Holding

The formation of the new railway zones is valid as the Government acted within the parameters of Section 3, considering all relevant factors, and courts will not interfere with such policy decisions absent arbitrariness, irrationality, or abuse of power.

Summary

The Federation of Railway Officers Association challenged the Government's decision to create seven new railway zones, alleging that the move violated Section 3 of the Railways Act, 1989 because it was not based on administrative efficiency and was driven by political and backward‑area considerations. The petitioners also claimed the decisions were arbitrary, malafide, and made without expert study, and sought judicial interference in what they described as a policy matter. The Supreme Court examined whether the government had considered all relevant factors such as workload, manpower, financial viability, and accessibility, and whether the allegations of malafide were specific enough to merit intervention. The Court held that the study group and the Union Cabinet had taken into account the relevant criteria and that the formation of the zones was within the statutory parameters of Section 3. It further reiterated that judicial review of policy decisions is limited and courts will not interfere unless the action is arbitrary, irrational, unconstitutional, or an abuse of power. Consequently, the petitions were dismissed and the formation of the zones upheld.

Issues considered

The validity of the formation of seven new railway zones under Section 3 of the Railways Act, 1989 concerning administrative efficiency
Whether the Government's decision was arbitrary, irrational, or malafide and thus amenable to judicial review
The scope of judicial review over policy decisions involving technical expertise
The adequacy and specificity of the petitioners' allegations of malafide conduct

Legislation cited

Railways Act, 1989s. 3

Subjects

Railway zonesAdministrative efficiencyPolicy decisionJudicial reviewMalafide allegationSection 3 Railways ActPublic interest litigationAdministrative law

Judgment

FEDERATION OF RAILWAY OFFICERS ASSOCIATION AND ORS. A
v.
UNION OF INDIA

MARCH 13, 2003

[S. RAJENDRA BABU AND G.P. MATHUR, JJ.] B

Railways Act, I989-Section 3-Formation of new railway zones-
Recommendation for formation of 4 zones in I984 by Railway Reforms
Committee approved by Study Group-Thereafter formation of 3 more zones- C
Views from different quarters against the formation-Formation of 7 zones
challenged as violative of Section 3 as the same was not on the basis of
administrative efficiency-Formation of 3 zones not being based on expert
study alleged to be malajide-Petition dismissed by High Court-In Special
Leave Petition, held: Formation of the zones is valid-Factors considered for
formation of zones by Study Group are relevant for efficient administration of D
railways-Allegation of malafide not admissible as the same is vague and
since concerned alleged parties not made party to the proceedings.

Policy Decision of Government-Interference with in Judicial Review-
Scope of-Held, scope ofjudicial review in such matters is limited-Court not
to interfere with such matters unless the policy is inconsistent with the E
constitution or law or is arbitrary or is abuse of power.

Judicial Interference-In administrative decisions-Criteria for-Held:
Interference not permitted if Government taking into consideration all relevant
factors, eschew from considering irrelevant factors and acts reasonably within F
parameters of law.

Administrative Law:

Malafides-Allegation of-Held, should not be vaguely made and it
must be specific and clear.
G
Railway Reforms Committee recommended in 1984 for formation
of 3 additional Railway zones on the basis of criterion of workload, and
formation of 4 additional zones on the basis of criterion of manpower.
Thereafter a Study Group, constituted to go into the question of
reorganisation of Railway zones and divisions, recommended setting up H
1085
1086 SUPREME COURT REPORTS [2003] 2 S.C.R.

A of 4 additional Railway zones on the basis of workload and accessibility
of activity centers/remote points from its respective zonal/divisional
headquarters. Ministry of Railways accepted the recommendations.
However, Union Cabinet deferred the proposal and called for more
material from the Ministry of Railways. Thereafter Union Cabinet
B considered the proposals as to formation of six new zones taking into
account financial viability, traffic growth and the norms of carving out a
zone. Ministry of Railways announced formation of six new zones.
Thereafter, Union Cabinet headed by the Prime Minister, approved
creation of new seventh zone. It was decided to shift the Headquarters of
South Western Railway from Bangalore to Hubli. From 1999 to 2001 the
C work of zones had been progressing. During the period Railway Board
had expressed its reservations in going ahead with formation of zones
mainly due to financial crunch. In November 2001, Minister of Railways
clarified in the Parliament about the formation of new zones. He also stated
that slow progress in the work was attributable to resource crunch. A writ
petition was filed before Calcutta High Court challenging Notification of
D setting up of a new zone, wherein it was held that setting up of new zone,
being pure question of policy decision, cannot be adjudicated in a Public
Interest Litigation.

A detailed note of reorganisation of the Railways was sent to the
E Union Cabinet to keep it apprised of the current situation and the views
of the Standing Committee of Parliament on Railways (1996-97), 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 formation of additional Railway zones were also placed before the
F Cabinet, but the Cabinet did not review its previous decision.

Petitioners filed writ petition before Delhi High Court, challenging
formation of seven Railway zones as violative of Section 3 of Railways Act,
1989, on the grounds that recommendations of Railway Reforms
Committee has become outdated in view of later developments; that the
G formation of three zones namely Hazipur, Bilaspur and Bhubaneshwar
being not based on expert study was based on extraneous considerations
not germane to efficiency in Railways; and that even policy decisions of
the Government could be interfered with if it was arbitrary or malafide
and manifestly contrary to public interest. High Court dismissed the
H petition holding that jurisdiction of the Court in matter of policy decision
FEDERATION OF RAILWAY OFFICERS ASSOCIATION v. U.0.1. ] 087

is very limited; that the question whether such a decision should have been A
taken or such decision would be benr'icial to Railway Administration is
not a matter within the domain of th~ Court.

In Special Leave Petitions to this Court, petitioners contended that
Section 3 provides that formation of Railway zones can be on the basis of
administrative efficiency but in view of facts of the case formation of new B
zones would only result in d'eterioration of the efficiency of administrative
system; that new zones have been formed with the objective of developing
backward areas or to meet public demand and such a step will not be
consistent with efficiency in administration.

Dismissing the. petitions, the Court c
HELD: I. In examining a question where a policy is evolved by the
Government, judicial revieiv thereof is limited. When policy according to
which or the purpose for which discretion is to be exercised is clearly
expressed in the statute, it cannot be said to be an unrestricted discretion.
On matters affecting policy and requiring technical expertise Court would D
leave the matter for decision of those who are qualified to address the
issues. Unless the policy or action is inconsistent with the Constitution and
the laws or ·arbit_rary or irrational or abuse of the power, the Court will
not interfere with such matters. 11096-F-G I

Rustom Cavasjee Cooper v. Union of India, 11970) 3 SCR 530; BALCO E
Employees' Union (Regd) v. Union of India and Ors., 120021 3 SCC 333;
Narmada Bachao Ando/an v. Union of India and Ors., 12000110 SCC 664;
Kasturi Lal Lakshmi Reddy v, State of Jam mu and Kashmir and Anr. II 9801
3 SCR 1338; Ramana Dayaram Shelly v. International Airport Authority of
India and Ors., 119791 3 SCC 489; Ugar Sugar Works Ltd. v. Delhi p
Administration and Ors., 12001 I 3 SCC 635 and State of U.P. v. UP.
University Colleges Pensioners' Association, 11994) 2 SCC 729, referred to.

2. The various factors considered by the Study Group are relevant
for the efficient administration of the Railways. The allegation that the
objective of developing backward areas or to meet public demand new G
zones will not be consistent with efficiency in administration ignores all
the factors taken into consideration and is not tenable. Merely se(ting up
of new zone in a backward area cannot be condemned only on the basis
that it is being formed in a backward area particularly when it fulfils other
criterion. To meet the demands of backward areas cannot by itself be
inconsistent with efficiency. When Railway is a public utility service it has H
1088 SUPREME COURT REPORTS [2003] 2 S.C.R.

A to take care of all areas including backward areas. In doing so, providing
service, efficient supervision and keeping the equipment and other material
in good and workable condition are all important factors. Such services
can be appropriately extended if there is an exclusive zone to cater to such
areas. If more facilities become available in those zones naturally efficiency
B would go up. Therefore, the concept of "efficiency" should not be
approached in a doctrinaire or pedantic manner. Thus formation of zones
in backward areas for providing proper facilities and services will improve
the efficiency and not retard it. (1099-A; 1100-A, Bl

3. Even if it is assumed that there is force in the material placed by
C the petitioners that by forming new Railway zones efficiency in the railway
administration would not enhance, the reasons given by the Government
and material placed by them in support of forming new Railway zones is
no less or even more forceful. Further, when technical questions arise and
experts in the field have expressed various views and all those aspects have
been taken into consideration by the Government in deciding the matter,
D it cannot be said that this Court should re-examine to interfere with the
same. The wholesome rule in regard to judicial interference in
administrative decisions is that ifthe Government takes into consideration
all relevant factors, eschew from considering irrelevant factors and acts
reasonably within the parameters of the law, courts would keep off the
E same. (1100-D-FJ
Bangalore Medical Trust v. B.S. Muddappa, (19911 4 SCC 54,
distinguished.

4. Matter regarding establishment of Hazipur zone has been under
consideration of the Government since 1981 as to reorganization of the
F zones. Thereafter, a Study Group was formed to look into the matter to
make its recommendations. It is only in 1995 a decision was taken by the
Government for a zone at Hazipur. If formation of a zone at Hazipur as
its headquarters fulfils the norms set up by the Government and there is
enough statistical data in that regard, it becomes difficult for the Court
G to state that the same is malafide. Allegations regarding malafides cannot
be vaguely made and it must be specific and clear. In this context, the
concerned Minister who is stated to be involved iQ the formation of new
zone at Hazipur is not made a party who can meet the allegations.
11100-C, DI

H 5. It was alleged that Bilaspur zone was formed subsequent to an
FEDERATION OF RAILWAY OFFICERS ASSOCIATION v. U 0.1 [RAJENDRA BABU,J.] ] 089

announcement made by the Prime Minister in his election speech, but the A
allegation as to when he had mad" such a speech is not set out either in_
the petition filed before the High Court or in these proceedings. Unless
full details are given as to place, time or date, it would be very difficult
for any one to deny the same, more so when the Prime Minister has not
been impleaded as a party in these proceedings. (1102-H; 1103-AI
B
6. As regards the decision of the Central Government to locate the ·
headquarters of South Western Railways at Hubli instead of Bangalore,
if benefit of a zonal headquarters in a particular place is more suited than
any other place in the zone it would not affect the ultimate efficient
functioning of the Railway administration. (1103-C, DJ C
.
CIVIL APPELLATE JURISDICTION : Special Leave Petition (C) No.
1838 of 2002.

From the Judgment and Order dated 6.8.2002 of the Delhi High Court·
in C. W.P. No. 4731 of 2002.
D
WITH
SLP (C) No. 17306 of 2002.

Dr. D.P. Pal Sr. Adv., Prashant Bhushan, Vishal Gupta, A.K. Mittal,
Balajee, Aman Hingorani, Ms. Priya Higorani and Mrs. Manjula Gupta for
the Petitioners. E
Soli J. Sorabjee, Attorney General, Kailash Vasdev Sr. Adv., Kishan
.....
Venugopal, K.C. Kaushik, S. Wasim A. Qadri, Mrs. Anil Katiyar, Barun K.
Sinha, Manoj Kumar, B.K. Satija and Navin Prakash for the Respondents.

The Judgment of the Court was delivered by F
RAJENDRA BABU, J. 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 G
administration of the railways.

The petitioners relied upon a proceeding of the Railway Board and a
note prepared for the consideration of the meeting to be held on November
30, 200 I. There are several aspects considered in that note, namely, (i) that
there is unprecedented financial crunch in the railways and recommendations H
1090 SUPRFME COURT REPORTS r2003] 2 S.C.R.

A 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;
B (iii) that the Comptroller & Auditor General has recommended for
reconsideration of the decision for 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
C 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; (vi) 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
D 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
E 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
F by the Railways in principle, the entire issue was fi1rther 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 ::one of Bilaspur ims added as it had heavy
G 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
H late as on March I, 2002 it was stated that owing to resource crunch the
FEDERATION OF RAILWAY OFFiCERS ASSOCIATION v. U.0.1. [RAJENDRA BABU. J.] ] 09 J

- proposed new zones and divisions will only gradually become operational A
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 tl·eir joint letter to the Prime Minister sent on July 12, 2002 they stated B
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 C
Bhubaneswar is not based on any expert study whatsoever and is based on
extreneous 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 D
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 malafide. It was further contended E
that when the statute has provided the guidance 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 & Kashmir and Anr., [1980] 3 SCR 1338, Ramana Dayaram F
Shelly v. International Airport Authority of India and Ors., [1979] 3 SCC
489; Ugar Sugar Works ltd. v. Delhi Administration and Ors., [2001] 3 SCC
635 and State of U.P. v. U.P. University Colleges Pensioners' Association,
[1994] 2 SCC 729, it was held rhat even policy decisions of the Government
can be interfered with if it is arbitrary or ma/a fide and manifestly contrary G
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.
17306/2002 . submitted that the provision of Section 3 of the Act provides H
1092 SUPREME COURT REPORTS [2003] 2 S.C.R.

A for test as to formation of railway zones and the critical test is efficiency in
the administration which is an objective test. The criterion 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.

B The learned Attorney General referred to the constitution of the Railway
Reforms Committee on May 12, 198 l 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
C 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 I, East Central and North Western Railways; in
Phase II, North Central Railways; and in Phase III, Southern Western Railways
D 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 Chairmen
of the Railway Board, namely, Shri M.S. Gujral and Shri M.N. Bery were
associated with the Railway Reforms Commission's deliberations as Member
and Chairman of the Working Group of Structural Reorganisation. In February
E 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
F reorganisation recommended the setting up of four additional railways zones,
namely, North Western Railway with its headquarters at Jaipur, South Western
Railway with its headquarters at Bangalore, East Central Railway 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
G 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·Oeve 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
H at Jaipur, South Western Railway with its headquarters at Bangalore, West
FEDERATION OF RAILWAY OFFICERS ASSOCIATION v. U.0.1. [RAJENDRA BABU, J.] J093

Central Railway with its headquarters at Jabalpur, North Central Railway A
with its headquarters at Allahabad, East Coast Railway with its headquarters
at Bhubneswar and East Central Railway with its headquai1ers 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 B
in his Budget speech for the year 1996-97 announced new six zones.
Thereafter, on September 9, 1998 the Union Cabinet headed by Prime Minister
Shri Atal Rihari Vajpayee approved the creation of a new seventh Zone with
headquarters at Bilaspur. On February 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 C
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
November 200 I the Minister for Railways while responding to various
questions raised in Parliament clarified as followo :-
D
"In the year 1995 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 E
Bilaspur. It is not correct to allege that there had been no examination
of the proposal. As far as opinions and observations on th.e 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 F
(the United Front and the National Democratic Alliance governments)
had taken a policy decision to create the new Zones."

In December 200 I 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 G
East Central Railway with its headquarters at Hajipur by October I, 2002
after finalising their respective jurisdictions. In the meanwhile, on July 5,
2002 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 H
1094 SUPREME COURT REPORTS [2003] 2 S.C.R.

A 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 2007 held that the
jurisdiction of the court in the matter of interference with policy decision of
B 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
C 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 apprised of the current situation and the
views of the Standing Committee of Parliament on Railways (I 996-97), the
Railway Convention Committee (1996), Railway federations, the Deputy
D Comptroller and Auditor General (I 999), 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
E 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
F 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.

The learned Attorney General also placed reliance on the decision of
this Court in Rustom Cavasjee Cooper v. Union of India, [1970] 3 SCR 530,
G wherein whether a right arising under A1ticle 19( I )(g) is not protected against
operation of any law imposed in the interest of general public to be reasonable
restrictions on the exercise of the right conferred by the said sub-clause was
considered. In this context, an argument was raised that the enactment of
Bank Nationalisation was not in the larger interest of the natio1; but to subserve
H political ends, that is , not with the object to ensure better banking facilities,
FEDERATION OF RAILWAY OFFICERS ASSOCIATION v. U.0.1. [RAJENDRA BABU, J.] J095

or to make them available to a wider public, but only to take control over the A
deposits of the public with the major banks, and to use them as a political
lever against industrialists who had built up industries by decades of industrial
planning and careful management and the Court's attention was invited to a
mass of evidence from the speeches of the Deputy Prime Minister and of the
Governor and the Deputy Governor of the Reserve Bank and also extracts
from the Reserve Bank Bulletins issued from time to time and other statistical B
information collected from official sources in support of the thesis of the
petitioner that the performance of the named banks exceed the targets laid
down by the Reserve Bank in its directives; that the named banks had
effectively complied with the requirements of the law and they had served
the diverse interests including small scale sector and so on. On the other C
hand, the learned Attorney General in that case contended that the commercial
banks followed a conservative policy because they had to look primarily to
the interests of the shareholders and on that account could not adopt bold
policies or schemes for financing the needy and worthy causes and that if the
resources of the banking industry are properly utilised for the weaker sections
of the people economic regeneration of the nation may be speedily achieved; D
that 28% of the towns in India were not served by commercial banks; that
there had been unequal development of facilities in different parts of the
country and deserving sections were deprived of the benefit of an important
national resources resulting in economic disparities.

This Court held that Court is not the forum in which these conflicting
E
claims may be debated; that whether there is a genuine need for banking
facility in the rural areas, whether certain classes of the community are deprived
of the benefit of the resources of the banking industry, whether administration
by the Government of the commercial banking sector will not prove beneficial
to the community and will lead to rigidity in the administration, whether the F
Government administration will eschew the profit motive and even if it be
eschewed, there will accrue substantial benefits to the public, whether an

-- undue accent on banking as a means of social regeneration, especially in the
backward areas, is a doctrinaire approach to a rational order of priorities for
attaining the national objectives enshrined in our Constitution and whether G
the policy followed by the Government in office or the policy propounded by
its opponents may reasonably attain the national objectives are matters which
have little relevance in determining the legality of the measure and it is again
not for this Court to consider the relative merits of the different political
theories or economic policies.
H
1096 SUPREME COURT REPORTS [2003] 2 S.C.R.

A The learned Attorney General also relied upon the decision in BALCO
Employees' Union (Regd.) v. Union of India and Ors., [2002) 2 SCC 333,
case wherein it is observed that :-

"It is evident that it is neither within the domain of the courts nor
the scope of the judicial review to embark upon an enquiry as to
B whether a particular public policy is wise or whether better public
policy can be evolved. Nor are our courts inclined to strike down a
policy at the behest of a petitioner merely because it has been urged
that a different policy would have been fairer or wiser or more
scientific or more logical."
c The learned Attorney General also pointed out similar observations in
Narmada Bachao Ando/an v. Union of India and Ors., [2000) 10 SCC 664.

Dr. Pal insisted that the provisions of Section 3 of the Act provides the .
norms upon which a railway zone can be formed and that is administrative
efficiency. Shri Prashant Bhushan and Dr. Pal have, as set forth earlier,
D contended that on the basis of the material placed by them the formation of
zones now under challenge will only result in deterioration of the efficiency
of administrative system and not improve, while the stand of the learned
Attorney General is that the Government has taken note of the workload
index, geographical spread, strength of manpower, traffic streams and patterns
E for determining optimum size of a zone or a division and, in this context,
territorial, ethnic, linguistic or such other considerations are not the basis for
reorganisation of the railway zones.

Jn examining a question of this nature where a policy is evolved by the
Government judicial review thereof is limited. When policy according to
F which or tqe purpose for which discretion is to be exercised is clearly expressed
in the statute, it cannot be said to be an unrestricted discretion. On matters
affecting policy and requiring technical expertise Court would leave the matt~r
for decision of those who are qualified to address the issues. Unless the --.
policy or action is inconsistent with the Constitution and the laws or arbitrary
G or irrational or abuse of the power, the Court will not interfere with such
matters.

Tested in this background set forth above, what we have to see is
whether Government has acted within the parameters of Section 3 of the Act
or not. Section 3 of the Act mentions constitution of the railway zones for the
H purpose of efficient administration. Therefore, to find out what would constitute
FEDERATION OF RAILWAY OFFICERS ASSOCIATION v. Uo.I. [RAJENDRA BABU, J.] J097

efficient administration we have to look to various matters on the basis of A
which the railway zones have been constituted and have been working. In
this context, a Committee had been constituted by the Government known as
Railway Reforms Committee which submitted its report in July 1984 after
exhaustive consideration ofvario!-1s aspects. The Committee, after taking into
consideration the workload and manpower along with the concepts of
modernisation, computerisation and updating of technology, traffic pattern, B
evolved certain formula for the formation of zones. And the Committee further
stated that "as for the criterion of geographical spread and the time taken to
reach the remotest point of a Zone or Division from its headquarters, each
case would have to be examined individually. This is so because the
headquarters of the various Zones and Divisions are not always centrally C
located. "Ultimately, the Committee concluded that the immediate requirement
of additional zones is three if one goes by the criterion of workload and four
if one goes by the criterion of manpower and as :Var as divisions were
concerned, immediate requirement for additional Divisions would appear to
be 15 by the criterion of workload and six by the criterion of manpower. The
requirement of Zones and Divisions on the basis of the workload by the year D
2000 would be even higher. But they did not finally suggest that the Zones
and Divisions should be formed at that rate but indicated their interest for
examining all those aspects of the matter.

Thereafter a Study Group was constituted consisting of several officers E
to critically analyse the impact of major developmental projects, to review or
define criteria to be adopted while considering issues/demands relating to
creation or reorganisation of Zones and Divisions amongst other aspects.
They suggested that for addressing the issues relating to rationalisation of
geographical distribution and reorganisation of Zones and Divisions, it was
essential that there should be broad quantitative norms in consonance with F
the Railway Reforms Committee's recommendations made earlier. The
workload index is now redefined as total transportation effort of a Zone/
Division which is also adequately weighted for the financial performance of
these units and should therefore be the over-riding criterion. It was also taken
note of that the norm of 200 units by 2000 AD is the optimum value of the G
workload index both in the case of zones as well as divisions and this
interpolated to 1992-93, that is, the last year for which estimated workload
indices are presently available. Besides workload, major decision variable is
accessibility. They suggested that zones/Divisions which have workload indices
in excess of criticality norm and also poor accessibility deserve immediate
relief. Heavily worked zones/divisions which are compact, that is, where H
1098 SUPREME COURT REPORTS [2003] 2 S.C.R.

A accessibility of the remote pointsh1ctivity centres is good and, therefore, does
not pose any administrative problem on this account, need not necessarily be
truncated for providing relief. Further, in the case of lightly worked zones/
divisions, accessibility alone will not be considered as a necessary and
sufficient criterion for providing relief through reorganisation. They are also
B of the view that the average travelling time between Zonal and Divisional
Headquarters and its remote activity centres by a representative Mail/Express
train should be about 6 hours in either case. High workload with poor
accessibility is the only necessary as well as sufficient condition for providing
relief to such zones/divisions through the setting up of new zones and divisions
which would arise only after full scope of territorial readjustments between
C 'existing, adjoining zones/divisions are fully explored or exhausted. They
recommended formation of zones North-Western, South-Western, East-Central
and North-Central. Adopting the same criteria as was done by the R.R.C, to
which we have adverted already, this study group summed up in its report as
follows :-

D "The identification of zones/ divisions which deserve attention/relief
has been done on the basis of their workload. For computing a zonal
/divisional workload index both physical as well as financ.ial output
indicators are taken into account. The norm of 200 workload units in
2000 AD (as had also been suggested by the RRC) is defined as the
optimum value of the workload index.
E
Besides workload the accessibility of activity centres/remote points
from its respective zonal/divisional headquarters is the other important
criterion. The norm in this case is defined as an average travelling
time (between the zonal and the divisional headquarters and, also,
between the divisional headquarters and its remote activity centres)
F
of about six (6) hours.

Based on the workload and accessibility norms defined above,
zones/divisions which have workload indices in excess of the criticality
norm and also poor accessibility have been identified for the purposes
of providing relief through reorganisation/creation of new zones and
G
di visions. Ethnic, linguistic and/or territorial (i.e. State Boundaries,
etc.) considerations do not form the basis for evaluating issues
pertaining to railway reorganisation.

The highlights of the Study Group are given in Annexure-1. M.R.
H in his Budget (1995-96) Speech on 14.3.95 had, inter alia conveyed
FEDERATION OF RAILWAY OFFICERS ASSOCIATION 1·. UQ.I. [RAJENDRA BABU,J.] J099

that the Committee's recommendations had been accepted by this A
Ministry and we being processed further."

The credibility of the said report is questioned and its bonafides are
doubted on behalf of the petitioners. The various factors considered by them
are also certainly relevant for the efficient administration of the Railways.
None of these factors taken note of by the study group can be stated to be B
irrelevant in this context. But what is to be seen is whether the report made
by them would, in essence, be not worthy of credit and not merely on
imaginary basis such as they are officers of the Government and they would
have worked under pressure of the Minister concerned to draw up a report
to suit his whims. Therefore, we do not think, we can accept the attack made C
by the petitioners on the report of the study group.

Cabinet notes were prepared, inter alia, after referring to RRC report,
report of the study group extracts of previous cabinet proceedings on the
subject, views of the Parliamentary Standing Committee on RCC, views of
Railway Federations, reports of Comptroller and Auditor General of India, D
comments of Rakesh Mohan Committee and proposal was made to set up six
..... new zones - (!) North-Western Railway, headquarters Jliipur; (2) South-
western Railway, Headquarters Bangalore; (3) West-Central Railway,
Headquarters Jabalpur; (4) North-Central Railway, Headquarters Allahabad;
(5) East-Central Railway, Headquarters Hajipur and (6) East Coast Railway,
Headquarters Bhubaneswar and various details regarding the workload, route E
kilometers and information regarding the accessibility and other criteria were
fully furnished to the Cabinet. It is indicated that with the criterion of six new
zones the accessibility of the Divisional Headquarters with Railway
Headquarter will increase and the Indian Railway average will improve to 6.2
hours from the ex'.sting 8.9 hours. As regards the cost implication and strategy F
adopted detailed consideration was made. The impact of the Information
Technology was also taken into account. Various views that had been expressed
at different levels and in public both opposing and supporting the formation
of new zones were also set forth. On July I 2, I 996 the Cabinet authorised
the Ministry of Railways to make suitable readjustments in the territorial
jurisdiction of the zones. G
It has been contended that the objective of developing backward areas
or to meet public demand new zones have been formed and such a step will
not be consistent with efficiency in administration. These two factors are
noticed not in isolation but along with other criteria as to increase in traffic H
1100 SUPREME COURT REPORTS [2003) 2 S.C.R.

A load and accessibility. Therefore, the contention ignores all the factors taken
into consideration and is not tenable. Even otherwise, to meet the demands
of backward areas cannot by itself be inconsistent with efficiency. When
Railway is a public utility service it has to take care of all areas including
backward areas. In doing so, providing service, efficient supervision and
B keeping the equipment and other nrnterial in good and workable condition
are all important factors. Such services can be appropriately extended if there
is an exclusive zone to cater to such areas. If more facilities become available
in those zones naturally efficiency would go up. Therefore, the concept of
"efficiency" should not be approached in a doctrinaire or pedantic manner.
Thus formation of zones in backward areas for providing proper facilities and
C services will improve the efficiency and not retard it. Merely setting up of
new zone in a bac,kward area cannot be condemned only on the basis that it ·
is being formed in a backward area, particularly when it fulfils other criterion
to which we have already adverted.

Even if we assume that there is force in the material placed by the
D petitioners that by forming new railway zones efficiency in the railway
administration would not enhance, the reasons given by the Government and
material placed by them in support of forming new railway zones is no less
or even more forceful. Further, when technical questions arise and experts in
the field have expressed various views and all those aspects have been taken
E into consideration by the Government in deciding the matter, could it still be
said that this Court should reexamine to interfere with the same. The
wholesome rule in regard to judicial interference in administrative decisions
is that if the Government takes into consideration all relevant factors, eschew
from considering irrelevant factors and act reasonably within the parameters
of the law, courts would keep off the· same. Even on the test suggested by
F Dr. Pal we cannot travel outside this principle to sit in appeal on the decision
of the Government.

The decision in B.S.Muddappa's case is distinguishable both on principle
and on facts from the present case. The question in that case is whether
'park' can be alloted to a trust for setting up of a private nursing home. There
G is no application of mind by any of the authorities as to whether setting up
a nursing home in place of a 'park' would amount to an improvement as
contemplated under the statute with which this court was concerned in that
case. In the present case, the problem is entirely different. The question
before the Court is whether formation of zones is for efficient administration
H of Railways. On this aspect we have considered the rival contentions including
FEDERATION OF RAILWAY OFFICERS ASSOCIATION ''· U.0.1. [RAJENDRA BABU, J.] j \Qj

the materia! placed before the Government of India and the criteria evolved A
for formation of the zones. The test whether such fonnation of zones is for
the purpose of efficient administration of Railways have been duly considered
by the Government before taking decision while such consideration was lacking
in Muddappa 's case. Hence, that decision cannot be of any assistance to
appellant. We have applied the principles set out in other decisions relied B
upon by the appellant to the facts of the case in reaching our conclusion in
this matter.

However, Shri Prashant Bhushan sought to impress upon us that within
three weeks of a new Railway Minister assuming office without any study or
report or any expert body a new railway Zone Hazipur was announced and C
steps were taken to constitute such zone. But the material on record would
indicate otherwise. Matter has been under consideration of the Government
since 1981 as to reorganisation of the zones. Thereafter, a Study Group was
formed to look into the matter to make its recommendations. It is only in
1996 a decision was taken by the G9vernment for a zone at Hazipur. If
formation of a zone at Hazipur as its headquarters fulfils the norms set up by D
the Government and there is enough statistical data in that regard, it becomes
difficult for us to state that the same is mala fide. Allegations regarding
malafides cannot be vaguely made and it must be specific and clear. In this
context, the concerned Minister who is stated to be involved in the formation
of new Zone at Hazipur is not made a party who can meet the allegations. E

The stand of the respondents is that in regard to East Central Zonal
Railway and the North Western Zonal Railways efficiency has shown
improvement for the months of October-November 2002 as compared to
October-November 200 I which is as under :-

Railway Revenue Tonnes Originating Earnings in F
In million Tonnes In crores

2002 2001 %age 2002 2001 %age
variation variation
G
East Central

October 4.32 4.19 3.1 270.82 250.81 7.98

November 4.43 4.31 2.78 264.42 261.4 1.16
H
1102 SUPREME COURT REPORTS [2003) 2 S.C.R.

A Oct+ Nov 8.75 8.5 2.94 535.24 512.21 4.50

North Western
B
October 1.34 U2 19.64 97.65 74.74 3065

November 1.23 1.23 0 89.25 73.91 20.75

Oct+ Nov 2.57 2.35 9.36 186.9 148.65 25.73
c
Revenue Tonnes Originating

Railway Month 2002 2001 Variation

October 1.34 1.12 0.22
D
North-Western November 1.23 1.23 0

Oct+ Nov 2.57 2.35 0.22

E October 2.24 2.47 -0.23

Western November 2.25 2.43 -0.18

Oct+ Nov 4.49 4.9 -0.41

F October 3.58 3.59 -0.01

Total November 3.48 3.66 -0.18

Oct+ Nov 7.06 7.25 -0.19 ----
G
If these figures furnished by respondents are correct then efficiency on
formation of the zones has certainly not deteriorated.

Shri Prashant Bhushan contended that Bilaspur zone was formed
subsequent to an announcement made by Shri Atal Bihari Vajpayee in his
H election speech, but the allegation as to when he had made such a speech is
FEDERATION OF RAILWAY OFFICERS ASSOCIATION v. U.0.1. [RAJENDRA BABU,J.J l 1QJ

not set out either in the petition filed before the High Court or in these A
proceedings. Unless full details are give1 .s to place, time or date, it would
be very difficult for any one to deny the same, more so when Shri Atal Bihari
Vajpayee has not been impleaded as a party in these proceedings.

It is next contended by Shri Prashant Bhushan that though there may
have been justification for forming compact zones and they may be B
economically viable whether Hazipur or Bilaspur or Bhubaneswar should be
made zonal Headquarters has not been adequately considered. The decision
of the Central Government to locate the headquarters of South Western
Railways at Hubli instead of Bangalore was the subject matter of challenge
in Union of India and Ors. v. Kannadapara Sanghatanega/a Okkuta & C
Kannadigara and Ors. Though the High Court had quashed shifting of
Headquarters from Bangalore to Hubli, this Court stated as follows :-

"it is not the function of the court to decide the location or the site
of the Headquarters, it is the function of the Government."

If benefit of a zonal headquarters in a particular place is more suited D
•· than any other place in zone it would not affect the ultimate efficient
functioning of the railway administration. Thus all contentions of the petitioners
stand rejected.

These petitions stand dismissed.
E
K.K.T. Petitions dismissed.

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