Gujarat Mail - as good as Undhiyu

I booked ticket Chandigarh to Borivali (Mumbai) by Train No. 22926/Paschim Express Coach No. S-9 / PNR No. 2602959060 for 11/02/2013 with 4 family members. Later got the boarding changed from New Delhi. But due to programme change, on 11/02/2013, I boarded train as per original booking i.e. Chandigarh to Borivali(Mumbai).
On seeing the chart, I found these berths are allotted to other passengers and my name also apeared. When TT came, I shown him my 4 tickets and told him I changed boarding to New Delhi. He told me that you will be treated as without ticket. Then I approached Train Suprintendent some Mr. S VARMA, he also told that I will be treated with out ticket and you have to...
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pay penalty.
Then TT asked me to pay penalty+fare for each passenger @450. I told him that why should I pay again, when I have already paid and Railways did not refund fare for this sector.
Railway has already sold the berth to other passenger, I am not claiming for the seat. TT of S-9 Coach threatened me that he will issue a Memo, RPF will come at Next station to evict all we 4 passengers and next day they will take us to the Railway Megistrate who will decide the penalty to be paid.
So at next station at Ambala Cantt, we got down and purchased general class tickets for Ambala to New Delhi and shifted to General Coach upto New Delhi.
So the moot point here is that being a Government Deptt. for Railways whether is it ethical:
1. To charge fare for the seat thrice (one originally I paid while booking + second passengers whom seats allotted to other passengers + third penalty plus fare charged again if I had paid which I avoided by shifting to general coach but purchased general class tickets for Ambala to New Delhi.
2. If it was not as per Rule, I told that I am not claiming for the seats.
3. Whether Railways is correct in its Rules, if not then to raise this issue with the Railways, please suggest the contacts and how to proceed?