Indian Railway History - British Law

Extracts from the "Statute Law Revision - Indian Railways Repeal Proposals", August 2007, published by the Law Commission of the United Kingdom.

The Law Commission published a consultation paper in August 2007, proposing repeal of 38 Acts in the UK statutes relating to the operation of railway companies in British India. The material here is extracted from the Consultation Paper. Web site of the Law Commission

Related pages: History of railways in India - FAQ

Bengal and North Western Railway Company

Acts covered: Bengal and North Western Railway Company Limited Act 1914 (4 & 5 Geo.5 c.viii)

Background

1. The Bengal and North Western Railway Company was registered in England in October 1882, as a result of an agreement made with the Secretary of State for India in that month. Instead of receiving a guaranteed return on its investment, government assistance came in the form of free land.

2. After incorporation, the company took responsibility for the railway line along the Ghaghara River between Patna and Bahraich. The government had begun construction of this line in 1881. The company completed the building works, and the first sections of the lines opened in April 1884. The line remained the property of the state, but the company was responsible for its operation.

3. In 1890, the Bengal and North Western Railway took over management of the Tirhoot State Railway (under a lease) in an effort to increase the latter's profitability. The company managed a number of lines until 1943, when it was amalgamated with the Rohilkund and Kumaon Railway, and the Lucknow Bareilly Railway. It became the Oudh-Tirhut Railway. All existing contracts were determined and it became an entirely state-owned enterprise.[43]

4. The Bengal and North Western Railway Company was formally dissolved in 1946. The company went into voluntary liquidation in 1942, with the liquidation process commencing in January 1943. The final winding up meeting was held on 24 January 1946.[44] The company was represented by Slaughter and May.[45]

5. One Act relating to the Bengal and North Western Railway Company was promoted over the lifetime of the company: Bengal and North Western Railway Company Limited Act 1914.

Purpose

6. The Bengal and North Western Railway Company was a company registered in England under the then companies legislation. It was formed in 1882 for various purposes, including contracting with the Secretary of State in Council of India to construct and operate certain railways and works in India. By a concession agreement entered into with the Secretary of State, the company agreed that 'the railways and all other appurtenances'[46] would revert, at value, to the Secretary of State on 31 December 1981 (at the end of the 99 year term) unless, prior to that date (in 1932, when the 50 year break clause would bite), the Secretary of State exercised his right of purchase.[47]

7. The company was authorised under its articles of association to increase its capital by creating new shares and by converting fully paid-up shares into stock.[48] However, it was not so authorised to effect a reduction in the company's capital (via a capital redemption fund) for the purpose of facilitating a sale by the company of its principal assets. To that end, the company promoted what was to become the 1914 Act.[49]

8. The principal functions of the 1914 Act were:

(a) to authorise the directors to set aside moneys from the company's "general revenues" to create and invest a "capital redemption fund" to be used to purchase the company's preference stock (which then would be cancelled, and thus reduce the company's capital);[50] and

(b) to provide that a copy of the Act be filed with the companies' registrar and supplied to members of the company.[51] Status of the 1914 Act

9. The sole purpose of the 1914 Act was to make a financial restructuring within the railway company as a precursor to future purchase of the railway system by the Government of India.

10. The 1914 Act on its face made clear that the railway system would revert to the Secretary of State in 1981 in default of exercise of the purchase right prior to that date. That date has passed and, in any event, the provision in the 1882 agreement was long since superseded when the railway became an entirely state-owned and managed enterprise in 1943.

11. The 1914 Act is now spent, and may be repealed in whole. Extent

12. The 1914 Act related only to the affairs of the Bengal and North Western Railway Company Ltd.

13. The Act applied to the United Kingdom, and the states of Bihar and Uttar Pradesh, in India.

Consultation

14. HM Treasury, the Foreign and Commonwealth Office, the Department for International Development, the Department for Business, Enterprise and Regulatory Reform, Companies House, the Bank of England, the High Commission of India, and the relevant authorities in Scotland, Wales and Northern Ireland have been consulted about the repeal proposals set out in this note.

32-195-50
LAW/005/017/06
9 July 2007

Notes

  1. [43] For further information, see Ghosh, S. Railways in India - A Legend (2002) Jogemaya Prokashani, Kolkata, page 130.

  2. [44] In 1946, the Indian Government enacted the Railway Companies (Substitution of Parties in Civil Proceedings) Act 1946 (Act 14 of 1946) which required the Central Government of India to take the place of the Bengal and North Western Railway Company (and other named companies) in any civil proceedings which remained outstanding at the commencement of the Act. It was enacted in recognition of the agreements already made between the company and the government whereby the government would take over certain of the company's rights and liabilities. The Act was repealed in 2001 by the Railway Companies (Substitution of Parties in Civil Proceedings) Repeal Act 2001 (Act 25 of 2001).

  3. [45] National Archives file from the Board of Trade archives, reference number BT31/30983/17441.

  4. [46] The 1914 Act: preamble.

  5. [47] A formula was set down for calculation of the purchase price components (for the entirety of the railway network, less the Doab lines, and for the Doab lines): see 1914 Act, preamble.

  6. [48] Preamble to the Bengal and North Western Railway Company Limited Act 1914 ("the 1914 Act"), the long title of which was "An Act to empower the Bengal and North Western Railway Company Limited to redeem a portion of its existing capital and for other purposes".

  7. [49] Ibid.

  8. [50] The 1914 Act, ss 2, 3. Nothing in the 1914 Act was to operate to limit the rights of existing debenture stockholders (ibid., s 4); all persons holding company preference stock (whether for themselves or as trustees) were to be able to sell that stock to the directors (ibid., s 5); and any moneys paid by the directors on sale of preference stock were to continue to be held on the same trusts as applied to the original stockholding (ibid., s 6).

  9. [51] The 1914 Act, ss 7, 8. Nothing in the 1914 Act was to interfere with the company's power to amend its articles of association or to make "any compromise or arrangement" under the company legislation: ibid., s 9. The costs of obtaining the 1914 Act were to be borne solely by the company: ibid., s 10.

The material in the Indian Railways Repeals Proposal - Consultation Paper is under UK Crown Copyright and is reproduced here in accordance with applicable terms of use.