Statute Law Repeals - Law Commission - Ministry of Justice

3.85 In September 1858 the railway company contracted with the government of India
to construct the first phase of the railway line from Negapatam (today
Nagapattinam) to Trinchinopoly and to pay a capital sum to the government
(which it could draw upon as works proceeded), in return for which the
government would guarantee interest on the sum for 99 years and would have an
option to purchase the undertaking. 94
3.86 By 1860 the cost of completing the first phase of the work (which was nearing
completion) exceeded the capital raised by share issue. In order to make up the
shortfall the railway company needed power to borrow beyond the original limit,
secured on the existing and future guarantees. The Great Southern of India
Railway Amendment Act 1860 95 repealed the earlier borrowing powers 96 and
substituted alternative borrowing arrangements (enabling borrowing by tranches
and by debenture issue, albeit with the same overall ceiling) which were to be
activated only with the Secretary of State’s sanction.
3.87 In December 1873 the Great Southern of India Railway Company agreed an
amalgamation with the Carnatic Railway Company (endorsed by the Secretary of
State), to form the new South Indian Railway Company, and the winding-up of
the two existing entities. 97 By this date lines had been constructed from
Negapatam to Trichinopoly and on to Errode, and from Arconum (today
Arakkonam) Junction to Conjeveram (now Kanchipuram). The merged company
was to construct two further lines: from Trinchinopoly to Tuticorin, and from
Madras (now Chennai) to Tanjore. The tripartite agreement provided that the
government could (during the next 999 years, commencing March 1870) accept a
surrender of the railway undertaking, or exercise an option to purchase.
94 For further information on the history of the Great Southern of India Railway Company and
its successor company see the various published works listed in our Consultation Paper
Statute Law Revision: Indian Railway Repeal Proposals (2007) Law Commission
Consultation Paper at page 103 n343 (published on the Law Commission’s website).
95 23 & 24 Vict. c.xlix (1860) (“The 1860 Act”).
96 Section 6 of the 1860 Act repealed the borrowing provisions set out in section 28 of the
1858 Act (a convoluted provision which authorised borrowing on mortgage or bond up to a
fixed ceiling), and section 7 substituted the new mechanism. The two Acts were to be
construed together.
97 The Board of Trade archives (now held at the National Archives) show that the Great
Southern of India Railway Company was dissolved in July 1874: see record reference no.
BT31/246/808 and linked records nos. BT41/272/1564 and BT285/332.
136