Source: Supreme Court 

Why in News? 

Recently, the bench comprising Justices Sanjay Karol and PK Mishra   in the matter of Union of India v. M/S Kamakhya Transport Pvt. Ltd. Etc.Etc. held that the penalty for mis declared goods can be imposed by the Railways post-delivery of consignments/goods under Section 66 of the Railways Act, 1989 (Act). 

What was the Background of Union of India v. M/S Kamakhya Transport Pvt. Ltd. Etc.Etc. (2025) Case? 

Initial Dispute: 

• The Union of India (Railway authorities) raised demand notices against multiple respondents on various dates:  
  • 13th October 2011 
  • 7th April 2012 
  • 29th October 2011 
  • 7th April 2012 
• The demands were raised alleging mis-declaration of goods for consignments sent through Indian Railways. 
• The respondents paid the demanded amounts under protest. 

Railway Claims Tribunal: 

• After paying the demands, respondents filed separate claim petitions under Section 16 of the Railway Claims Tribunal Act, 1987. 
• Claims were filed before the Railway Claims Tribunal, Guwahati Bench in OA Nos. 229/12, 184/12, 228/12, and 185/2012. 
• Respondents sought refund of amounts paid, arguing that demand notices issued after delivery of goods were illegal under Sections 73 and 74 of the Railways Act, 1989. 
• The Tribunal allowed the claim petitions vide common order dated 19th January 2016. 
• Tribunal directed refund of amounts with 6% per annum interest:  
  • C.M. Traders: Rs. 4,47,965/- 
  • Vinayak Logistics: Rs. 4,97,342/- 
  • Kamakhya Transport Pvt. Ltd.: Rs. 3,07,902/- and Rs. 15,12,959/- 
• Tribunal relied on Gauhati High Court judgment in Union of India v. Megha Technical & Engineers Pvt. Limited (2013).  

Gauhati High Court: 

• Railway authorities appealed to Gauhati High Court against the Tribunal's order. 
• Appeals were filed as MFA Nos. 80 of 2016, 57 of 2016, 29 of 2017, and 28 of 2017. 
• Railway authorities argued that Tribunal failed to consider that consignments were booked declaring one category, but loaded items were different. 
• The High Court dismissed the appeals vide judgment dated 20th December 2021. 
• The High Court affirmed the Tribunal's order. 

Supreme Court: 

• Railway authorities filed Special Leave Petitions (SLP(C) Nos. 11566-11569/2022) before Supreme Court 
• Leave was granted and SLPs converted to Civil Appeals Nos. 7376-7379 of 2025.

What were the Court’s Observations?

Railway Authorities' Case: 

• Courts below erroneously treated the dispute as overloading of wagon (governed by Section 73) instead of mis-declaration case. 
• Actual cases involving consignments were found to be different from the declared category, attracting penalties under Section 66 of the Act.  
• The High Court's reliance on Jagjit Cotton Textile case was erroneous as it dealt with overloading and right to lien. 
• Section 83 permits detainment of goods after delivery. 

Respondents' Case: 

• Since demand notices were raised after delivery of goods, Section 66 was not applicable. 
• Courts below are rightly held in favor of respondents. 

Supreme Court's Analysis: 

• Demand notices were for mis-declaration, not overloading of wagon. 
• Section 66 applies to the present case, not Section 73. 
• Demand notices were found to be genuine in nature. 
• The High Court's interpretation of the Jagjit Cotton Textile case was erroneous. 
• The observation in Jagjit Cotton Textile about collecting penal charges before delivery was merely a suggestion under Section 54(1), not applicable to Section 66. 

Final Decision: 

• Supreme Court set aside the Gauhati High Court's order dated 20th December 2021 
• Civil appeals were allowed in favor of Railway authorities. 
• Pending applications are disposed of.

What are the Relevant Legal Provisions Referred to? 

Railways Act, 1989: 

• The Railways Act, 1989 is a legislation enacted by the Indian Parliament to govern all facets of rail transport in the country.  
• It came into effect in 1989, superseding the earlier Railways Act of 1890.  
• The Act comprehensively outlines legal provisions related to railway zones, construction and maintenance of railway infrastructure, as well as services concerning passengers and railway employees. 

Section 66 of the Railways Act, 1989: 

Section 66 - Power to Require Statement Relating to Description of Goods 

Sub-section (1): 

• The owner or person having charge of goods brought for railway carriage must provide a written statement. 
• Consignees or endorse must also provide statements when requested by authorized railway servants. 
• Statement must contain description of goods to enable determination of carriage rate. 

Sub-section (2): 

• If the owner/person refuses to give a statement or open package when required. 
• Railway administration can refuse to accept goods for carriage. 
• Alternative: charge highest rate for any class of goods. 

Sub-section (3): 

• If consignee/endorsee refuses to give statement or open package. 
• Railway administration can charge highest rate for any class of goods for the carriage. 

Sub-section (4): 

• If statement is materially false regarding description of goods. 
• Railway administration may charge rates not exceeding double the highest rate for any class of goods. 
• Rate to be specified by Central Government. 

Sub-section (5): 

• If a difference arises regarding description of goods. 
• Railway servants may detain and examine the goods. 

Sub-section (6): 

• When goods detained for examination and found different from stated description. 
• Cost of detention and examination borne by owner/person/consignee/endorsee. 
• Railway administration is not liable for any loss, damage, or deterioration during detention/examination. 

Key Elements of this Section: 

• Section 66 does not specify the stage (before or after delivery) when charges can be made. 
• Legislative intent permits levy of charge under Section 66 at either stage. 
• No restriction to impose penalty only before delivery of goods. 
• Section 66 is distinct from Section 73 (overloading) and Section 78 (re-measurement before delivery).