Recovery of Rs. 29,000 cr. rail freight dues stalled

Key investigators who unearthed the evasion abandon task

June 29, 2016 01:17 am | Updated November 17, 2021 04:46 am IST - NEW DELHI:

The recovery of over Rs. 29,000 crore by the Railways from freight-evading iron ore exporters who were feeding the global frenzy for steel during the boom period is floundering, say sources in the Railways and other agencies who have investigated the humungous scandal.

The key investigators who exposed the scandal in the South Eastern Railways have all dispersed from the task, the latest being the principal investigation officer. The only hope for the recovery — that could dramatically turn around the fortunes of the Railways — now hinges on the Supreme Court, a key official in the Railway Board told The Hindu .

The developments come even as the Railways have withdrawn the higher freight charges iron ore exporters had to pay under the 2008 policy, which they avoided illegally.

According to sources, the Railways on May 9 issued a freight rate circular, abolishing the dual freight policy in iron ore transportation, eight years after it was implemented. According to the new circular, the exporters would now only pay the same fare for exporting iron ore out of India as those for domestic manufacturers who use ore to make steel within the country.

A CAG audit report tabled in May 2015 estimated that the Railways could recover Rs. 29,236.77 crore from the exporters who transported iron ore meant for export on freight charges meant for domestic consumption movements. The loss estimates were for a period from May 2008 up to September 2013. Those moving iron ore for export had to pay four to five times more than those transporting iron ore for the manufacture of steel within India.

“While the Railways eagerly provided relief to such traders and exporters by abolishing the dual freight regime, they seem to have forgotten that many of them have not paid a single penny from the thousands of crores of rupees in railway freight they evaded during the great iron ore boom period of 2008-2012,” a key official involved in unravelling the scam said.

The massive freight evasion phenomenon first came to light in 2011 during an investigation done by the Vigilance Department of Kolkata-based South Eastern Railway. However, in the past five years the officials who unearthed the scam have all dispersed. According to sources, SK Sadangi, an IIT and Harvard alumni who unravelled the modus operandi as part of the vigilance department, is now leaving railways on deputation. Sadangi was also part of the team of experts that assisted Justice M.B.Shah Commission which probed illegal iron ore and manganese mining. Even as the recovery is slipping, the Anti-Corruption Unit CBI, Kolkata that is conducting its own investigation into the evasion, has completed its investigations and filed charge sheets against many freight evading companies vindicating Railway's stand. The entire case has been caught in a legal mangle since the railways served demand notices on the freight evading companies operating in the Chakradharpur Division.

The companies took railways to Calcutta High Court challenging both Railway’s recovery action and the transportation policy itself. After a 3-year-long battle, railways won the case in the lower court. At one point of time there were 23 cases pending before various high courts. However, in April 2015 a transfer petition was filed in the Supreme Court seeking consolidation of those petitions. The case is languishing without any breakthrough, and it has not been listed for Wednesday as was indicated by the court during the last hearing.

“The only hope is the Supreme Court. Everyone else seems to have given up,” an official in one of the investigation agencies who probed the scandal told The Hindu .

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