Statute Law Repeals - Law Commission - Ministry of Justice

PART 3
INDIAN RAILWAYS
INTRODUCTION
3.1 The repeal proposals in this part of the report (and draft Bill) all relate to Indian
railways and, more particularly, the legislation which facilitated the construction of
various railway lines across the Indian subcontinent, and the subsequent
maintenance of those railway undertakings and their gradual absorption into state
control. 1 The individuals and organisations consulted about these proposals are
set out in Appendix 3.
3.2 The benefits of harnessing travel by rail as a means of connecting the major
population bases of a vast subcontinent - which then embraced the whole of
British India and the independent princely states - were recognised by the East
India Company in 1843. But that organisation, even with all the influence it still
wielded, was unable (and unwilling) to finance the construction and running costs
on its own. From 1786 onwards the company’s fortunes had waned and, by 1813,
it had lost much of its trading monopoly in the region. 2 By the same token, British
capitalist venturers were less than enamoured with the notion of investing in
railways unaided. The East India Company’s solution was a quasi-public/private
partnership arrangement whereby ownership, control and risk would be shared,
underpinned and secured by a system of public guarantees.
3.3 English companies were invited to bear the construction costs of the new rail
network in India, and to own the relevant operational undertakings. In return, the
East India Company (the quasi-public partner in the enterprise) would guarantee
the railway shareholders a 5% return on their capital investment, make available
land without cost and offer 99 year operating contracts. The Company would,
however, reserve options to purchase each undertaking (for proper
consideration) at specified break points.
3.4 The first passenger train ran (under the auspices of the Great Indian Peninsula
Railway Company) 3 from Mumbai (Bombay) to Thane in April 1853, 4 followed in
August 1854 by the inaugural run of the East Indian Railway Company between
Howrah and Hooghly. These early successes encouraged British private
investment, which then continued apace until 1868 (reaching a total of some £70
million), albeit with some disruption at the time of the Sepoy Rebellion of 1857.
1 We have included within this Part of the report two Acts relating to the former Ceylon
Railway Company. Ceylon was a British crown colony from 1796 to 1948, when it assumed
Dominion status. From 1796 to 1798 the colony was governed from Madras in India.
2 The East India Company had ruled in India on behalf of the British Crown since 1786 but,
by 1813, the British government had withdrawn (by legislation) its trading monopoly and, in
1858, the British Crown assumed direct governance of British India. The Crown acted
through its Secretary of State in Council of India. The East India Company was eventually
dissolved in 1874 (bringing to an end its 274 years of activity).
3 Incorporated in Britain in August 1849.
4 nd
See M A Rao, Indian Railways, (2 ed 1988), chap 2 at p16 (copy held by Cambridge
University Library).
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