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| Date | 2017-08-29 |
|---|---|
| Type | Commercial Circular |
| Topic | train-services |
intention of Railway Board was not to levy penal demurrage charges for days
Union Of India & Ors. vs Haryana Power Generation Corporation
... on 29 August, 2017
Author: Sanjiv Khanna
Bench: Sanjiv Khanna, Navin Chawla
$- 1.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO(OS) (COMM) No. 160/2017
Date of decision: 29th August, 2017.
UNION OF INDIA & ORS. ..... Appellants
Through Mr. Jagjit Singh, Standing Counsel.
versus
HARYANA POWER GENERATION CORPORATION LTD
..... Respondent
Through
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE NAVIN CHAWLA
SANJIV KHANNA, J.(ORAL):
This intra court appeal under Section 13 of the Commercial Court, Commercial Division and
Commercial Appellate Division of the High Court Act, 2015 read with Section 37 of the Arbitration
and Conciliation Act, 1996 impugns the judgment dated 25th April, 2017 passed by the Commercial
Bench of the High Court.
2. The appellant had filed objections under Section 34 of the Arbitration and Conciliation Act, 1996
(Act, for short) impugning the arbitral award dated 27th July, 2016 passed by Mr. M.C. Srivastava,
Member Traffic (Retired), Railway Board.
3. Haryana Power Generation Corporation Ltd, a State Government Undertaking engaged in the
generation of electricity and having coal based Thermal Power Station (Panipat Thermal Power
Station) had invoked the arbitration clause for refund of Rs. 32,57,15,690/- recovered from them by
Northern Railway as penal demurrage charges.
4. There was a contract called "Assisted Siding Agreement" dated 21st March, 1996 between the
respondent and Northern Railway for transportation of coal from subsidiaries of Coal India Limited
to the Railways sliding at the Thermal Power Station at Panipat, Haryana.
Union Of India & Ors. vs Haryana Power Generation Corporation ... on 29 August, 2017
Indian Kanoon - http://indiankanoon.org/doc/151123328/
1
5. As per the agreement, the respondent was required to unload the coal and release the rake within
a period of seven hours. In case of delay beyond seven hours, the appellant was entitled to recover
demurrage charges @ Rs. 100/- per wagon per hour.
6. The appellants had levied demurrage charges of Rs. 25,92,89,500/-. However, on appeal filed by
the respondent for waiver, the respondent was granted waiver of Rs. 14,05,19,320/-. They had
accordingly paid demurrage charges of Rs. 11,87,70,180/-.
7. The appellants had also levied penal demurrages charges of Rs. 32,57,15,690/- for the period
June, 2008 to March, 2012. These charges were recovered. The respondent had initiated arbitration
proceedings for the refund of the penal demurrage charges alongwith interest @ 18 % per annum.
8. The learned Arbitrator in award dated 27th July, 2016 on the question of penal demurrage
charges, has referred to paragraphs 3.4.1 and 3.4.2 of the Rates Master Circular Demurrage, Waiver
2016 issued vide Railway Board's Letter No. TC-1/2016/201/1 dated 19th May, 2016. The two
paragraphs read as under:-
"Para 3.4.1 In case excessive congestion takes place at any terminal/steel plant,
CCM/COM/DRM can increase the demurrage rates, even at progressively increasing
rate subject to a maximum of six times of the prevalent rate. This penal rate should
be implemented only after giving due publicity and notice of 48 hours and should be
applicable for the notified period.
Para 3.4.2 The rates can be increased by say 2 times or 3 times or so on and not
necessarily six times at one go in all cases. In fact, Railway may decide to levy
variable rates like 2 times for first three times detention, 3 times for next twelve
hours detentions and so on and so forth. Railway must judiciously evaluate the
situation and the rates should be increased on merit to the extent considered
justified. Levy of six times rate should be resorted only
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