Section 91: Price to be paid to person entitled after deducting dues

(1) Out of the proceeds of any sale of goods under sub-section (1) of section 90 or the price payable therefor under sub-section (4) of that section, the railway administration may retain a sum equal to the freight and other charges due in respect of such goods and the expenses incurred in respect of the goods and the auction thereof and render the surplus, if any, to the person entitled thereto.

(2) Notwithstanding anything contained in sub-section (1), the railway administration may recover by suit any such freight or charge or expenses referred to therein or balance thereof.

(3) Any goods sold under sub-section (1) of section 90 or transferred in compliance with the directions issued under sub-section (2) of that section shall vest in the buyer or the transferee free from all encumbrances but subject to a priority being given for the sum which may be retained by a railway administration under sub-section (1), the person in whose favour such encumbrance subsits may have a claim in respect of such encumbrance against the surplus, if any, referred to in that sub-section.

Simplified Explanation

Section 91 of The Railways Act, 1989 deals with the distribution of proceeds from the sale of unclaimed goods or those requisitioned as essential commodities. It outlines the railway administration’s authority to deduct dues and settle claims, and it also addresses the transfer of ownership rights. Here’s a detailed breakdown:

1. Distribution of Sale Proceeds

(1) Deductions by Railway Administration

• From the proceeds of the sale (under Section 90) or the price received for essential commodities requisitioned under government directives:
  • The railway administration is entitled to retain sums for:
    1. Freight charges due for transportation.
    2. Other charges incurred in handling or managing the goods.
    3. Auction expenses related to the sale process.
• The remaining surplus, if any, must be handed over to the person entitled to it, such as the owner or consignee.

2. Recovery of Outstanding Dues

(2) Legal Recourse

• If the proceeds from the sale or requisitioned goods are insufficient to cover:
  • Freight charges.
  • Additional handling or auction costs.
• The railway administration has the right to file a suit to recover the balance from the person responsible.

3. Transfer of Ownership

(3) Encumbrance-Free Transfer

• Goods sold at auction or transferred under government directions are passed to the buyer or transferee:
  • Free from all encumbrances (e.g., claims, liens, or charges on the goods).
  • However, priority is given to the railway administration to recover its dues from the sale proceeds.

Claims Against Surplus

• If there are surplus proceeds after deducting railway dues:
  • A person with a valid encumbrance claim (e.g., a lienholder) may file a claim against the surplus.
  • Such claims do not impact the buyer’s or transferee’s ownership of the goods.

4. Key Implications

1. Transparency in Settlement:
   • Ensures that legitimate owners or lienholders receive any surplus proceeds from the sale of goods.
2. Protection for Railway Administration:
   • Allows deduction of dues and expenses, ensuring the railway’s financial interests are safeguarded.
3. Encumbrance-Free Sale:
   • Buyers at auctions or government transferees receive goods without disputes over prior claims, ensuring smooth transactions.
4. Legal Safeguard for Claimants:
   • Lienholders or other claimants have the right to claim surplus proceeds after railway dues are settled.
5. Clear Recovery Mechanism:
   • Empowers the railway administration to recover outstanding amounts through legal action if the sale proceeds fall short.

5. Conclusion

Section 91 establishes a balanced mechanism for managing the financial proceeds from the sale or transfer of unclaimed or requisitioned goods. It ensures that the railway administration is compensated for its costs while protecting the rights of legitimate owners and claimants. This provision streamlines the disposal process and provides clarity in ownership transfer, benefiting all stakeholders involved.