Full Text
HIGH COURT OF DELHI
Date of Decision: 18.05.2026
INDIAN RAILWAY CATERING AND TOURISM CORPORATION LIMITED .....Petitioner
Through: Mr. Harshit Agarwal, Mr. Aasheesh Gupta, Mr. Kamal Kumar and Mr. Deepesh Parashar, Advocates.
Through: Mr. Naresh Kumar Thanai, Advocate through video- conferencing.
JUDGMENT
1. The present Petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996[1], seeking the setting aside of the Arbitral Award dated 28.08.2023[2], passed by the learned Sole Arbitrator.
2. By way of the Impugned Award, the learned Arbitrator has held the Respondent entitled to a sum of Rs. 2,30,40,995/-, along with interest at the rate of 12% per annum and cost of litigation, payable within one month from the date of delivery of the Award. The said amount has been awarded primarily on account of the alleged A&C Act Impugned Award difference in the price of combo meals and regular meals, as well as reimbursement towards welcome drinks.
3. The case of the Petitioner is that the Respondent had expressly agreed not to raise any claims in relation to the subject matter in dispute and that various circulars issued by the Petitioner had already been duly taken into consideration while determining and fixing the amounts payable to the Respondent under the terms of the contract itself; and therefore, since the said components already formed an integral part of the contractual arrangement, no separate or independent reimbursement in respect thereof could have been awarded by the learned Arbitrator.
4. This Court notes that, at the outset, only a narrow issue arises for consideration in the present proceedings, inasmuch as the controversy involved herein stands substantially covered by the judgment of the Hon‟ble Supreme Court in Indian Railways Catering and Tourism Corp. Ltd. v. Brandavan Food Products[3] [hereinafter referred to as “Brandavan case”].
5. In view of the aforesaid position, this Court does not deem it necessary to traverse the entire factual matrix underlying the disputes between the parties in exhaustive detail. Suffice it to observe that, in the event the issue arising for consideration in the present Petition stands covered by the decision in the Brandavan case and is answered in favour of the Petitioner, the present Petition would not warrant any further elaborate adjudication.
SUBMISSIONS ON BEHALF OF THE PARTIES:
6. Learned counsel appearing on behalf of the Petitioner had, on 2025 SCC OnLine SC 2369 the previous date of hearing, drawn the attention of this Court to the Judgment passed by the Hon‟ble Supreme Court in the Brandavan case.
7. Learned counsel appearing on behalf of the Petitioner submits that the factual matrix underlying the disputes between the parties, the nature and scope of the contractual controversy, as well as the grounds and issues forming the subject matter of challenge in the Brandavan case, are substantially similar and materially akin to those arising in the present proceedings, and therefore, the principles and findings laid down therein would squarely govern the adjudication of the present Petition.
8. It is further submitted that in the Brandavan case, the Arbitral Award impugned therein was initially subjected to challenge under Section 34 of the A&C Act, whereupon the learned Single Judge had partially set aside the said Award, vide Judgement dated 27.04.2022[4]. The Section 34 Judgement was challenged in Appeals under Section 37 of the A&C Act, whereby, vide Judgement dated 10.02.2025[5], the Division Bench set aside the Section 34 Judgement and restored the Arbitral Award in its entirety.
9. Learned counsel further submits that the aforesaid Section 37 Judgement came to be challenged before the Hon‟ble Supreme Court in the Brandavan case, whereby the Apex Court, vide the Judgement dated 07.11.2025, ultimately set aside the Arbitral Award impugned therein.
10. In the aforesaid backdrop, learned counsel for the Petitioner contends that the controversy involved in the present Petition would Section 34 Judgement Section 37 Judgement also require examination in the light of the principles laid down by the Hon‟ble Supreme Court in the Brandavan case.
11. Per contra, learned counsel appearing on behalf of the Respondent submits that the present proceedings stand on a materially different factual footing and, therefore, the Judgement rendered in the Brandavan case would have no decisive application to the facts of the present Petition.
12. In elaboration of the aforesaid submission, learned counsel for the Respondent seeks to distinguish the present proceedings primarily on two grounds. First, that the Commercial Circular dated 27.05.1999[6], which formed part of the factual and contractual framework in the Brandavan case, does not form part of the pleadings or contractual matrix in the present proceedings, and second, that Clause 3.5.[4] of the Tender document, which, according to the Respondent, materially alters the contractual position, was not under consideration in the Brandavan case. ANALYSIS:
13. This Court has heard the learned counsel for the parties and, with their able assistance, perused the material available on record as well as the Judgement rendered by the Hon‟ble Supreme Court in the Brandavan case.
14. At the outset, this Court deems it apposite to observe that the scope of interference under Section 34 of the A&C Act is both limited and circumscribed. This Court, while exercising jurisdiction under the aforesaid provision, does not sit in appeal over the findings rendered by an Arbitral Tribunal and ordinarily would refrain from re- 1999 Circular appreciating evidence or substituting its own interpretation merely because another view may also be possible. Interference would therefore arise only where the Award is shown to suffer from patent illegality appearing on the face of the Award, perversity, or where the findings returned are contrary to the fundamental policy of Indian law or the governing contractual framework between the parties.
15. At the same time, it is equally well-settled that the limited scope of jurisdiction under Section 34 of the A&C Act does not preclude the Court from exercising its duty to interfere where the Award proceeds upon a view which is no longer sustainable in law at all. Where the interpretation adopted by the Arbitral Tribunal stands contrary either to the express terms of the contract or to the binding legal position declared by the Hon‟ble Supreme Court, such a view would cease to remain a “possible view” in the eyes of law and would consequently render the Award vulnerable to interference within the limited contours of Section 34 of the A&C Act, particularly on the grounds of patent illegality and contravention of the fundamental policy of Indian law.
16. In this regard, a three-Judge Bench of the Hon‟ble Supreme Court, after an exhaustive consideration of a catena of earlier decisions, in OPG Power Generation (P) Ltd. v. Enexio Power Cooling Solutions (India) (P) Ltd.7, has reiterated that though the scope of interference under Section 34 of the A&C Act is limited, an arbitral award would nevertheless be amenable to interference where it disregards the binding effect of a judgment of a superior Court or adopts a view contrary to the settled legal position. The Hon‟ble
Supreme Court observed as under: “41. In Associate Builders v. DDA, (2015) 3 SCC 49, a two-Judge Bench of this Court, held that audi alteram partem principle is undoubtedly a fundamental juristic principle in Indian law and is enshrined in Sections 18 and 34(2)(a)(iii) of the 1996 Act. In addition to the earlier recognised principles forming fundamental policy of Indian law, it was held that disregarding: (a) orders of superior courts in India; and (b) the binding effect of the judgment of a superior court would also be regarded as being contrary to the fundamental policy of Indian law. Further, elaborating upon the third juristic principle (i.e. qua perversity), as laid down in ONGC Ltd. v. Western Geco International Ltd., (2014) 9 SCC 263, it was observed that where:
(i) a finding is based on no evidence; or
(ii) an Arbitral Tribunal takes into account something irrelevant to the decision which it arrives at; or
(iii) ignores vital evidence in arriving at its decision, such decision would necessarily be perverse [Associate Builders case, (2015) 3 SCC 49, para 31]. To this a caveat was added by observing that when a court applies the “public policy test” to an arbitration award, it does not act as a court of appeal and, consequently, errors of fact cannot be corrected; and a possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. It was also observed that an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on that score. Thus, once it is found that the arbitrator's approach is not arbitrary or capricious, it is to be taken as the last word on facts. ***** In contravention with the fundamental policy of Indian law
51. As discussed above, till the 2015 Amendment the expression “in contravention with the fundamental policy of Indian law” was not found in the 1996 Act. Yet, in Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644, in the context of enforcement of a foreign award, while construing the phrase “contrary to the public policy”, this Court held that for a foreign award to be contrary to public policy mere contravention of law would not be enough rather it should be contrary to: (a) the fundamental policy of Indian law; and/or (b) the interest of India; and/or
(c) justice or morality. *****
55. The legal position which emerges from the aforesaid discussion is that after “the 2015 Amendments” in Section 34(2)(b)(ii) and Section 48(2)(b) of the 1996 Act, the phrase “in conflict with the public policy of India” must be accorded a restricted meaning in terms of Explanation 1. The expression “in contravention with the fundamental policy of Indian law” by use of the word “fundamental” before the phrase “policy of Indian law” makes the expression narrower in its application than the phrase “in contravention with the policy of Indian law”, which means mere contravention of law is not enough to make an award vulnerable. To bring the contravention within the fold of fundamental policy of Indian law, the award must contravene all or any of such fundamental principles that provide a basis for administration of justice and enforcement of law in this country.
56. Without intending to exhaustively enumerate instances of such contravention, by way of illustration, it could be said that: (a) violation of the principles of natural justice; (b) disregarding orders of superior courts in India or the binding effect of the judgment of a superior court; and
(c) violating law of India linked to public good or public interest, are considered contravention of the fundamental policy of Indian law. However, while assessing whether there has been a contravention of the fundamental policy of Indian law, the extent of judicial scrutiny must not exceed the limit as set out in Explanation 2 to Section 34(2)(b)(ii). *****
67. In Associate Builders v. DDA, (2015) 3 SCC 49, this Court held that an award would be patently illegal, if it is contrary to: (a) substantive provisions of law of India; (b) provisions of the 1996 Act; and
(c) terms of the contract [See also three-Judge Bench decision of this Court in State of Chhattisgarh v. SAL Udyog (P) Ltd., (2022) 2 SCC 275]. The Court clarified that if an award is contrary to the substantive provisions of law of India, in effect, it is in contravention of Section 28(1)(a) of the 1996 Act. Similarly, violating terms of the contract, in effect, is in contravention of Section 28(3) of the 1996 Act.
68. In SsangyongEngg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 this Court specifically dealt with the 2015 Amendment which inserted sub-section (2-A) in Section 34 of the 1996 Act. It was held that “patent illegality appearing on the face of the award” refers to such illegality as goes to the root of matter, but which does not amount to mere erroneous application of law. It was also clarified that what is not subsumed within “the fundamental policy of Indian law”, namely, the contravention of a statute not linked to “public policy” or “public interest”, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality [See SsangyongEngg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131]. Further, it was observed, reappreciation of evidence is not permissible under this category of challenge to an arbitral award [See SsangyongEngg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131]. ***
73. In a recent three-Judge Bench decision of this Court in DMRC Ltd. v. Delhi Airport Metro Express (P) Ltd., (2024) 6 SCC 357, the ground of patent illegality/perversity was delineated in the following terms: (SCC p. 376, para 39) “39. In essence, the ground of patent illegality is available for setting aside a domestic award, if the decision of the arbitrator is found to be perverse, or so irrational that no reasonable person would have arrived at it; or the construction of the contract is such that no fair or reasonable person would take; or, that the view of the arbitrator is not even a possible view. A finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside under the head of “patent illegality”. An award without reasons would suffer from patent illegality. The arbitrator commits a patent illegality by deciding a matter not within its jurisdiction or violating a fundamental principle of natural justice.”. ***** Scope of interference with the interpretation/construction of a contract accorded in an arbitral award
84. An Arbitral Tribunal must decide in accordance with the terms of the contract. In a case where an Arbitral Tribunal passes an award against the terms of the contract, the award would be patently illegal. However, an Arbitral Tribunal has jurisdiction to interpret a contract having regard to terms and conditions of the contract, conduct of the parties including correspondences exchanged, circumstances of the case and pleadings of the parties. If the conclusion of the arbitrator is based on a possible view of the matter, the Court should not interfere [See: SAIL v. Gupta Brother Steel Tubes Ltd., (2009) 10 SCC 63; Pure Helium India (P) Ltd. v. ONGC, (2003) 8 SCC 593; McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181; MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163]. But where, on a full reading of the contract, the view of the Arbitral Tribunal on the terms of a contract is not a possible view, the award would be considered perverse and as such amenable to interference [South East Asia Marine Engg. & Constructions Ltd. v. Oil India Ltd.,
17. Keeping these principles in mind, we proceed to consider the impact of the Brandavan case on the present matter. In the Brandavan case, the Hon‟ble Supreme Court was considering disputes arising out of catering contracts awarded by Indian Railway Catering and Tourism Corporation and the effect of the Commercial Circulars governing reimbursement for meals supplied by the caterers. The Hon‟ble Supreme Court examined, inter alia, the interplay between the Circular dated 09.10.2013, introducing combo meals and the subsequent Circular dated 23.10.2013, substituting the same with regular meals, albeit at revised rates.
18. The relevant paragraphs of the Judgment in the Brandavan case, insofar as they concern the factual backdrop and the nature of the disputes, read as under:
129.50 (with and without service tax) and for 2AC/3AC/CC, it was enhanced to Rs. 125/Rs. 112.50 (with and without service tax). The newly introduced combo meal for all AC classes was priced at Rs. 75/Rs.
66.50 (with and without service tax).
12. However, on 23.10.2013, the Railway Board issued Commercial Circular No. 67 of 2013, again revising the menu and tariffs of catering services on the three trains. It was stated therein that a review of the decision on revision of the menu/tariffs of catering services in Rajdhani/Shatabdi/Duronto Express Trains had been undertaken based on the feedback received from the Zonal Railways and instructions were issued to be complied with immediate effect. These instructions are of relevance and read as under: “Accordingly, the following instructions may be complied with immediate effect: —
(i) Regular Meal, in place of Combo Meal, may be restored. Accordingly, Para 1.[4] of CC 63/2013 regarding combo meal is deleted.
(ii) Quantity of Paneer dish, Chicken dish and Dal be restored to 150gms. Paneer dish with seasonal veg. (150gms with Paneer 70gms) and Chicken dish with thick gravy (150gms with Chicken 80-100gms) should be served (Neck and wing portion of chicken should not be served).
(iii) Kathi Roll/Samosa/Patties/Kachori/Sandwiches be served in Evening Tea.
(iv) Flavoured Milk/Milk Shake be served to the passengers in food grade per bottles/tetra pack.
(v) Sale of beverages on board is pending. Accordingly,
13. The Northern Railway issued Letter of Award dated 17.01.2014 to BFP for „Provision of Catering Services in Train Nos. 12423-24, New Delhi-Dibrugarh-New Delhi Rajdhani Express Train‟. The term of the contract was for a period of five years @ Rs. 35,63,00,000/- and BFP was required to deposit the various amounts stipulated therein within a time frame. A copy of the revised catering charges was stated to have been enclosed with this letter. Pursuant thereto, Master License Agreement (MLA) dated 21.04.2014 was executed by the Northern Railway with BFP. Article 1 in the MLA dealt with „Scope of the Arrangement‟. Clause 1.[1] therein stated that the scope of services shall be principally to operate, manage and supply catering services on the train from the nominated/approved base kitchens at originating/enroute stations. Clause 1.[2] provided that the scope of arrangement between the parties shall be governed by the provisions of Annexure I (scope of services to be rendered by the licensee). Clause 1.[4] is relevant and reads as under: “1.[4] It is agreed by the Licensee that the norms with regards catering changes payable to Licensee for providing catering services to the passengers on the Train are also subject to the predetermined prices as set forth in Annexure II of this Agreement. The Licensee also hereby confirms and acknowledges that Railway shall have the absolute right and discretion to change and modify the prices set forth in Annexure II without any need for prior discussion with the Licensee and the decision of Railway shall be strictly enforced by the Licensee during the Term of this Agreement.”
14. The tenure of the Agreement was to commence on 21.01.2014 and was for a period of five years. On the completion of five years, one renewal for another five years could be given subject to satisfactory performance. Article 20 was titled „Dispute Resolution‟ and Clause 20.[2] therein provided for settlement of disputes through arbitration, as per the provisions of the Act of 1996. Clause 21.6, titled „Waiver‟, stated that unless otherwise expressly provided in the agreement, a delay or omission by either party to exercise any of its rights under the agreement would not be construed to be a waiver thereof. Annexure II to the MLA was a copy of the modified Section C, setting out Special Conditions of Contract I and Special Conditions of Contract II. The Special Conditions of Contract I detailed the cyclic menus for different meals for the AC classes. Cyclic menus for lunch/dinner for 1AC/EC and 2AC/3AC/CC were provided but no separate menu was provided for a combo meal, obviously, because a second regular meal was to be provided instead of a combo meal, as per Commercial Circular No. 67 of 2013. However, insofar as the revised tariffs were concerned, the tabulated statement therein referred to the pricing for different meals and mentioned CM (combo meal) also. This was owing to the aforestated circular categorically stating that there would be no increase in charges. Article 8 of the MLA was titled „Changes in menu, tariff and duration of train‟. Clause 8.[1] therein stated that the Railway reserved the right to change catering tariff and menu for the train at any time after the award of the licence and in the event of any such change by the Railway, the licensee was required to maintain the same quality and hygiene standards for preparation, supply and service of food/meals to passengers on the train as it was prior to such change.
15. Thereafter, Commercial Circular No. 32 of 2014 was issued by the Railway Board on 06.08.2014 further revising the menu and tariff of catering services in the Rajdhani/Shatabdi/Duronto Express Trains. Under the heading „Rationalization of Menu‟, it was provided under Para 1.[5] that a welcome drink would be served to all passengers in AC classes on commencement of the journey but, whenever breakfast followed immediately after the welcome drink, then Frooti tetra pack, hitherto being provided along with breakfast, would not be served. It was reiterated in Para 1.[6] that, as per the instructions issued vide Commercial Circular No. 67/2013, a regular meal (lunch/dinner) was to be served in the place of combo meal (wherever applicable) at the tariff applicable for combo meal. Para 4 is of relevance and it reads thus: “4. Service-wise Tariff 4.[1] The catering charges for each pair of station on up and down direction should be calculated and notified for each Rajdhani/Shatabdi/Duronto Express trains by the concerned zonal railways in consultation with their associate finance. Since the catering charges are to be included on the basis of actual services rendered to the passengers there may be difference in catering charges in some cases on up and down direction between same pair of stations due to variation in catering services. It is advised that the actual charges of catering services as per the requirement of the journey of Rajdhani/Shatabdi/Duronto Express trains should be added to the basic fare and the amount so arrived will be rounded off to the next higher multiple of Rs. 5/-. Payment of appointment charges to the caterers should be made according to the actual services rendered to the passengers as per the following rates given below except in case of combo meal where charges will be as per below but menus shall be as per regular Lunch/Dinner meal as issued vide CC-67/2013:— (in Rs.) 1A/EC Type of service Catering charges to be disbursed to the licensee without service tax. Catering charges to be included in fare (Inclusive of present service tax @8.66%) (1) (2) (3) Morning Tea 12.50 15.00 Breakfast 81.50 90.00 Lunch/Dinner 129.50 145.00 Evening Tea where dinner is served
41.00 45.00 Evening Tea where dinner is not served
66.50 75.00 Combo Meal 66.50 75.00 2AC/3AC/CC Type of service Catering charges to be disbursed to the licensee without service tax. Catering charges to be included in fare (Inclusive of present service tax @8.66%) (1) (2) (3) Morning Tea 8.00 10.00 Breakfast 66.50 75.00 Lunch/Dinner 112.00 125.00 Evening Tea 40.00 45.00 Combo Meal 66.50 75.00 SL (Duronto Trains) Morning Tea 6.50 10.00 Breakfast 34.00 40.00 Lunch/Dinner 71.00 80.00 Evening Tea 18.00 20.00
16. It is an admitted fact that the caterers, including BFP, abided by the instructions and prices set out in the commercial circulars, replicated in their MLAs/contracts, for some time without protest. They raised bills for the second regular meals provided by them on the trains at the price fixed for a combo meal. However, on 22.06.2015, the Indian Railways Mobile Caterers Association submitted a representation to the Northern Railway expressing difficulties due to the revision in the menu and tariff of catering services, in addition to other grievances. Therein, it was pointed out that combo meals at the rate of Rs. 66.50/- (without service tax) with a reduced menu was introduced but the same was stopped and regular meal service was reinstated, but the rates were not revised and the caterers were compelled to serve regular meals in lieu of combo meals at a reduced price. They also raised the issue of welcome drinks being served as an additional item without any tariff being paid for the same. The Association stated that the caterers were facing losses on all fronts, which included the service of second meals at half the rate and free service of welcome drinks. This was followed up with several reminders and representations.
17. While so, the IRCTC entered into the picture in the year 2017 as per the new catering policy. It is an admitted fact that upon the recommendation of the IRCTC, under its letter dated 05.07.2019, the Railway Board issued Circular dated 03.10.2019, modifying the earlier Commercial Circular No. 32/2014 dated 06.08.2014. Thereby, the Board advised that reimbursement of catering charges to service providers should be made at the rate of regular meal tariff in place of combo meal tariff for service of a regular meal as the second meal of the day. It was further advised that passenger fares should be corrected accordingly by levying regular meal tariff for the actual service of the regular meal. These instructions were directed to be implemented with prospective effect. The „Note‟ pertaining to this modification indicated that the IRCTC had highlighted the inadequacy of the tariff of catering services as there was a special case of the second meal of the day in the case of Rajdhani/Shatabdi/Duronto Express Trains. The IRCTC pointed out that after the tenders were allotted and agreements were executed, the menu of the second meal was changed and made similar to that of a normal lunch/dinner but instead of charging Rs. 112/- from the passengers, the Railway continued to charge Rs. 66.50/- for this meal. The IRCTC pointed out that this anomaly needed to be corrected with revision in the rates of the second meals and advised that either the menu of the meal should be restored as a combo meal or the tariff should be made similar to a normal meal. The IRCTC also pointed out that the caterers were continuously representing about this issue. However, as per the mandate of the Circular dated 03.10.2019, the parity brought about thereunder was to be with prospective effect only.
18. The grievance of BFP and the other caterers, leading to the thirteen arbitration claim petitions, was that, despite being told to serve regular meals twice, after substitution of the combo meal with a regular meal under Commercial Circular dated 23.10.2013, they were reimbursed for the second regular meal only at the price of a combo meal, as was fixed by the earlier Commercial Circular dated 09.10.2013, and the price of a regular meal was not given to them for the second meal. BFP claimed that it tried to raise bills for the second regular meals supplied to the passengers at the same rates as were applicable to the first regular meal but the Northern Railway, the predecessor of the IRCTC, refused to accept the bills unless they were raised as per the Commercial Circular No. 67 of 2013 dated 23.10.2013. BFP, therefore, asserted that it was forced to comply with this direction under financial and economic duress as it needed regular funds for maintaining day-to-day catering services to the passengers. Another grievance was with regard to supply of welcome drinks under Commercial Circular No. 32 of 2014 dated 06.08.2014. The complaint was that the caterer was not paid for serving welcome drinks.”
19. A perusal of the aforesaid observations leaves little room for doubt that the controversy involved in the present proceedings substantially mirrors the controversy which fell for consideration before the Hon‟ble Supreme Court in the Brandavan case.
20. Further, the Hon‟ble Supreme Court, in the aforesaid judgment, and in the backdrop of the factual matrix and circumstances noticed hereinabove, proceeded to undertake a detailed examination and analysis of the various issues arising for consideration from Paragraph 49 onwards, including the contractual stipulations, the scope of the claims raised, and the extent of the arbitral tribunal‟s jurisdiction and authority, in the following manner:
21. A bare reading of the aforesaid extracts clearly demonstrates that the Hon‟ble Supreme Court, while examining the issues arising for consideration and adjudicating upon the validity and sustainability of the arbitral award under challenge, undertook an extensive analysis of the relevant factors, and ultimately arrived at the following determinations, though the same are not intended to constitute an exhaustive enumeration thereof: (a) The caterers submitted their bids on the basis of the prevailing Railway catering policy and tariff structure existing at the time of the tender, which expressly contemplated the applicable menus, meals, and corresponding rates. (b) The subsequent policy changes introduced by the Railway Board, including the concept of “combo meals” and revised tariff structures, formed part of the governing contractual framework before execution of the final agreement.
(c) Although the Railway Board later restored the second regular meal in place of the combo meal, it simultaneously retained the lower tariff applicable to combo meals, thereby making the policy decision binding upon the contracting parties.
(d) The caterers entered into the agreement with full knowledge of the revised policy framework, including the Railway‟s express right to alter menus and tariffs in accordance with Railway Board directives. (e) The contractual documents, read together with the Railway Board circulars, clearly established that the Railway‟s catering policy and circulars enjoyed overriding primacy over all other contractual terms and bid documents. (f) The Apex Court found that the expression “combo meal” in the contractual schedules could not be interpreted in isolation, since the subsequent circulars had already clarified that a second regular meal was to be supplied at the tariff applicable to a combo meal. (g) The policy circulars issued by the Railway Board were never set aside by any Court and continued to remain operative and binding throughout the relevant period. (h) The caterers had earlier challenged the Railway Board circulars before the Delhi High Court but failed to pursue the challenge after dismissal of the writ petition; consequently, the validity and enforceability of the policy decisions attained finality.
(i) Since the contracts merely incorporated and reflected binding
Railway Board policy decisions, neither the parties nor the Arbitrator could interpret the agreements contrary to those policies. (j) The Apex Court held that the Arbitrator exceeded the permissible scope of contractual interpretation by effectively rewriting the contractual terms and ignoring the binding nature of the Railway Board circulars. (k) The claim for reimbursement relating to the “welcome drink” was also rejected because the bid documents themselves originally contemplated such service and the contract expressly empowered the Railway to modify menus without consultation with the caterers.
(l) The Apex Court held that the reintroduction of the welcome drink was merely an exercise of contractual and policy powers already reserved under the agreement and therefore did not create any independent entitlement to reimbursement.
(m) The Arbitrator failed to accord due weight to the governing policy framework and overlooked the mandatory requirement under Section 28(3) of the A&C Act, which required the arbitral tribunal to decide disputes in accordance with the terms of the contract and the applicable trade usages. (n) The Apex Court concluded that the arbitral award suffered from patent illegality and was contrary to the public policy of India because it granted reliefs in direct conflict with binding governmental policy and the contractual scheme. (o) The Apex Court further held that principles of fairness and arbitrariness under Article 14 could not be invoked against IRCTC in the facts of the case, since IRCTC had no independent discretion and was bound to implement the Railway Board‟s policy directives. (p) Consequently, the arbitral award, as well as the Section 34 Judgments partially affirming the arbitral award and Section 37 Judgement affirming it wholly, were set aside by the Apex Court.
22. A careful consideration of the aforesaid findings returned by the Hon‟ble Supreme Court leaves no doubt that the controversy involved in the present Petition stands squarely covered by the principles laid down in the Brandavan case. The foundational contractual framework, the governing Railway Board Circulars, the nature of the claims raised by the caterers, as also the grievance pertaining to reimbursement of the second regular meal at combo meal rates, are substantially identical to the issues which came to be adjudicated by the Hon‟ble Supreme Court.
23. This Court further finds that the principal reasoning adopted by the learned Arbitrator in the present case proceeds substantially on the very interpretation which now stands expressly disapproved by the Hon‟ble Supreme Court in the Brandavan case. The learned Arbitrator, while allowing the claims of the Petitioner herein, proceeded on the premise that once regular meals were restored in place of combo meals under the Circular dated 23.10.2013, reimbursement was necessarily required to be made at the tariff applicable to regular meals and not at the rates prescribed for combo meals.
24. However, the Hon‟ble Supreme Court, after an exhaustive examination of the tender conditions, the Master Licence Agreement, and the governing Railway Board Circulars, has categorically held that the Circular dated 23.10.2013 consciously restored the regular meal while simultaneously retaining the tariff applicable to combo meals and that such policy decision continued to bind the parties during the relevant contractual period. The Apex Court further held that the contractual stipulations merely mirrored the extant policy framework and, therefore, could not have been interpreted by the learned Arbitral Tribunal in a manner contrary to the said policy decisions.
25. Significantly, the Hon‟ble Supreme Court has further held that the learned Arbitrator, by granting parity of tariff between the first and second regular meals and by permitting reimbursement contrary to the governing policy circulars, had in effect rewritten the contract between the parties. The Hon‟ble Supreme Court consequently held that such an approach rendered the Award patently illegal and contrary to the public policy of India within the meaning of Sections 34(2)(b)(ii) and 34(2A) of the A&C Act.
26. This Court has also perused the relevant clauses of the Tender document and the contractual framework forming part of the present proceedings. The clauses governing revision/modification of tariff, menu and policy directives are materially similar to those considered by the Hon‟ble Supreme Court in the Brandavan case and likewise recognise the primacy of Railway Board policy circulars governing catering services.
27. In the considered opinion of this Court, the distinctions sought to be canvassed by learned counsel for the Respondent do not materially alter the legal position. The first distinction sought to be raised is with respect to the 1999 Circular not forming part of the pleadings or contractual framework in the present proceedings. However, as noticed by the Hon‟ble Supreme Court itself, the relevance of the 1999 Circular lay only in tracing the historical evolution of the tariff structure and the catering policy governing the contracts in question. The actual controversy before the Hon‟ble Supreme Court ultimately turned upon the effect of the Circulars dated 09.10.2013, 23.10.2013 and 06.08.2014 together with the contractual clauses incorporated in the tender documents and the Master Licence Agreements. The absence of an express reference to the 1999 Circular in the pleadings of the present matter, therefore, does not create any material distinguishing feature.
28. The second distinction sought to be urged pertains to Clause 3.5.[4] of the Tender document. However, this Court finds no merit in the aforesaid contention either. The tender documents forming part of the present proceedings are the same which formed consideration before the Hon‟ble Supreme Court in the Brandavan case.
29. In fact, the Hon‟ble Supreme Court itself has extensively examined the contractual stipulations governing modification of menu, tariff and catering charges and has conclusively held that the policy directives issued by the Railway Board held primacy over the contractual arrangements inter se the parties. Merely because Clause 3.5.[4] has now been specifically pointed out in the present proceedings would not dilute the ratio laid down by the Hon‟ble Supreme Court nor alter the binding effect thereof.
30. This Court is further of the considered view that once the Hon‟ble Supreme Court has authoritatively interpreted the very same contractual framework and policy circulars and has unequivocally held that an arbitral award granting reimbursement contrary thereto suffers from patent illegality and contravention of the public policy of India, this Court, while exercising jurisdiction under Section 34 of the A&C Act, cannot sustain an Award founded upon the very reasoning which now stands expressly rejected by the Hon‟ble Supreme Court.
31. The Impugned Award can, therefore, no longer be regarded as representing a plausible or even a possible view in law, inasmuch as the findings and interpretation adopted therein stand in clear discordance with the legal principles governing the underlying disputes, as comprehensively examined and authoritatively settled by the Hon‟ble Supreme Court in the substantially identical dispute considered in the Brandavan case. The interpretation adopted by the learned Arbitrator in the present matter is directly contrary to the binding legal position declared by the Hon‟ble Supreme Court and, consequently, falls foul of the settled principles governing patent illegality and contravention of the fundamental policy of Indian law, as elucidated in OPG Power Generation (supra) and the Brandavan case itself. DECISION:
32. In view of the aforesaid discussion, this Court is of the considered opinion that the Impugned Arbitral Award cannot be sustained in law and is liable to be set aside under Sections 34(2)(b)(ii) and 34(2A) of the A&C Act.
33. Accordingly, the present Petition is allowed and the Arbitral Award dated 28.08.2023 passed by the learned Arbitrator is set aside.
34. In view thereof, the present Petition, along with pending Application(s), if any, stands disposed of in the aforesaid terms.
HARISH VAIDYANATHAN SHANKAR, J. MAY 18, 2026/tk/DJ