Union Of India vs Indian Oil Corporation Ltd. 2024 INSC 243 – S 106(3) Railways Act – Distinction Between Overcharge & Illegal Charge

Railways Act, 1989; Section 106(3) – There exists a very fine & clear distinction between an overcharge and an illegal charge, and that Section 106 sub-section (3) of the Act, 1989 only applies when the claim is for a refund of an overcharge, for all other charges, be it illegal or not, the said provision will have no application whatsoever. (Para 98) – A distinction has been envisaged between an ‘overcharge’ and an ‘illegal charge’, where the former relates to any excess sum paid due to a mistake which was capable of being discovered by exercise of proper vigilance and thus, ought to have been claimed within a period of 6-month (Para 94)- When it comes to a Notice for Claim for Refund of Overcharge under Section 106(3) of the Act, 1989 the following conditions must be fulfilled: – a. Claim must be for refund of an ‘Overcharge’, b. Overcharge must have been paid to the Railway Administration in respect of the goods carried by the railway c. Notice must be issued within 6-months from the date of payment or delivery of goods for which overcharge was paid, and d. Notice must be served to the concerned railway administration to whom the overcharge was paid. Thus, the rigours of Section 106 sub-section (3) i.e., the 6-month timeperiod for making a notice of claim, is only attracted, when the refund is for an overcharge. Whenever, an application is made under Section 16 of the RCT Act for refund, what needs to be seen is whether the same is for a refund of an overcharge or not? If the claim is for an overcharge, Section 106 sub-section (3) would be applicable. (Para 43-44) – he rigours of Section 106(3) of the Act, 1989 will only be applicable where the claim is for a refund of an ‘overcharge’. Where the claim for refund is for anything but an ‘overcharge’, Section 106(3) of the Act, 1989 will not apply, and no notice of claim is required. (Para 59)

Interpretation of Statutes -In interpreting a statute or a rule, the court must bear in mind that the legislature does not intend what is unreasonable or impossible. If a rule leads to an absurdity or manifest injustice from any adherence to it, the court can step in. A statute or a rule ordinarily should be most agreeable to convenience, reason and as far as possible to do justice to all. A law/rule should be beneficial in the sense that it should suppress the mischief and advance the remedy. In interpreting a rule, it is legitimate to take into consideration the reasonableness or unreasonableness of any provision. Gross absurdity must always be avoided in a statute/rule. The expression reasonable means rational, according to the dictate of reason and not excessive or immoderate.

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