Jarvis has since pulled out of rail maintenance work

Three judges in London said on Thursday the penalty was too high and set a new fine of �275,000.

Jarvis Facilities had pleaded guilty to breaching health and safety laws before the incident at Aldwarke Junction near Rotherham on 10 November 2002.

But the original judge "overestimated the risks", the court said.

Public safety

Mr Justice Hedley, giving the ruling of the court, said although the work by Jarvis had fallen far below expected standards, the fine should not have exceeded �275,000.

He said the court recognised that "this case was not a disaster case nor, on its facts, was there any real risk that it could have been one".

The judge said the court was still entitled to take a more severe view of breaches of health and safety at work where there was a significant public element.

"This is so particularly in cases, like the railway, where public safety is entrusted to companies in the work that they do and where the general public simply has to trust in the competence and efficiency of such companies," he added.

The court heard that a locomotive and two wagons of an empty coal train were derailed at the junction. There were no injuries.

Lawyers for the company told Sheffield Crown Court last year that Jarvis had abandoned its rail maintenance contract following the incident at Aldwarke junction.