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

Oude Railway Company

Acts Covered: Oude Railway Act 1858
(21 & 22 Vict. c.lxxxiii)

Background

1. The Oude Railway Company was incorporated in England by Act of Parliament in 1858, with the intention that it would be responsible for constructing a line running between Lucknow and Kanpur (formerly Cawnpore). The state of Oude was suffering from the after-effects of the Sepoy Rebellion in 1857 and, whilst it was obvious that the transport and communication systems needed updating, it was extremely difficult for private companies to attract investment to fulfil this goal.

2. The Oude Railway Company, also known as the Avadh Railway Company, was badly affected by the wars in the state. The company had failed to secure a guarantee of assistance from the Indian government by the time of its incorporation, but by the early 1860s it had carried out a number of surveys of the necessary land, with the approval and support of the Indian government. Around 1861-62, the company had become one of the first victims of British political difficulties with the guarantee system. Concern was being voiced loudly in Parliament about railway companies relying on governmental assistance and not continuing to seek private investment. There was a move to stop further guarantees being awarded and to halt existing guarantees. The Oude Railway Company was ordered to postpone its works and to repay, with interest, all moneys that had been loaned.[446]

3. It is not clear what happened to the company, but it is likely that it collapsed and was formally dissolved shortly thereafter. The archives of the Board of Trade contain records indicating that the company has been dissolved.[447] The railway company is no longer registered at Companies House as an active company, nor are there any indications that it remains in existence. The line between Lucknow and Kanpur was built in 1867 by the Indian Branch Railway Company, which later became the Oudh and Rohilkhand Railway Company. Neither of these companies had any connection to the Oude Railway Company.

4. One Act relating to the Oude Railway Company was promoted over the lifetime of the company: Oude Railway Act 1858. This Act is proposed for repeal in the following note. Oude Railway Act 1858 (21 & 22 Vict. c.lxxxiii)

Purpose

5. In December 1856 the Oude Railway Company Limited was formed initially as a joint stock company, with its registered office based in England.[448] The objects of the limited liability railway company were (according to the memorandum of association) "to construct and work one or more railways with telegraphs in the territory of Oude and other parts of India, and for all other purposes connected therewith".[449]

6. The railway company's nominal capital was made up of 50,000 £20 shares. By 1858, "the greater part" of the share capital had been subscribed, and the company had opened negotiations with the East India Company to construct a main railway link between Cawnpore (today Kanpur) to Lucknow, with branches to "other places" in both Oude and the wider East Indies.[450] In order better to regulate the railway company's functioning, and to empower it to execute the construction contracts, the company needed to reconstitute itself through statutory incorporation. To this end the railway company sought and obtained the 1858 Act.[451]

7. The main purposes behind the 1858 Act were these:

(a) to wind up the original railway company (which was immediately to "cease to exist") and to reform it as a statutory body corporate, having "perpetual succession" in England, all territories governed by the East India Company and "in all other places";[452]

(b) to provide for the transfer to the new company of all land, property and contractual rights and obligations,[453] and for the continuing validity of all share documentation and all company byelaws and resolutions;[454]

(c) to provide for the continuity of officer-service within the new company;[455]

(d) to provide for the raising of capital by the new company (initially fixed with a ceiling of £1 million),[456] and its borrowing on mortgage or bond;[457]

(e) to regulate the holding of meetings and the appointment of directors;[458]

(f) to "facilitate the issue, transfer, and transmission of [the company's] shares, stock, and securities" by, amongst other things, establishing an India office "at such place as [the directors] shall think fit" (and appointing staff to it), making regulations governing such transactions, preparing an "official seal" for the India office (to authenticate share certificates), establishing various "Indian" registers which were to be maintained,[459] and providing for the transfer of registered shares and stock between company offices;[460] and

(g) to empower the railway company to purchase and hold land in England,[461] and to enter into contracts with the East India Company (on behalf of the government of India) for the purpose of constructing, maintaining and working railways and telegraphs.[462]

Status of the 1858 Act

8. The 1858 Act was a stand-alone piece of legislation. Its purpose was to effect the transformation of the Oude Railway Company from a joint stock company to a statutory corporation, and to imbue that new body with power to raise capital, to undertake contract-based construction works, and to operate a railway undertaking in conjunction with the government of India.

9. The 1858 Act hinted that ultimately the railway undertaking would pass from the railway company to the Indian government (whether as the East India Company or in some other guise). In fact, this appears never to have come about. The company was ordered to stop its construction works and to return all the money it had been given. Another company constructed the line sometime later. No further Acts were sought in connection with this particular railway undertaking; that in itself may be an indicator of the fortunes of the railway company. The 1858 Act was neither amended nor repealed.

10. The Oude Railway Company was probably dissolved between 1862 and 1867. The East India Company was dissolved in 1874.

11. The 1858 Act is now spent and may be repealed in whole.

Extent

12. The 1858 Act related to the affairs of the Oude Railway Company. That company operated in India (in the northern British territory) and in England (in London).

13. The Act applied to Great Britain and to India (in the state of Uttar Pradesh).

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. [446] For further information see Chand, T. P. The Administration of Avadh (1971) Vishwavidyalaya Prakashan, Varanasi; Mehta, N. B. Indian Railways: Rates and Regulations P S King & Son, London.

  2. [447] The records reside at the National Archives, under reference number BT31/217/673.

  3. [448] The company was formed in accordance with the Joint Stock Companies Act 1856 (c.47).

  4. [449] Preamble to the Oude Railway Act 1858 (21 & 22 Vict. c.lxxxiii) ("the 1858 Act"), being "An Act to incorporate and regulate 'The Oude Railway Company;' to enable the Company to construct and maintain Railways in the East Indies, and to enter into Contracts with the East India Company; and for other Purposes". The short title of the Act was assigned by section 1.

  5. [450] The 1858 Act, preamble. In this context the East India Company was acting "on behalf of the government of India": ibid.

  6. [451] The costs relating to the obtaining of the 1858 Act were to be borne by the new railway company: the 1858 Act, s 43.

  7. [452] The 1858 Act, ss 3-5. The new company would have a common seal and power to hold land. The original shareholders were automatically to become shareholders in the new company. The provisions of the Companies Clauses Consolidation Act 1845 (8 & 9 Vict. c.16) were to form part of the 1858 Act, and their operation would extend across India as well as England. The objects of the railway company were "the constructing, maintaining, and working of such railways and branches, with or without telegraphs, in the territory of Oude and in any other parts of India, as [the company] may from time to time determine, and all other matters necessary or incident thereto": the 1858 Act, s 39.

  8. [453] The 1858 Act, ss 6-9. All property transferred remained subject to any pre-existing "charges and liabilities"; and the 1858 Act did not abate any legal proceedings or rights of action generally which may have been in train or have accrued pre-transfer: ibid.

  9. [454] The 1858 Act, ss 10, 11.

  10. [455] The 1858 Act, ss 12, 13. Company officers in the employ of the original railway company were obliged to ensure that all moneys and documents were transferred to the new company, and were themselves to have continuity of employment terms and conditions in the new company (and be liable to the same "penalties, obligations, and regulations" as previously applied to them and their sureties): ibid.

  11. [456] The 1858 Act, ss 14-18. Shareholders in the original railway company were to have their shareholdings transferred to the new company on an equal basis. The new company was to have the ability to raise its initial capital from £1 million to £3 million by issuing additional £20 shares (which all was to be treated as "general capital"): ibid., s 17. Shares could be issued as "guaranteed shares" where the interest payable on them was underwritten by the East India Company: ibid., s 18.

  12. [457] The 1858 Act, s 19. The borrowing was to be subject to the 1845 Companies Act, and was not to exceed 1/3rd of the subscribed capital which had been raised by guaranteed shares.

  13. [458] The 1858 Act, ss 20-27. The railway company's general meetings were to be held twice yearly at the company's principal office (and "corporate domicile") which was to be based in London (presumably the City) or in Westminster. The original company's directors were to form the new board (with a maximum of twelve, and a minimum of six, directors, and a quorum of three) and each director was to hold shares to the value of £1,000 and was to be remunerated from the company's funds.

  14. [459] Relating to shareholders, consolidated stock, transfers, mortgages and bonds. The various registers were to be copied "from time to time" to the London office, and their entries were to follow the pattern of "the corresponding books in England": the 1858 Act, ss 31, 32.

  15. [460] The 1858 Act, ss 28-37. Sections 36 and 37 provided that, in order to determine the relevant law affecting particular shares or securities, all shares and securities would be deemed to be held in England unless specifically registered at the Indian office. Certified copy entries from the registers would be self-producing evidence in court proceedings. Sections 41 and 42 provided for the making of statutory declarations, and the recovery of penalties for byelaw breaches, in India (broadly replicating the position in England).

  16. [461] Not exceeding ¼ acre, for the purpose of building company offices.

  17. [462] The 1858 Act, ss 38, 40. The various contracts were to provide to the East India Company rights relating to "tolls, receipts, and profits" (including their application), to supervision and regulation of the railway company and its works both in England and "elsewhere", to the appointment of an ex officio director and regulation of the board's powers, to the appointment and regulation of agents in India "or elsewhere", and to payment to the East India Company of the whole or part of the railway company's subscribed capital; all leading to "the eventual or contingent transfer" to the East India Company of all or part of the railway undertaking by "surrender or sale": ibid., s 40. All such contracts were to include provision for arbitrated dispute resolution, either specifically or by reference to the Companies Clauses Consolidation Act 1845.

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