RAJENDRA BABU, J. - (1.) THE petitioners before us filed a writ petition in the High Court of Delhi challenging the formation of seven railway zones. THE petitioners contended that the notification issued for formation of new zones is violative of Section 3 of the Railways Act, 1989 (hereinafter referred to as 'the Act') as the same is not formed for the purpose of efficient administration of the railways.
(2.) THE petitioners relied upon a proceeding of the Railway Board and a note prepared for the consideration of the meeting to be held on Nov. 30, 2001. THEre are several aspects considered in that note, namely, (i) that there is unprecedented financial crunch in the railways and recommendations made by the Railways Reforms Committee in 1984 to form new four Zones remained unimplemented on account of the same and the position has not improved but has only worsened; (ii) that on account of technological innovations by utilisation of Information Technology the Railways can centralise their operations and thus reducing the relevance of the new zones; (iii) that the Comptroller and Auditor General has recommended for reconsideration of the decision of creation of new zones and division from the point of view of financial viability; (iv) that the Standing Committee of Parliament on Railway have recommended for creation of new zones on the basis of work load, efficiency and effective management; (v) that the Railway Convention Committee recommended that instead of creating new zones expenditure to be incurred on the same could be better utilised for procurement of rolling stock, doubling and renewal of railway lines and in electrification programmes; (vij that the management cadres and staff federations are not in favour of new zones and divisions; (vii) that Rakesh Mohan Committee has suggested that the formation of additional zones would be of dubious merit and would add substantial cost and. be of little value to the system; (viii) that there would be tremendous dislocation in the zones, operating discipline, traffic accounts and staff matters that will affect the system adversely; (ix) that the creation of zones or divisions apart from causing upheaval will also divert the railway's attention to restructure itself to be more competitive in the market; (x) that therefore, the Board was of the view that it would not be appropriate for formation of seven new zones in the context of financial crunch, the opinion expressed by the Parliamentary Committees and, therefore, calls for further examination of the matter. THE petitioners also placed reliance upon the draft that has been prepared by the Member Secretary of the Committee to finalise the detailed territorial jurisdiction of new zones and stated that "Though the recommendations of the Study Group were accepted by the Railways in principle, the entire issue was further examined in the Railway Board and the final proposal was made for the creation of the six new zones, four as per the Report of the Study Group and two additional zones, with the objective of the development of the backward areas particularly of Orissa and Bihar. Another zone of Bilaspur was added as it had heavy workload and in view of the continuous long pending demand of the region....." It was very strongly contended that though Railway Reforms Committee had recommended in 1984 for formation of new zones, the situation has entirely changed in view of various factors referred to above and this was admitted position inasmuch as in Parliament the Minister for Railways answered that no study regarding utilisation of new zones had been conducted and even as late as on March 1, 2002 it was stated that owing to resource crunch the proposed new zones and divisions will only gradually become operational depending on the availability of the investable resources and, therefore, no time frame could be fixed. It was pointed that the expenditure in the creation of new zones would result in accumulation of fresh arrears regarding replacement of over aged assets, thereby affecting safety. Reliance was also placed on a letter addressed by six former Chairmen of the Railway Board. In their joint letter to the Prime Minister sent on July 12, 2002 they stated that the creation of new zones would be operational debacle, a financial disaster and an administrative blunder and from considerations of sound management and operational efficiency, there is a case for reduction in the number of zonal rail headquarters. THErefore, it was contended that the decision in respect of at least three of the seven zones, namely, Hazipur, Bilaspur and Bhubaneswar is not based on any expert study whatsoever and is based on extraneous considerations not germane to efficiency in the railways. For reasons already stated, it was submitted that the recommendations of the Railways Reforms Committee has become outdated in view of the later developments. It was also contended that the formation of Hazipur zone was decided by the Government without any study or report of any expert body within three weeks of a new Railway Minister assuming office whose constituency was Hajipur and Bilaspur zone was announced in an election rally by Shri Atal Bihari Vajpayee, Prime Minister, again without any study or recommendation of any expert body. THErefore, it is submitted that the decision of the Government in this regard is mala fide. It was further contended that when the statute has provided the guidelines in regard to the formation of a policy, the same should be based on proper information obtained from appropriate sources and in this context, the petitioners placed reliance on the decision of this Court in Bangalore Medical Trust v. B.S. Muddappa, 1991 (4) SCC 54, and also pointed out that in Kasturi Lal Lakshmi Reddy v. State of Jammu and Kashmir and another, 198O (3) SCR 1338, Ramana Dayaram Shetty v. International Airport Authority of India, and others, 1979 (3) SCC 489; Ugar Sugar Works Ltd. v. Delhi Administration and others, 2001 (3) SCC 635 and State of U.P. v. University Colleges Pensioners' Association, 1994 (2) SCC 729, it was held that even policy decisions of the Government can be interfered with if it is arbitrary or mala fide and manifestly contrary to public interest. THEy, therefore, submitted that the action taken by the Government should be quashed in reversal of the judgment of the High Court. Dr. D.P. Pal, the learned senior Advocate who appears in SLP (C) No. 17306/2OO2, submitted that the provision of Section 3 of the Act provides for test as to formation of railway zones and the critical test is efficiency in the administration which is an objective test. The criteria being objective, the Court can examine the material on record to draw an inference one way or the other. The efficiency would increase only if it can reduce the cost of administration and the earnings in the zone will increase. The learned Attorney General referred to the constitution of the Railway Reforms Committee on May 12, 1981 to recommend ways of enhancing the efficiency of the functioning of the Indian railways. At that time. there were nine zones in existence, namely, (i) Eastern Railways (Calcutta), (ii) South Eastern Railways (Calcutta), (iii) Central Railways (Bombay), (iv) Western Railways (Bombay), (v) Northern Railways (Delhi), (vi) Southern Railways (Madras), (vii) North Eastern Railways (Gorakhpur), (viii) North Eastern Frontier Railways (Gauhati) and (ix) South Central Railways (Secunderabad). Railway Reforms Committee proposed the addition of four new zones in phases as follows : in phase 1, East Central and North Western Railways, in Phase II, North Central Railways, and in Phase III, Southern Western Railways to be considered later. The Railway Reforms Committee also projected the need for 15 zones by the year 2000. It is submitted that the former Chairman, of the Railway Board, namely, Shri M.S. Gujral and Shri M.N. Bery were associated with the Railway Reforms Commissioner's deliberations as Member and Chairman of the working Group of Structural Reorganisation. In Feb. 24, 1994 the Minister of Railways in his Budget speech for the year 1984-85 stated that it was necessary to conduct a detailed study to rationalise the geographical distribution of existing zones and divisions and on May 6, 1994 a Study Group was set up consisting of Advisers of the Railway Board to go into the question of reorganisation of railway zones and divisions. The Study Group after examination of the entire gamut of the issues pertaining to railway reorganisation recommended the setting up of four additional railways zones, namely. North Western Railway with its headquarters at Jaipur, South Railway with its headquarters at Bangalore, East Central Railways with its headquarters at Jabalpur and North Central Railway with its headquarters at Allahabad. The Minister for Railways in his Budget speech for the year 1995-96 stated that the Committee's recommendations had been accepted. The Union Cabinet, however, deferred the proposal of creating four zones and called for more material from the Ministry of Railways. Thereafter, the Union Cabinet headed by Shri Deve Gowda, then Prime Minister, considered these proposals in their meeting held on July 12, 1996 as to formation of six new railway zones and they are North Western Railway with its headquarters at Jaipur, South Western Railway with its headquarters at Bangalore, West Central Railway with its headquarters at Jabalpur, North Central Railway with its headquarters at Allahabad, East Coast Railway with its headquarters at Bhubneswar and East Central Railway with its headquarters at Hajipur. At the time of considering the same, the Union Cabinet took into account the financial viability, traffic growth and the norms of carving out a zone before deciding the creation of six new zones on July 16, 1996. Minister of Railways in his Budget speech for the year 1996-97 announced new six zones. Thereafter, on Sept. 9, 1998 the Union Cabinet headed by Prime Minister Shri Atal Bihari Vajpayee approved the creation of new seventh Zone with headquarters at Bilaspur. On Feb. 22, 1999 the Union Cabinet also decided to move the headquarters of the South Western Railway from Bangalore to Hubli. From 1999 to 2001 the work of Zones had been progressing slowly and a debate was going on for and against the formation of new zones. During this period Railway Board had also expressed reservations in going ahead with formation of zones mainly due to financial crunch. On 29th Nov. 2001 the Minister for Railways while responding to various questions raised in Parliament clarified as follows : "In the year 1985 the Union Cabinet had deferred a proposal based on the recommendations of the RRC for creating 4 new Zones. However, in the year 1996, the Union Cabinet had examined and approved the proposal for creating 6 new zones. Subsequently, the Government decided to form the 7th Zone with headquarters at Bilaspur. It is not correct to allege that there had been no examination of the proposal. As far as opinions and observations on the new Zones are concerned, there have always been two opposing views. Further, the slow progress in this regard is attributable to a resource crunch. However, there was never any intention not to proceed with the creation of any of the new Zones as consecutive Governments (the United Front and the National Democratic Alliance Governments) had taken a policy decision to create the new Zones."
(3.) IN Dec. 2001 Railway Board initiated action for operationalisation of new zones. On June 4 and 14, 2002 the Railway Board met and decided to operationalise North Western Railway with its headquarters at Jaipur and East Central Railway with its headquarters at Hajipur by Oct. 1, 2002 after finalising their respective jurisdictions. IN the meanwhile, on July 5, 2000 a writ petition was filed by Biswajit Deb, petitioner in SLP No. 17306/2002. before the Calcutta High Court challenging the notification of setting up a new zone. The Calcutta High Court dismissed the said petition holding that setting up of new zone is purely a policy decision of the Railway Board to arrange their own administration which cannot be adjudicated in a Public INterest Litigation. The Delhi High Court in the case of petitioner herein in Special Leave Petition (Civil) No. 16838 of 2002 held that the jurisdiction of the Court in the matter of interference with policy decision of the Government is very limited, that the question whether such a decision should have been taken or whether such a decision would ultimately be beneficial to the Railway Administration in general is not a matter which is within the domain of the Court. It is also noticed that the fact that there is no expert body decision in the matter would not call for consideration in a writ proceeding merely because the petitioner or some other persons may have different views in the matter. On July 26, 2002 a detailed note of reorganisation of the railways was sent to the Union Cabinet to keep it appraised of the current situation and the views of the Standing Committee of Parliament on Railways (1996- 97), the Railway Convention Committee (1996), Railway Federations, the Deputy Comptroller and Auditor General (1999), the Comptroller and Auditor General (2001) and the comments of Rakesh Mohan Committee (2001) against the formation of additional railway zones were also placed before the Cabinet and the Cabinet did not review its previous decision. Two new zones, that is. North Western Railway with its headquarters at Jaipur and East Central Railway with its headquarters at Hajipur began functioning in accordance with the notification dated June 14, 2002 issued by the Railway Board. It is also pointed out that Parliament had approved the establishment of a Special Railway Fund of Rs. 17,000 crores by Government to ensure the safety of the railways in accordance with the recommendations of the Railway Safety Review Committee Report, 2000. All the safety related tasks to be carried out on the basis of moneys drawn from this Fund have been listed and placed before Parliament and have been approved by Parliament as part of the Railway Budget.;