NEW CLAUSE.—(Appeal by State to Railway Tribunal from certain. directions of Federal Railway Authority.) (Hansard, 11 April 1935)

§ The SOLICITOR-GENERAL
I beg to move, "That the Clause be read a Second time".
1436 The Committee will remember that Clause 187 of the Bill as presented to the House was deleted or withdrawn. It was a Clause dealing with the provisions for the settlement of questions arising between the Railway Authority and the owners of railways in Indian States. It was represented that the Clause as originally drafted was to some extent vague and did not sufficiently indicate the principle on which important matters, such as disputes should they arise, should be settled by the Railway Tribunal which is being set up under the Bill. I think it will be convenient if I deal with the Clause which I am now moving and the three following Clauses together as they all cover the same subject matter, and really make more 1437 specific, definite and intelligible the principles which we think should apply in these matters. I will deal, first of all, with the new Clause on the Order Paper which I have moved. The idea of the Clause in the Bill was that in the event of disputes arising between the railway authority which controls the railways of British India and any railways in an Indian State controlled either by that State or by the authority in the State should be settled in the last resort by the Railway Tribunal.
The first new Clause provides that if the authority, in the exercise of what is conferred on it by the Bill, namely, the executive authority of the Federation in respect of railways, should give any direction to the Federated State in relation to such matters as the inter- change of traffic, the maxamum or minimum rates and fares, or station or service terminals, then the State, if it feels that those directions are unfair or are such as ought not to be given on the ground that they will discriminate unfairly against the State, may com-plain, and the complaint will be determined by the Railway Tribunal. A State railway may feel that some arrangements in regard to external charges or interchange of traffic with British India lines were unfair, having regard to the Federal charges or arrangements affecting the various systems. If they have a grievance of that kind it is right that they should be able to go to the Railway Tribunal to ascertain whether or not their grievance is just. I do not think that anybody would complain of the Clause in that respect or the manner in which it deals with the situation.

§ Sir H. CROFT
I notice that in the Seventh Schedule there are words which do not appear in the new Clause. Can the Solicitor-General tell me why it is that safety, routeing and limitation of liability are excluded from the new Clause? Is there any reason for that?

§ The SOLICITOR-GENERAL
I think the reason is that safety is a matter which should be dealt with by the Federal Legislature, and, of course, should equally apply to all the railways under the authority of the Federation. If it is right that there should be certain statutory safeguards to ensure the safety of passengers, then if they are right on the 1438 Federal railways they are right on the State railways, and vice versa. If there is any complaint on such matters it can be debated in the Legislature and those concerned can make their voices heard. With regard to the disputes that are to go to the Railway Tribunal, they are disputes that relate to traffic administration. As hon. Members know, in railway matters there are very often disputes as to whether a charge is fair, and particularly when you have two systems one against another a question may very easily arise as to whether the authority which has these wide executive powers is treating a State railway on matters of terminal charges and interchange of traffic as fairly and with the same privileges as it is treating inter se the various systems which it controls itself. These matters are on rather a different basis than questions of safety, which clearly are questions of legislative policy which apply to the country as a whole. The object of this first new Clause is to make specific those points on which we think it proper that a State railway should be able to go to the Railway Tribunal if they think that they are being discriminated against.
The second new Clause (Obligation to afford mutual traffic facilities and to avoid unfair traffic discrimination, etc.) sets out specifically in the Constitution provisions' which in their general character will be very familiar to hon. Members who are acquainted with railway matters. It sets out the general principle, which is to be found in any Railway Act, on which railways should be conducted. The essential words are: It shall be the duty of the Authority of every Federated State so to exercise their powers in relation to the railways…as to afford all reasonable facilities for the receiving, forwarding and delivering of traffic on those railways, including the receiving, forwarding and delivering of through traffic at through rates… so as to secure proper communication and no unfair discrimination. That enshrines a principle which everybody will agree is a proper principle for railway legislation. It lays it down that that principle is to be behind and is to be the guide, in fact more than the guide, the controlling principle, of the Railway Tribunal in considering any complaints which may be brought to it under the first Clause. It lays down what I think it will be agreed are the general principles on which rail 1439 ways should conduct their business inter se, where one system joins another and connects with another. The Subsection provides that in cases where these principles have not been complied with complaint shall be made to and determined by the Railway Tribunal.
The third Clause (Construction and reconstruction of railways) deals with a very important matter, namely, the construction and reconstruction of railways. Where you have, as you have in most countries, and as you have in India, systems covering to some extent the same sort of area and there is a proposal to construct a new line, it may well be that an existing system feels that that new line is really unnecessary or, at any rate, that if there is to be a new line in that area it would be better in the general interests of transport that it should be constructed in some direction other than in that which is proposed. For instance, the management of one system may say: "If you construct the new line there it will unfairly compete with what may be the Slightly longer route which we have between these two points, but it is really uneconomic to spend this money to save half an hour or an hour in getting from A to B, when you might perfectly well get from A to B by using the existing lines, some of which belong to us."
There might be a new line proposed in some area where there is no railway at present, as to which no questions could arise, but it might well be that the proposed new line would affect the interests of an existing system. As I have said, there may be two points, A and B. At present traffic from A to B goes round through system A. The suggestion is to make a rather more direct line from A to B which will prejudice the interests of system A. System A would therefore have a case, which certainly ought to be heard, for saying that although half an hour might be saved by constructing the new route between the two points it is not really an economic proposition, having regard to the general interests of the railways of the country as a whole. The third Clause deals with this matter in this way. It says: The Governor-General…shall make rules requiring the Authority and any Federated State to give notice in such cases as the rules may prescribe of any proposal for constructing a new railway. 1440 That prevents one side or the other getting a proposition under way without the knowledge of the other system which may be interested. The second Subsection of the Clause provides that the rules shall contain provisions enabling objections to be launched by the Authority or by a Federated State on the ground that the carrying out of the proposal will result in unfair or uneconomic competition with a federated railway or a State railway, as the case may be. That is to say in the cases that I have tried to describe one system might feel that the construction of the new railway was really unfair having regard to its own existing reasonable and satisfactory facilities. There are proposals that notice should be given so that objections can be lodged, and the matter referred to the Railway Tribunal. In Sub-section (3) the Committee will see that this is not allowed in any case where the Governor-General in his discretion regards any new line it is proposed to construct as necessary for defence purposes. That is a proper exception, because the Governor-General, having the responsibility for defence, must be able to say whether such a railway is necessary for defence purposes.

§ Mr. KIRKPATRICK
I suppose State railway means a Government-owned railway, or rather a native State railway which is ordinarily known as a State railway. How does this stand in relation to company-owned railways? Everyone regards the State railways as a Government-controlled railway.

§ The SOLICITOR-GENERAL
There is that confusion in terminology. A State railway ordinarily means a Government State railway which, of course, will be controlled by the authority. The authority will control all the railways in British India.

§ Mr. KIRKPATRICK
; Including company-owned lines?

§ The SOLICITOR-GENERAL
Yes, including company-owned lines. The possibility of dispute is as between railways in British India and railways within a State which are not owned by the Government of India or by a company under the Government of India.

§ Mr. KIRKPATRICK
A companyowned line could not avoid this by saying that they were a Federal railway or State railway?

§ The SOLICITOR-GENERAL
No, the thing is complete. There is nothing left out. Either it is under the authority or is a Federal State railway. Finally I come to the fourth new Clause—(Railway Tribunal) Only two substantial changes are made, and they are changes which, 1 think, will appeal to the Committee.

§ Sir H. CROFT
Is not this procedure rather unusual? We are now considering new Clauses which occupy nearly two pages of the Order Paper, involving practically the control of the whole railways in India. Could we not take a discussion on the Clauses as far as the Solicitor-General has already gone?

§ The SOLICITOR-GENERAL
I only want to meet the convenience of the Committee. The main principle has already been approved on earlier Clauses, and the only reason why I am doing this is that I felt it was desirable that hon. Members should also have before them the constitution of the Railway Tribunal. Clearly it is relevant when you are discussing whether questions are a fit matter for a tribunal to know the constitution of the tribunal. However, I am entirely in the hands of the Committee.

§ Sir H. CROFT
I only suggested that it was rather unusual in considering new Clauses. They are always taken with great deliberation, but if this is the only case in which the Solicitor-General proposes to adopt this plan I have no great objection to it.

§ The CHAIRMAN
It is really a matter for the convenience of the Committee, and I think hon. Members will agree that the Solicitor-General was bound to refer to the three following new Clauses in order to explain this particular one. In view of the number and extent of those later new Clauses, I doubt whether it would be reasonable to ask the Committee to refrain from all discussion on those subsequent new Clauses, but I hope they will not repeat on later new Clauses what takes place on this Clause. I do not propose to limit the discussion on either of the new Clauses beyond what is reasonable, but if a 1442 certain latitude is allowed now there will have to be a corresponding limitation on the subsequent Clauses.

§ The SOLICITOR-GENERAL
I do not want to introduce any revolutionary procedure or to do anything which does not suit the convenience of the Committee. I thought it would be convenient to the Committee if in these opening remarks I covered the whole ground on this subject. Let me say that there are two important points in regard to the fourth new Clause. The first is in Sub-section (2), that the president shall be a judge of the Federal Court. This tribunal will have important matters to decide. They will have to decide on the facts of disputes which may be brought before it and, therefore, it is advisable that the president should be a judge of the Federal Court. The other two will not be representatives of each side, but will be persons who will be selected by the Governor-General in his discretion from a panel of eight persons with railway knowledge or business experience. We feel that such a constitution will result in a tribunal which should inspire the confidence of those who will take their disputes before it. The remaining Subsections of the new Clause deal with a number of ordinary matters, and gives the powers which are conferred on the tribunal. In Sub-section (4) there is provision for an appeal to the Federal Court from a decision of the tribunal on questions of law, but that no appeal shall lie from the decision of the Federal Court on any such appeal.
I think it is only right before I conclude to point out that to a large extent the general nature of the ground covered by this Clause is implicit in the provisions which the Committee have already passed. What the Clause does is to deal in detail, and in sufficient detail, with the principles upon which these disputes are to be tried, whether they are disputes as to traffic facilities as between existing systems or disputes which may arise on a proposal to construct a new line. The personnel of the tribunal has been modified in a way which we hope will commend itself to the Committee and will inspire the complete confidence of the railways of British India and the railways of the Federated States who may have to appeal to the tribunal to settle their disputes.

§ Mr. LYONS
I wish to ask my hon. and learned Friend for a more detailed explanation arising out of the point raised by my hon. and gallant Friend the Member for Bournemouth (Sir H. Croft). The Clause now submitted by the Solicitor-General provides: If the Authority, in the exercise of any executive authority of the Federation in relation to interchange of traffic or maximum or minimum rates and fares or station or service terminals, give any direction to a Federated State, the State may complain that the direction discriminates unfairly against the State, and any such complaint shall be determined by the Railway Tribunal. That seems to give a very substantial right of appeal in those matters. I now turn to Item 20 in the Federal Legislative List in the Seventh Schedule which I think was in the mind of my hon. and gallant Friend the Member for Bournemouth. Clause 100 provides that the Federal Legislature has power to make laws on any of the matters enumerated in this List and the List includes as Item 20: Railways, that is to say, the regulation of Federal railways; the regulation of other railways in respect of maximum and minimum rates and fares, terminal charges, safety, routeing and interchangeability of traffic, and limitation of liability; construction of new railways other than minor railways; reconstruction of existing railways other than minor railways. That includes a great many more matters than those referred to in the proposed new Clause which the Solicitor-General has just submitted. I hope, therefore, that he will further enlighten the Committee upon this point. Is it the deliberate intention of the new Clause to make any substantial limitation in what seems to be the right of appeal at present. The item which I have quoted seems to give a very much wider latitude than is given in the proposed new Clause.

§ The SOLICITOR-GENERAL
Perhaps I did not fully appreciate the point put by my hon. and gallant Friend the Member for Bournemouth but in reply to my right hon. and learned Friend who has just spoken I would point out that the item in the Seventh Schedule to which he refers deals with the legislative powers of the Federal Legislature, in which, of course, the Federated States have their representatives. Clause 187 which was 1444 originally in the Bill but was struck out was not, and the new Clauses which I am now submitting are not concerned with legislation but with possible disputes arising out of action by the Railway Authority. It is a matter not of the legislative but of the executive power of the Federation in connection with railways. What we have done in the first new Clause is to enumerate those matters in which it seemed to us that disputes might arise, as a result Of executive action, which it would be proper to refer to the tribunal.

§ Mr. LYONS
I am much obliged to my hon. and learned Friend for the information. May the Committee take it that the new Clause in no way limits the ordinary right of appeal which would exist in regard to any of the matters referred to in Item 20 of List 1 in the Seventh Schedule 1 If there is no limitation of those rights my point is met.

The SOLICITOR-GENERAL M
I am not sure what my hon. and learned Friend means when he refers to appeals in respect of matters in Item 20 because Item 20 is merely an enumeration of matters on which the Federal Legislature can legislate.

§ ? Mr. LYONS
I appreciate that point, but in the first new Clause there is a statement giving a right of appeal in connection with a much narrower list of matters than those which are set out in Item 20. I am anxious to know whether there is anything in the Clause which prejudices the position at all in relation to the matters mentioned in Item 20.

§ Sir H. CROFT
The Committee are aware that in the White Paper which described the attitude of the Princes on certain difficulties connected with the structure of the Bill, the railway Clauses were indicated as having given great offence to the Princes. I think they were described as being "entirely unacceptable" to the Princes. I imagine that this group of new Clauses—and I am sorry that the Secretary of State is not here to explain them—represent an endeavour to meet the point of view of the Princes and to square up those difficulties. I can understand the first Clause of this series on which the Committee 1445 is now trying to concentrate as being one which would be acceptable to the Princes. It gives them the right of appeal and objection. But the second Clause seems to impose certain obligations upon them which did not, I think, appear earlier, and I should be glad to know from the Solicitor-General whether the Princes have acceded to it or not.

§ The SOLICITOR-GENERAL
My hon. and gallant Friend is right in saying that this matter was referred to in the White Paper. The main point mentioned there was, that Clause 187 as it then appeared in the Bill was not satisfactory and that it might be construed as having the effect that the Federated States and the Railway Authority would not appear as equals before the tribunal. These were obviously proper points to raise, and we think we have met them. I cannot state categorically that the Princes have expressed approval of the various steps which we have taken, but we have considered their representations and we have put down these new Clauses which we believe meet the points made by them. As I say, I think in substance they were all perfectly fair points. I am not suggesting, of course, that these new Clauses cover every conceivable detail. In regard to the second new Clause, I do not think that any railway company in the world would object to that obligation. It is a familiar type of Clause in legislation covering railway systems, and indeed it might have been taken for granted without putting it into the Bill, that the railways would work together in accordance with experience. However, we thought it right to state it expressly in the Bill. With regard to the question of my hon. and learned Friend the Member for East Leicester (Mr. Lyons), I am not sure even yet that I follow his point. Item 20 deals with legislative powers, but the fact that there are these legislative powers gives no one a right of appeal of any kind. What the new Clause which I am now proposing does is to say what kind of executive action in connection with railways would give a right of appeal. That is quite a different matter from the list of subjects in Item 20 which is confined to the powers of the Federal Legislature.

§ Sir A. KNOX
I want to ask one or two simple questions about the last of these Clauses.

§ The CHAIRMAN
I think the hon. and gallant Member had better put his questions when we come to the Clause to which they refer. I have said that I do not want to avoid any discussion on the later Clauses, and, if the hon. and gallant Member's points refer specifically to the last of these Clauses, he might postpone his questions till we come to that Clause.

§ Mr. A. SOMERVILLE
It was interesting to hear from the Solicitor-General that the Government believe that these Clauses meet the strong objections that were raised by the Princes in their note to the Viceroy. I suppose that he cannot give an assurance that they completely meet those objections May I put this point to my hon. and learned Friend? These Clauses will appear in the Instruments of Accession. What will be the effect if in one State the Instrument of Accession accepts one or more of these Clauses—

§ The SOLICITOR-GENERAL
So far as these Clauses are concerned, they will all be accepted by a Federated State. A State can, of course, put forward proposals for excepted items in the federal list. Apart from that, it can only put forward a proposal to except a Clause in the Bill if the Clause specifically authorises that procedure. Therefore, a State which accedes as to railways will be bound by all the Clauses which we are now discussing.

§ Mr. SOMERVILLE
I understand, then, that a Prince must accept all these Clauses?

§ The SOLICITOR-GENERAL
If he accedes as to railways.

§ Mr. SOMERVILLE
There is a further point. The ruler of one State may accept all these Clauses, but the ruler of a neighbouring State may not accept them. That may interfere considerably with the railway system or the reformed railway system. What will be the procedure to deal with that situation?

§ The SOLICITOR-GENERAL
I cannot, of course, anticipate too much. My hon. Friend will realise that it is open to His Majesty whether or not he accepts the proposals put forward by a State which desires to federate as sufficient to entitle it to accede and to have an Instrument of Accession. I think that the point 1447 my hon. Friend is putting is this. Suppose that a State which has a railway system desires to federate, but desires to except, that is to say not to accede, with respect to railways. It would be improper for me to anticipate what action the Government would take with regard to such 4 proposal, but clearly they would have their hands completely free to say, "If you want to accede you must accede as to railways, or make some arrangement which we are satisfied will enable your railway system to work in with the other systems." Apart from accession as to railways, the position would be the same as at present. I do not think that one can speculate to any great extent as to the hypothetical case of the kind put by the hon. Gentleman.

§ Mr. SOMERVILLE
Do I understand that if the ruler of a state does not accede to a sufficient extent, say, with regard to railways, there would be the possibility of his accession being refused?

§ The SOLICITOR-GENERAL
My right hon. Friend has again and again explained that it is not his intention to accept an accession to federation unless it is a real accession. That is to say, that accession is as to a substantial number of the powers.