Indian Railway Catering And Tourism Corporation Limited vs Foodworld

Court
Delhi High Court

$~37
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 18.05.2026
+ O.M.P. (COMM) 51/2024 & I.A. 1939/2024 (Stay)
INDIAN RAILWAY CATERING AND TOURISM
CORPORATION LIMITED .....Petitioner
Through: Mr. Harshit Agarwal, Mr.
Aasheesh Gupta, Mr. Kamal
Kumar and Mr. Deepesh
Parashar, Advocates.
versus

FOODWORLD .....Respondent
Through: Mr. Naresh Kumar Thanai,
Advocate through video-
conferencing.

CORAM:
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR


% JUDGEMENT (ORAL)
1. The present Petition has been filed under Section 34 of the
1
Arbitration and Conciliation Act, 1996 , seeking the setting aside of
2
the Arbitral Award dated 28.08.2023 , 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

1
A&C Act
2
Impugned Award
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
11:36:34
O.M.P. (COMM) 51/2024 Page 1 of 31

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
3
and Tourism Corp. Ltd. v. Brandavan Food Products [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

3
2025 SCC OnLine SC 2369
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BHATIA
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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
4
27.04.2022 . The Section 34 Judgement was challenged in Appeals
under Section 37 of the A&C Act, whereby, vide Judgement dated
5
10.02.2025 , 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

4
Section 34 Judgement
5
Section 37 Judgement
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BHATIA
Signing Date:23.05.2026
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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
6
27.05.1999 , 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-

6
1999 Circular
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BHATIA
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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
7
Cooling Solutions (India) (P) Ltd. , 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

7
(2025) 2 SCC 417
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By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
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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
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BHATIA
Signing Date:23.05.2026
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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. &
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BHATIA
Signing Date:23.05.2026
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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. ,
(2020) 5 SCC 164 ].”
(emphasis supplied)

17. Keeping these principles in mind, we proceed to consider the
impact of the Brandavan case on the present matter. In the Brandavan
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By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
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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:
“ 5. In terms of the Catering Policy of 2010 issued by the Railway
Board, Ministry of Railways, Government of India, the Northern
Railway published Tender Notice dated 27.05.2013 inviting bids
for providing catering services on the train referred to above. The
contract period was for 5+5 years from the date of commencement
of the catering services. The tender document prescribed the food
items/beverages which were to be supplied to the passengers
4
travelling on these trains. The tariff/apportionment charges for
each service were also prescribed. We may note, at this stage, that
the tariffs are fixed on the basis of the commercial circulars issued
by the Railway Board. At the time of issuance of the tender notice,
the tariffs set out therein were reflective of the tariffs fixed in the
year 1999, under Commercial Circular dated 27.05.1999.
6. While so, before the opening of the bids pursuant to Tender
Notice dated 27.05.2013, the Railway Board issued Commercial
Circular No. 63 of 2013 dated 09.10.2013 whereby, while
increasing the tariffs, the concept of „combo meal‟ was introduced
as a measure to reduce wastage of food. It was proposed that,
instead of providing a second regular/full meal during the course of
the journey, a combo meal could be served, i.e., a smaller meal
consisting of lesser number of items and quantities. The price of
this combo meal for 1AC/2AC/3AC was fixed at Rs. 66.50/- (Rs.
75/- with service tax) as against a regular meal, which was
enhanced to Rs. 129.50/- (Rs. 145/- with service tax) for 1AC/EC,
and Rs. 112.50/- (Rs. 125/- with service tax) for 2AC/3AC/CC.
However, upon receiving feedback of the dissatisfaction of
passengers with combo meals, the Railway Board issued
Commercial Circular No. 67 of 2013 dated 23.10.2013,
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By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
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discontinuing combo meals, by deleting Para 1.4 of the earlier
Commercial Circular dated 09.10.2013, and substituting it with a
regular meal, but at the price fixed for a combo meal. Therefore, at
the time of opening of the tender bids and the awarding of contracts
thereafter, Commercial Circular dated 23.10.2013 was holding the
field.
7. BFP's bid dated 27.06.2013 emerged successful in relation to
Train Nos. 12423-24, viz., New Delhi-Dibrugarh-New Delhi
Rajdhani Express, and the Northern Railway issued Letter of
Award dated 17.01.2014 to it. Pursuant thereto, BFP started
providing catering services with effect from 21.01.2014.
Thereafter, BFP and the Northern Railway entered into Master
Licence Agreement dated 21.04.2014. While so, by Commercial
Circular No. 32 of 2014 dated 06.08.2014, caterers were directed
by the Railway Board to provide a welcome drink to all passengers
in AC classes at the time of commencement of the journey.
Thereafter, the Railway Board announced a new Catering Policy on
27.02.2017 providing for management of catering services by the
IRCTC in the place of the Zonal Railways. In consequence,
Tripartite Agreement dated 10.08.2017 was executed by the
Northern Railway, the IRCTC and BFP and the management of
catering services stood transferred to the IRCTC.
8. The principal contention urged by the IRCTC before us is that
the Arbitrator had no jurisdiction to re-write the terms of the
contract contrary to the agreement entered into by and between the
parties with their volition and their eyes wide open. It would,
therefore, be necessary to examine the genesis and the nature of the
contract underlying the claims put forth by the caterers. Hitherto, as
stated earlier, Commercial Circular dated 27.05.1999 issued by the
Railway Board, dealing with catering services in the Rajdhani and
Shatabdi Express trains, set out the tariffs to be paid to the caterers
for the meals that they would serve on those trains, viz., morning
tea/welcome drink/light refreshment; breakfast; lunch; high
tea/evening tea; and dinner. Separate charges were framed for
2AC/3AC/CC, on the one hand, and 1AC/EC, on the other. This
circular held the field for nearly a decade and a half.
9. The tender document for provision of catering services on Train
Nos. 12423-24, New Delhi-Dibrugarh-New Delhi Rajdhani
Express, was issued by the Northern Railway on 27.05.2013.
Chapter I therein dealt with the scope of work. Clause 1.3 stated
that the bidder, once selected, shall become the licensee and shall
be liable to pay licence fee as per the terms and conditions
determined by the Northern Railway. Clause 1.2.1 stated that the
licensee shall provide catering services on Train Nos. 12423-24 and
provide meals from the kitchens at the originating/enroute stations
of the train. Clause 1.3, titled „Scope of work of catering services
on train‟ indicated the major components. Clause 1.3.1 reads as
follows:
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BHATIA
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“1.3.1 The Licensee shall be responsible for all catering
services from pantry car on Train No. 12423/24 as per
Policy, guidelines, instructions issued by Railway and
other statutory regulations. This will include supply and
service of fully cooked meals/food to passengers on
demand viz. breakfast, lunch, dinner, snacks, tea, coffee
etc. These meals/food shall be prepared, packed and
transported from the Kitchens set-up and located at or
around the originating/terminating/en-route station(s) on
Railway premises/non railway area authorized by railway
administration to be set up by the licensee.‟
Clause 1.3.3 is also relevant and it reads as follows:
“The menus and rates for each service are enclosed at
Section C. Railway reserves the right to modify/alter the
catering tariff and menu and such changes in catering
charges and menu shall be informed to the Licensee in
advance for which the License Fee shall be varied based
on the reassessment of sales. In the event of such changes,
the Licensee shall maintain the same quality and hygiene
standards for preparation, supply and service of
food/meals to passengers as it were prior to such change.”
10. The Special Conditions of Contract-I, contained in Section C,
specified the menu for morning tea/coffee, the menu for welcome
drink, the menu for breakfast, the menu for lunch/dinner and the
menu for evening tea. These were the meals that were to be
supplied on the train by the caterer. Section C contained a tabular
statement, specifying the tariffs for Train Nos. 12423-24. Notably,
the rates specified in the tabular statement were in tandem with
those set out in the Commercial Circular dated 27.05.1999 that was
then holding the field. There was obviously no mention of a combo
meal as that concept had not been introduced by the time this bid
document was issued in May, 2013.
11. It was only on 09.10.2013 that the Railway Board came up with
the idea of introducing a combo meal, vide Commercial Circular
No. 63 of 2013. It dealt with revision of the menu and tariff of
catering services in Rajdhani/Shatabdi/Duronto Express Trains. It
was noted therein that the menu and tariff of catering services were
last revised in the year 1999 for these trains and that they were
prestigious premier trains of the Indian Railways. As the cost of
raw materials for catering services had increased manifold due to
inflation, etc., since the year 1999, it was stated that a review of the
menu and tariff had been done through Committees set up by the
Railway Board to determine the norms for apportionment of
catering charges in the fares of these trains. Clause 1.4 is of
relevance in the context of a combo meal and it reads as follows:
“1.4 The concept of combo meal for
Rajdhani/Shatabdi/Duronto express trains has been
introduced in place of regular second meal of the day
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
11:36:34
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where more than one meal services are provided. The
third/following meal shall be the regular meal and the
sequence of every alternate meal as combo meal shall be
followed for the particular train. At one point of time only
one type of meal will be served in the entire train.”
The menu for each service was furnished in Annexure A,
which was to be adopted uniformly. The price of
lunch/dinner for 1AC/EC was increased to Rs. 145/Rs.
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,
Para 13 of CC 63/2013 may be kept pending.
The above changes will be done without any increase in
charges.”
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
Signature Not Verified
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By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
11:36:34
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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
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
11:36:34
O.M.P. (COMM) 51/2024 Page 13 of 31

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
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
11:36:34
O.M.P. (COMM) 51/2024 Page 14 of 31

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.
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
11:36:34
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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.”

Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
11:36:34
O.M.P. (COMM) 51/2024 Page 16 of 31

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:
“ 49. Certain undeniable facts may be noted at this stage. The
catering policy under the Circular dated 27.05.1999 was holding
the field at the point of time the Tender Notice was issued by the
Northern Railway on 27.05.2013. BFP submitted its bid dated
22.06.2013, based on that catering policy. In terms of this policy,
the menus as well as the tariffs for different meals were shown in
the tender document for all AC classes in the train. Significantly,
Para 6 of the Circular dated 27.05.1999 provided that, apart from
breakfast, lunch, high tea/evening tea and dinner, the caterer was
also required to provide morning tea/welcome drink/light
refreshment. The tariff fixed for lunch/dinner was Rs. 75 for
2AC/3AC/CC and Rs. 112.50 for 1AC/EC. As regards breakfast,
the tariff fixed was Rs. 40 and Rs. 60 for the above two categories
of classes; for high tea/evening tea, the tariff fixed was Rs. 40 and
Rs. 60 respectively, while for the morning tea/welcome drink/light
refreshment, the tariff was shown as Rs. 13 and Rs. 19.50,
respectively. The catering policy introduced in the year
2010, vide Commercial Circular No. 35 of 2010 dated 21.07.2010,
did not make any substantial changes as regards the menus and
tariffs shown in the earlier circular of 1999 but left it open to the
Railway Board to fix the menus and tariffs for Rajdhani, Shatabdi
and Duronto Express Trains.
50. Therefore, when BFP and the other caterers made their bids
pursuant to the tender notices in May, 2013, they did so under the
impression that they would be supplying food on the trains in
question as per the menus fixed under the circular of 1999 and
would be paid tariffs in terms of the rates fixed therein. This is also
evident from Clause 1.3.3 of the bid document, which stated that
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
11:36:34
O.M.P. (COMM) 51/2024 Page 17 of 31

the menus and rates for each service would be as per Section C
thereof, though the Railway reserved the right to modify/alter the
menu and catering tariffs. Section C, appended to the bid
document, contained the menus for morning tea/coffee; welcome
drink; breakfast; lunch/dinner and evening tea for the two separate
categories in the AC classes. More significantly, tariffs in terms of
the rates mentioned in the Circular dated 27.05.1999 were
replicated in the tabular statement appended thereto. Thus, the bid
submitted by BFP was in contemplation of being paid the very
same tariffs as were fixed in the Circular dated 27.05.1999 and in
accordance therewith, it made its bid with license fees of Rs.
35,63,00,000/- for Train Nos. 12423/12424, New Delhi-Dibrugarh-
New Delhi Rajdhani Express.
51. It was only during the processing of the bids received pursuant
to the Tender Notice dated 27.05.2013, that the catering policy
underwent a change and Commercial Circular No. 63 of 2013 dated
09.10.2013 was issued by the Railway Board, embodying the
changes in the policy. Therein, it was noted that the menu and tariff
of catering services for Rajdhani, Shatabdi, and Duronto Express
Trains were last revised in the year 1999 and as the cost of raw
materials used for catering services had increased manifold due to
inflation, etc., a review of the menu and tariff had been done
through the Committees set up by the Railway Board. Based on the
Committees' recommendations, the Railway Board had decided to
revise the menus and tariffs as set out therein. The menu for each
service was set out in Annexure A to the circular, and the same was
to be uniformly adopted by the Zonal Railways.
52. It is this circular that introduced the concept of a combo meal.
It was stated in Clause 1.4 thereof that a combo meal had already
been introduced in Rajdhani and Duronto Express trains in the
place of the second regular meal of the day, where more than one
meal service was provided. The quantity of food to be served in a
combo meal was lesser than that served in a regular meal, i.e.,
lunch/dinner, and the tariff was correspondingly lesser. For
instance, the tariff for lunch/dinner, with service tax, was fixed at
Rs. 145/- for 1AC/EC and at Rs. 125/- for 2AC/3AC/CC classes.
However, the tariff for a combo meal was fixed at Rs. 75/-, with
service tax, for all the AC classes. The Railway Board also advised
the Zonal Railways to reassess and revise the license fees to be paid
by the caterers in the light of the enhancement of the
tariff/apportionment charges payable to them for the supply of food
in these trains. It is on this basis that BFP was also required to pay
higher license fees over and above its bid of Rs. 35,63,00,000/- and
the same is now the subject matter of a separate arbitration.
53. In any event, the new policy in relation to a combo meal in the
Circular dated 09.10.2013 came to be modified almost immediately
thereafter under Circular No. 67 of 2013 dated 23.10.2013. This
circular was stated to be a corrigendum to the earlier Circular dated
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
11:36:34
O.M.P. (COMM) 51/2024 Page 18 of 31

09.10.2013. In consequence, the Railway Board scrapped the newly
introduced combo meal and directed that a regular meal should be
restored in its place. The Railway Board directed that Para 1.4 of
Circular No. 63 of 2013 dated 09.10.2013 in relation to a combo
meal would stand deleted. Certain other changes in the menu were
also indicated and, after setting out the details thereof in Clauses
(ii) to (v), the Railway Board categorically stated that the above
changes would be done without any increase in charges.
54. Therefore, by the time the bid of BFP was processed, resulting
in the issuance of Letter of Award dated 17.01.2014 to it, the
aforestated revised catering policy was already in place. In fact, the
Letter of Award ended with a reference to the revised catering
policy and the concluding para therein reads as under:
„A copy of the revised catering charges is enclosed
herewith for your reference; the revised license fee on „Pro
Rata basis‟ will be calculated and advised to you in due
course. Difference amount of the license fee has to be
deposited within seven days.‟
55. Thus, knowing fully well that there was a change in the menu
and in the tariffs payable to it for the food to be supplied by it on
the New Delhi-Dibrugarh-New Delhi Rajdhani Express, BFP
entered into the MLA dated 21.04.2014. This agreement made it
clear that the scope of the arrangement made thereunder was
governed by Annexure I (Scope of services to be rendered by the
licensee). Clause 4.2(e) of the MLA noted that, in terms of the
Circular dated 09.10.2013, catering charges had been revised.
Article 8 of the MLA dealt with the changes in the menu, tariff and
duration of the train and Clause 8.1 therein put it beyond the pale of
doubt that the Northern Railway, the predecessor of the IRCTC,
reserved the right to change the menu and the catering tariff for the
train at any time after the award of the license. Annexure I to the
MLA, titled „Scope of the work‟, provided that the main objective
was to appoint a licensee for Train Nos. 12423-12424 to ensure the
provision of hygienic, good quality meals/food to the passengers.
As per the laid-down guidelines and as per the specified menu, rate
and policy directives issued by the Railway, the menus and rates
for each service, as per Clause 1.3.3 therein, were set out in Section
C, and the Northern Railway reserved the right to modify/alter the
catering tariff and the menu.
56. Though an argument was advanced before us that Section C,
marked as Annexure II to the MLA, was not provided to BFP, we
find from the photocopy of the MLA and the Annexures placed
before us in Volume III in I.A. No. 140341 of 2025, filed in Special
Leave Petition (Civil) Nos. 15507-15509 of 2025, that the pages
therein from 290 to 307, containing Section C/Annexure II, also
bear the signatures of the partner of BFP who signed each of the
pages of the MLA on its behalf. Annexure II/Section C consisted of
two parts - 1. Special Conditions of Contract-I and 2. Special
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
11:36:34
O.M.P. (COMM) 51/2024 Page 19 of 31

Conditions of Contract-II. The Special Conditions of Contract-I set
out the cyclic menus for morning tea, breakfast, lunch/dinner and
evening tea for both categories of AC classes. The revised tariffs
were set out in a separate table therein. Notably, the tariffs were
detailed with reference to the meal. For example, where lunch and
evening tea were served, it was indicated as „L+ET‟ and the tariffs
were shown separately for 2AC/3AC and 1AC/EC. Significantly,
where a first regular meal was served along with another meal, it
was shown as L+ET+CM, i.e., lunch+evening tea+combo meal.
The tariff payable was shown as the aggregate of the tariffs payable
for lunch, evening tea and the second regular meal at the price of a
combo meal. Merely because this tabular statement referred to CM
(combo meal), it is not open to BFP and the other caterers to
contend that they were only required to serve a combo meal and not
a second regular meal. The circulars issued and put in place by the
date of execution of BFP's MLA on 21.04.2014 clearly evidenced
that the concept of a combo meal, which was introduced under
Circular dated 09.10.2013, was already done away with under the
later Circular dated 23.10.2013. Further, this circular made it clear
that the changes made thereunder did not warrant any increase in
charges and that is the reason why CM continued to be used in the
context of the second regular meal.
57. Therefore, the policy as it stood then was that, though a second
regular meal was to be resumed in the place of a combo meal, the
lesser tariff payable for a combo meal was to be paid for the second
regular meal. No doubt, on the face of it, this disparity between the
tariff payable for two regular meals appears arbitrary and
disproportionate, but it may be noted that the contracts entered into
by Northern Railway with BFP and the other caterers were in
keeping with the policy of the Railway Board and there was no
independent discretion left with the parties to deviate therefrom.
58. It is perhaps for this reason that BFP chose to approach the
Delhi High Court. It may be noted that in WP(C) No. 15548 of
2017 filed by BFP before the Delhi High Court, specific prayers
were made to quash Commercial Circular No. 67 of 2013 dated
23.10.2013 and Commercial Circular No. 32 of 2014 dated
06.08.2014. The writ petition was dismissed by a learned Judge of
the Delhi High Court on 23.09.2019, relegating BFP to the remedy
of arbitration. Having suffered the dismissal of its writ petition by
the High Court, BFP did not choose to carry the matter further and
merely abided by the advice of the learned Judge that it should
resort to arbitration. This failure on the part of BFP to maintain and
succeed in its challenge to the policy decisions as to the payment of
tariff for the first and second regular meals is fatal. Circular No. 67
of 2013 dated 23.10.2013 and Circular No. 32 of 2014 dated
06.08.2014 were not set aside and continued to remain in force.
Once those policy decisions remained in place untouched, they
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
11:36:34
O.M.P. (COMM) 51/2024 Page 20 of 31

necessarily had to be given effect to and the terms and conditions in
the MLA merely reflected the same.
59. Significantly, Clause 21.1 of the MLA, titled „Interpretation‟,
states that the agreement and the arrangement between the parties
shall at all times be read along with the terms of the bid and the
response of the licensee to the bid. It further states that, in the event
of any interpretation of the provisions of the arrangement between
the parties, the documents shall be read in the following order of
precedence:
(i) Railway latest catering policy as applicable from time to time;
(ii) The Articles of this Agreement;
(iii) The Contents of the Annexure (s) to this Agreement;
(iv) Licensee's response to the Bid;
(v) The Bid.
This clause, therefore, made it clear that the policy decisions, as per
the Railway Board's catering policy and circulars, had to be given
primacy and priority over and above even the terms of the
agreement and other connected documents.
60. As regards the issue of a welcome drink, the Railway Board
had issued Circular No. 32 of 2014 dated 06.08.2014, wherein it
was stated that review of the menu and tariff had been undertaken
through the Committees set up by it, and based on the
recommendations made, the revised menu and tariff had already
been notified, vide Circular No. 63 of 2013 dated 09.10.2013.
Circular No. 67 of 2013 was then referred to, whereby certain
modifications were made in the earlier Circular No. 63 of 2013. It
was then stated that, the Board had decided to revise the
instructions and, therefore, consolidated instructions were being
issued. One of the changes made thereunder was that a welcome
drink would be served to all passengers in AC classes on
commencement of the journey, but when breakfast followed
immediately after the welcome drink, the Frooti/Tetra Pack drink
hitherto being provided along with breakfast, would not be served.
BFP and the other caterers claimed that this addition to the catering
services to be provided by them resulted in extra costs being
incurred, for which they were not reimbursed. This was the claim
put forth before the Arbitrator which was accepted by him.
61. However, two crucial aspects were overlooked by the
Arbitrator in this regard. The bid document dated 27.05.2013,
pursuant to which BFP had submitted its bid dated 27.06.2013,
clearly indicated that a welcome drink was contemplated at that
stage. BFP would, therefore, have been conscious that this item
was to be supplied when it submitted its tender. However, in the
circulars that were issued thereafter, the welcome drink was
overlooked and that oversight was sought to be rectified by the
subsequent Circular dated 06.08.2014. No doubt, the MLA and the
tabulated statement in Annexure II appended thereto, did not refer
to a welcome drink and no tariff was stipulated therefor. However,
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
11:36:34
O.M.P. (COMM) 51/2024 Page 21 of 31

Clause 8.1 of the MLA empowered the Railway to change the
menu for the train at any time without consultation with the caterer.
The reintroduction of the welcome drink on the train, which was
initially contemplated in the bid document itself, was therefore
squarely covered thereby. Addition of a welcome drink is clearly a
change in the menu and was, therefore, directly traceable to the
power conferred by Clause 8.1 of the MLA. That apart, the Circular
dated 06.08.2014 again emphasized that, as per the instructions
issued under the earlier Circular No. 67 of 2013, the regular meal
(lunch/dinner) was to be served in the place of a combo meal,
wherever applicable, at the tariff applicable to a combo meal. This
categorical statement in the Circular dated 06.08.2014 put it
beyond doubt that the Railway and the caterers were bound by this
policy decision and there was no room for discretion or alteration
in this regard.
62. Given these facts, we have to examine whether the
hermeneutical exercise undertaken by the Arbitrator, culminating in
the Award dated 27.04.2022, warrants interference. It is now well
settled that Section 34 of the Act of 1996 provides limited grounds
on which an arbitral award can be set aside. Section 34(1) makes it
clear that recourse to a Court against an award may be made only
by an application to set it aside in accordance with sub-sections (2)
and (3) thereof. Section 34(2) details the grounds on which an
award may be set aside. For the purposes of this adjudication,
Section 34(2A) is also relevant. This provision was inserted with
retrospective effect from 23.10.2015, vide Amendment Act No. 3
of 2016. It states to the effect that a domestic arbitral award may be
set aside if the Court finds that the said award is vitiated by patent
illegality appearing on the face of that award. The proviso thereto,
however, adds a caveat that an award should not be set aside
merely on the ground of an erroneous application of the law or by
reappreciation of evidence.
63. Pertinently, Section 34(2)(b)(ii) provides that if the Court finds
that an arbitral award is in conflict with the public policy of India,
the Court would be justified in setting it aside. Explanation 1 , as it
presently reads, and Explanation 2 were inserted by the
Amendment Act No. 3 of 2016 with retrospective effect from
23.10.2015. Explanation 1 provides that, for the avoidance of
doubt, it is clarified that an award is in conflict with the public
policy of India only if its making was induced or affected by fraud
or corruption or was in violation of Sections 75 or 81 of the Act of
1996 or it is in contravention with the fundamental policy of Indian
law or it is in conflict with the most basic notions of morality or
justice. Explanation 2 provides that, for the avoidance of doubt, the
test as to whether there is a contravention with the fundamental
policy of Indian law shall not entail a review on the merits of the
dispute.
*
Signature Not Verified
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:23.05.2026
11:36:34
O.M.P. (COMM) 51/2024 Page 22 of 31

68. Given the settled legal position emerging from the above
referred decisions, it is manifest that the Arbitrator erred in
assuming that he was only interpreting the terms and conditions of
the contracts/MLAs and was, therefore, at liberty to place a
contrary construction on the express language used therein, which
was actually reflective of the policy decisions of the Railway
Board, Ministry of Railways, Government of India, in its circulars
referred to supra. Merely because there was a subsequent change in
the policy with prospective effect, based on the recommendations
made by the IRCTC itself, whereby parity was brought about in the
tariffs to be paid to the caterers for the first and the second regular
meals, it did not have the effect of wiping out the policy decisions
set out in Commercial Circulars No. 67 of 2013 and 32 of 2014,
during the period that they continued to hold sway and were in
operation.
69. In its wisdom, having chosen to challenge the aforestated
circulars, BFP did not carry it forward after the dismissal of its writ
petition and, in consequence, BFP and the other caterers can raise
no objection at this stage to the policy decisions embodied in those
circulars which were merely replicated and applied in their
contracts/MLAs. Once the contracts between the parties were
strictly in terms of and in keeping with the extant policy, the terms
of such contracts could not have been interpreted by the Arbitrator
contrary to and in violation of the policy, which remained intact
after the dismissal of BFP's writ petition. The Arbitrator was,
therefore, not justified in undertaking interpretation of the
contractual terms contrary to language used therein, which merely
mirrored the policy decisions of the Railway Board which were
binding in nature. In effect, the Arbitrator practically rewrote the
contract between the parties in such a manner that it was in
contradiction with the policy decisions set out in the Circulars
dated 23.10.2013 and 06.08.2014, which he could not have
touched. In the light of the judgments referred to supra , this error
on the part of the Arbitrator resulted in the Award not only being
against the public policy of India but also made it patently illegal.
Section 28(3) of the Act of 1996 mandatorily required the
Arbitrator, while deciding and making the Award, to take into
account the terms of the contract and the trade usages applicable to
the transaction. The trade usages in this regard were the policy
decisions of the Railway Board, Ministry of Railways, Government
of India, that governed contracts of this nature. Therefore, the
Arbitrator was bound to consider such policy decisions in that light
and evaluate the contractual terms in the context thereof. In the
present case, the Arbitrator completely overlooked the weightage to
be given to the policy decisions embodied in the Railway Board's
circulars and compounded the error by contrarily interpreting the
contractual terms, which were strictly in consonance therewith, to
grant relief to the caterers.
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70. The last contention urged by the caterers is as to whether the
IRCTC, being a State instrumentality, has to be tied down by
principles of fairness and reasonableness even in the contractual
sphere. It was argued that the IRCTC could not act unreasonably or
unfairly even while acting under a contract. This contention no
longer stands to reason as we have held that the IRCTC and its
predecessor, Northern Railway, had no independent discretion in
the matter while drawing up the contracts/MLAs and giving effect
to them, in so far as the two subject issues were concerned, as they
were bound by the policy directives of the Railway Board and
could not have deviated therefrom. The circulars which embodied
these policy directives were unsuccessfully challenged by BFP
before the Delhi High Court and left at that. Therefore, those policy
directives remained in force and the contracts/MLAs between the
parties merely reflected the same. Once IRCTC had no
independence of its own or discretion to condition or alter the
contracts/MLAs, the question of applying the principles of fair play
in action and lack of arbitrariness, traceable to Article 14 of
the Constitution, would not even arise.
71. We are, therefore, of the considered opinion that the caterers
were not entitled to seek parity of tariff/apportionment charges for
the second regular meal on par with that payable for the first
regular meal during the period in question. Similarly, as the
Railways was well within its domain under Clause 8.1 of the MLA
in reinstating the welcome drink to be provided to passengers at the
beginning of the journey, which was, in fact, contemplated in the
bid document dated 27.05.2013, the caterers were not justified in
seeking reimbursement on that count also.
72. The errors committed by the Arbitrator were not noted in the
correct perspective by either the Court exercising jurisdiction under
Section 34 of the Act of 1996 or by the Court exercising appellate
jurisdiction under Section 37 thereof. The Award, being patently
illegal and in conflict with the public policy of India is, therefore,
unsustainable in law and is liable to be set aside under Section
34(2A) and Section 34(2)(b)(ii) of the Act of 1996. In the light of
this finding, the cross appeals filed by the caterers on the issue of
award of interest no longer survive for consideration.
73. In the result, the appeals filed by the Indian Railways Catering
and Tourism Corporation are allowed setting aside the Award dated
27.04.2022, corrected on 26.07.2022, along with the judgments and
orders dated 10.02.2025 and 13.08.2024 passed by the Delhi High
Court, and the appeals filed by the caterers, viz., M/s. Brandavan
Food Products, R.K. Associates and Hoteliers Pvt. Ltd. and Satyam
Caterers Pvt. Ltd. are dismissed.Parties shall bear their own costs.”
(emphasis supplied)
21. A bare reading of the aforesaid extracts clearly demonstrates
that the Hon‟ble Supreme Court, while examining the issues arising
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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
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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.
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(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
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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
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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
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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
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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

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