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A Calcutta High Court ruling, upholding the penalty on misusing concessions, is likely to help the Railways collect fines totalling ₹17,000 crore from some 300 customers who had derived gains from such sops. These customers had flouted the Railways norms for concessions on iron ore between 2008 and 2012.
In a September 29 ruling, the Court allowed the Railways to collect penalty from Rashmi Metaliks for the financial gains it derived from lower iron ore freight charges.
The court ruled that the Railways is entitled to impose fines in the case of past “misutilisation of concessional rate” of freight, extended for iron ore meant for use by domestic industries.
Rashmi Metaliks, which allegedly misused the provisions for lower rates for iron ore, had challenged the Constitutional validity of the ₹660-crore penalty demand notice slapped by the Railways in 2011.
The judgement establishes that the Railways is well within its rights to recover money from a widespread racket that prevailed during 2008-2012.
The ruling is significant in view of the detection of a large-scale iron-ore freight charges fraud by the Railways’ vigilance wing. The Comptroller and Auditor General and the Shah Commission have endorsed the findings of the vigilance wing.
According to sources in Railways, the judgement on 16 such cases is awaited from the High Court.
An audit report by the CAG in 2013 had said that the Railways could recover at least ₹17,000 crore from the erring companies. The Shah Commission report on illegal iron ore mining in different States last year also recommended a probe by the CBI to establish criminality in such activities.
The Commission said: “The average difference between the ‘domestic freight rate’ and the ‘other than domestic freight rate’ was in fact, at its maximum during 2011-12. Therefore, the Railways are advised to quantify the amount of freight evasion and institute a recovery mechanism for the entire time, starting from May 2008, till date”.
The Calcutta High Court also said the Railways can recover penalty amounts including for the period between 2011 and 2012, when the proceedings were on, through fresh demands and civil suits.
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