not instil any attempt made by the Railway Authorities either to adjust or
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refund the same. It is further apparent from the correspondences made by
the appellant that the claim of refund was, in fact, declined which also
indicate the conduct of the appellant in unreasonably withholding the
amount towards the registration fees and, therefore, after a gap of a
considerable period of time, it is unjustified that the said amount would not
be refunded to the writ petitioner/respondent. The writ
petitioner/respondent was deprived of the said amount and in a commercial
parlance was precluded from utilising the same for business purpose.
The judgment of the Apex Court in Maharashtra State Electricity
Distribution Co. Ltd. Vs. JSW Steel Ltd. & Ors. reported in (2022) 2
SCC 742, cited by the appellant that the Apex Court has directed the
adjustment of the said amount does not appear to have any manner of
application in the instant case. In the said report, the Maharashtra State
Electricity Distribution Co. Ltd. being the licensee approached the State
Commission for MYT Approval for Financial Year 2014-15, provisional truing
up of ARR for Financial year 2015-16 and multi-year tariff for 3 rd control
period of Financial Year 2016-17 to Financial Year 2019-20. The respondent
therein resisted the claim and the Commission held that the additional
surcharge leviable under Section 42(4) of the Electricity Act, 2003 is not
applicable to captive users to the extent of their self-consumption from such
plants. It was further held that additional surcharge shall be applicable to
all consumers who avail open access to receive supply from sources other
than the distribution licensee. The order of the said Commission was
challenged before the Appellate Tribunal and was allowed with the
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categorical finding that the group of captive consumers are not liable to pay
additional surcharge to the distribution licensee. The question that fell for
consideration was whether the captive consumers/ captive users are liable
to pay the additional charges under Section 42(4) of the Electricity Act,
2003. The Apex Court after considering the definition of a consumer and the
provisions contained in Section 42(4) of the Electricity Act, 2003 held that
the captive consumer/captive users constitute a separate class other than
the consumers defined under Section 2(15) of the Electricity Act and,
therefore, shall not be subject to any additional surcharge levied under the
said Act.
In the backdrop of the above, the Apex Court held that if the
distribution licensee is directed to refund, it would cause a huge liability as
they are providing electricity to all intending users and directed the
adjustment from the future bills. The appellant does not stand on the same
footing that of distribution licensee being the company who is in the helm of
a business of distributing the electricity and, therefore, such decision does
not appear to have any applicability of this case. Furthermore, we do not
find that the discretion exercised by the Apex Court in granting the relief is
equated with the law declared under Article 141 of the Constitution of India
and, therefore, we do not find any assistance can be lend to the appellant.
Similarly, in case of Ajmer Vidyut Vitran Nigam Ltd. (supra), the
Apex Court directed the adjustment taking into account the long business
relation between the two companies although it was found that such
payment was secured unreasonably and de hors the agreement.
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The contention of the appellant that the writ Court should not
interfere in relation to a dispute arising out of a contract does not appear to
us an absolute proposition of law laid down in catena of judgments rendered
by the Apex Court. The Apex Court in ABL International Ltd. & Anr. vs.
Export Credit Guarantee Corporation of India Ltd. & Ors. held that
there is no absolute rule involving the adjudication of disputed question of
facts to send the parties to Civil Court. It is further held that in an
appropriate case involving the interpretation of a contract does not ipso facto
render it a serious disputed question of fact so as to relegate the parties to
the Civil Court in the following:
“19. Therefore, it is clear from the above enunciation of law that
merely because one of the parties to the litigation raises a dispute in
regard to the facts of the case, the court entertaining such petition
under Article 226 of the Constitution is not always bound to relegate
the parties to a suit. In the above case of Gunwant Kaur this Court
even went to the extent of holding that in a writ petition, if the facts
require, even oral evidence can be taken. This clearly shows that in an
appropriate case, the writ court has the jurisdiction to entertain a writ
petition involving disputed questions of fact and there is no absolute
bar for entertaining a writ petition even if the same arises out of a
contractual obligation and/or involves some disputed questions of
fact.”
The Apex Court in ABL International Ltd. (supra) was also
considering whether the writ Court can grant the monetary relief by way of a
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refund of an amount which was unreasonably and unfairly received.
Answering the aforesaid point the Apex Court held:
“25. The learned counsel for the respondent then contended that
though the principal prayer in the writ petition is for quashing the
letters of repudiation by the first respondent, in fact the writ petition
is one for a “money claim” which cannot be granted in a writ petition
under Article 226 of the Constitution of India. In our opinion, this
argument of the learned counsel also cannot be accepted in its absolute
terms. This Court in the case of U.P. Pollution Control Board v.
Kanoria Industrial Ltd. While dealing with the question of refund of
money in a writ petition after discussing the earlier case-law on this
subject held: (SCC pp. 556-58, paras 12 & 16-17)
“12. In the para extracted above, in a similar situation as arising
in the present cases relating to the very question of refund, while
answering the said question affirmatively, this Court pointed out that
the courts have made distinction between those cases where a claimant
approached a High Court seeking relief of obtaining refund only and
those where refund was sought as a consequential relief after striking
down of the order of assessment etc. In these cases also the claims
made for refund in the writ petitions were consequent upon declaration
lf law made by this Court. Hence, the High Court committed no error
in entertaining the writ petitions.
* * * *
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16. In support of the submission that a writ petition seeking
mandamus for mere refund of money was not maintainable, the
decision in Suganmal v. State of M.P. was cited. In AIR para 6 of the
said judgment, it is stated that
‘we are of the opinion that though the High Courts have power to
pass any appropriate order in the exercise of the powers conferred
under Article 226 of the Constitution, such a petition solely praying for
the issue of a writ of mandamus directing the State to refund the
money is not ordinarily maintainable for the simple reason that a claim
for such a refund can always be made in a suit against the authority
which had illegally collected the money as tax’.
17. Again in AIR para 9, the Court held:
‘we, therefore, hold that normally petitions solely praying for the
refund of money against the State by a writ of mandamus are not to be
entertained. The aggrieved party has the right of going to the civil
court for claiming the amount and it is open to the State to raise all
possible defences to the claim, defences which cannot, in most cases,
be appropriately raised and considered in the exercise of writ
jurisdiction.’
This judgment cannot be read as laying down the law that no writ
petition at all can be entertained where claim is made for only refund
of money consequent upon declaration of law that levy and collection
of tax/cess is unconstitutional or without the authority of law. It is
one thing to say that the High Court has no power under Article 226 of
14the Constitution to issue a writ of mandamus for making refund of the
money illegally collected. It is yet another thing to say that such
power can be exercised sparingly depending on facts and circumstances
of each case. For instance, in the cases on hand where facts are not in
dispute, collection of money as cess was itself without the authority of
law; no case of undue enrichment was made out and the amount of cess
was paid under protest; the writ petition were filed within a reasonable
time from the date of the declaration that the law under which
tax/cess was collected was unconstitutional. There is no good reason
to deny a relief of refund to the citizens in such cases on the principles
of public interest and equity in the light of the cases cited above.
However, it must not be understood that in all cases where collection
of cess, levy or tax is held to be unconstitutional or invalid, the refund
should necessarily follow. We wish to add that even in cases where
collection of cess, levy or tax is held to be unconstitutional or invalid,
refund is not an automatic consequence but may be refused on several
grounds depending on facts and circumstances of a given case.”
The law enunciated in ABL International Ltd. (supra) is further
restated and reiterated in a subsequent judgment rendered by the Apex
Court in Surya Constructions vs. State of Uttar Pradesh & Ors.,
reported in (2019) 16 SCC 974 in the following:
“3. It is clear, therefore, from the aforesaid order dated 22-3-2014
that there is no dispute as to the amount that has to be paid to the
appellant. Despite this, when the appellant knocked at the doors of the
15High Court in a writ petition being Writ Civil No. 25216 of 2014, the
impugned judgment dated 2-5-2014 dismissed the writ petition stating
that disputed questions of fact arise and that the amount due arises
out of a contract. We are afraid the High Court was wholly incorrect
inasmuch as there was no disputed question of fact. On the contrary,
the amount payable to the appellant is wholly undisputed. Equally, it
is well settled that where the State behaves arbitrarily, even in the
realm of contract, the High Court could interfere under Article 226 of
the Constitution of India (ABL International Ltd. V. Export Credit
Guarantee Corpn. of India Ltd.)”
Reverting to the point of charging excess land license fees, the
minutes as relied upon by the appellant of the PHOD’s level committee
meeting dated 18.02.2022 is also corroborating the stand of the appellant
that there was an excess payment by the writ petitioner/respondent and
proceeded to adjust the same from the future license fees for 5 years in
advance. The copy of the resolution of said meeting was communicated to
the writ petitioner/respondent vide letter dated 21st February, 2022
acknowledging excess payment towards the land license fees to the tune of
9,94,77,331/-. It is a specific stand of the appellant that the said amount
after adjustment shall be treated as a further payment for a period of 5
years reckoning from 1.4.2022 to 31.3.2027. We had an occasion to peruse
the minutes as stated above and do not find any guidelines or the
supporting documents in relation thereto. The contract entered into between
the parties are exposit of the fact that the license fee for one year should be
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paid in advance with the buffer period of one month and, therefore, the
parties to the contract cannot resile therefrom. The contract is explicit and,
therefore, the parties have to strictly adhere to the terms and conditions
embodied therein and cannot unilaterally modified or changed the same.
The decision in adjusting the said amount from a license fees to be paid for
future period is contrary to the contract and, therefore, the stand of the
appellant in this regard does not appear to hold water.
We, thus, do not find any incongruity, illegality and/or infirmity in the
impugned order.
The appeal is thus dismissed.
No order as to costs.
Urgent Photostat certified copies of this judgment, if applied for, be
made available to the parties subject to compliance with the requisites
formalities.
(Harish Tandon, J.)
I agree.
(Prasenjit Biswas, J.)
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Later:
After the delivery of the judgment in open Court, learned counsel for
the appellant prays for stay of the operation of the instant judgment.
We do not find any ground warranting stay of operation of the instant
judgment.
Hence, the prayer for stay of the judgment is refused.
(Harish Tandon, J.)
(Prasenjit Biswas, J.)