Legal Dispute Over Contractual Modification of Concession Fees Referred to Arbitration Under DIAC Rules

The Petitioner, a catering service provider for Train No. 22435-36 Vande Bharat Express, entered into a license agreement with the Respondent (IRCTC) on 18.09.2023.

Following the augmentation of the train from 16 to 20 coaches, the Respondent issued a demand notice dated 03.12.2025, unilaterally increasing the annual concession fee from Rs. 3,31,20,000 to Rs. 4,14,00,000.

The Petitioner challenged this demand as contractually impermissible, asserting that the agreement only permits fee variations for frequency changes, not coach augmentation.

Consequently, the Petitioner moved the High Court seeking interim protection against the demand.

1. Whether the Petitioner is entitled to interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, against the Respondent's demand for increased concession fees.

2. Whether the dispute regarding the unilateral modification of the license agreement should be referred to an independent arbitrator.

Section 9 of the Arbitration and Conciliation Act, 1996, which empowers the court to grant interim measures of protection before or during arbitral proceedings.

Clause 9 contained in the license agreement, which mandates that disputes regarding the construction or operation of the contract be referred to a Sole Arbitrator.

Principle of party autonomy where parties ad idem (in agreement) can consent to the appointment of an arbitrator under the aegis of a specific institution, such as the Delhi International Arbitration Centre (DIAC).

The Court observed that a substantive dispute exists regarding whether the Respondent had the contractual authority to increase the concession fee based solely on coach augmentation.

During the proceedings, the parties reached a consensus (ad idem) that the dispute should be adjudicated through arbitration rather than through a prolonged Section 9 hearing in court.

The Court found that in the interest of justice, given the valuation of approximately Rs. 4.5 Crores, an independent arbitrator should be appointed to resolve the merits of the demand notice.

Rather than granting a direct stay, the Court shifted the forum of interim relief by granting the Petitioner liberty to move an application under Section 17 of the Act before the newly appointed arbitrator.

The Court did not rule on the merits of the demand notice but granted the Petitioner liberty to seek interim protection from the Arbitrator under Section 17 of the Act.

All rights and contentions of the parties were left open for adjudication in the arbitral proceedings.