INDIAN RAILWAYS CATERING AND TOURISM CORP. LTD. (IRCTC) vs M/S BRANDAVAN FOOD PRODUCTS
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 14.11.2024
Pronounced on: 10.02.2025
+ FAO(OS) (COMM) 245/2024 & CM APPL. 65789/2024
+ FAO(OS) (COMM) 246/2024 & CM APPL. 65793/2024
+ FAO(OS) (COMM) 247/2024 & CM APPL. 65797/2024
+ FAO(OS) (COMM) 248/2024 & CM APPL. 65799/2024
+ FAO(OS) (COMM) 249/2024 & CM APPL. 65804/2024
+ FAO(OS) (COMM) 250/2024 & CM APPL. 65806/2024
+ FAO(OS) (COMM) 251/2024 & CM APPL. 65808/2024
+ FAO(OS) (COMM) 252/2024 & CM APPL. 65810/2024
+ FAO(OS) (COMM) 253/2024 & CM APPL. 65812/2024
+ FAO(OS) (COMM) 254/2024 & CM APPL. 65814/2024
+ FAO(OS) (COMM) 255/2024 & CM APPL. 65816/2024
+ FAO(OS) (COMM) 256/2024 & CM APPL. 65818/2024
+ FAO(OS) (COMM) 257/2024 & CM APPL. 65820/2024
INDIAN RAILWAYS CATERING AND TOURISM CORP. LTD. (IRCTC) …..Appellant
Through: Mr. Tushar Mehta, SG & Mr. Ciccu Mukhopadhaya, Senior Advocate with Mr.Saurav Agrawal, Mr.Anshuman Choudhary and Ms. Kirutika S., Advs.
versus
M/S BRANDAVAN FOOD PRODUCTS …..Respondent
M/S BRANDAVAN FOOD PRODUCTS …..Respondent
M/S BRANDAVAN FOOD PRODUCTS …..Respondent
M/S R.K. ASSOCIATES AND HOTELIERS PVT LTD.
…..Respondent
M/S BRANDAVAN FOOD PRODUCTS …..Respondent
SATYAM CATERERS PVT. LTD. …..Respondent
M/S BRANDAVAN FOOD PRODUCTS …..Respondent
M/S BRANDAVAN FOOD PRODUCTS …..Respondent
M/S BRANDAVAN FOOD PRODUCTS …..Respondent
M/S BRANDAVAN FOOD PRODUCTS …..Respondent
M/S BRANDAVAN FOOD PRODUCTS …..Respondent
M/S R.K. ASSOCIATES AND HOTELIERS PVT LTD.
…..Respondent
SATYAM CATERERS PVT. LTD. …..Respondent
Through: Mr.Sanjay Jain & Mr.Joy Basu, Senior Advocates with Mr.Sudhir Mishra, Ms.Ritwika Nanda, Ms.Shruti Gupta, Advs.
Reserved on: 23.12.2024
Pronounced on: 10.02.2025
+ FAO(OS) (COMM) 262/2024
+ FAO(OS) (COMM) 263/2024
+ FAO(OS) (COMM) 264/2024
+ FAO(OS) (COMM) 265/2024
+ FAO(OS) (COMM) 266/2024
BRANDAVAN FOOD PRODUCTS …..Appellant
Through: Mr. Sanjay Jain & Mr. Joy Basu, Sr. Advs. with Mr. Sudhir Mishra, Ms. Ritwika Nand, Ms. Shruti Gupta, Mr. Anurag Sarda, Ms. Harshita Sukhija, Ms. Palak Jain & Mr. Anoop George, Advs.
versus
INDIAN RAILWAY CATERING AND TOURSIM COPORTATION LTD …..Respondent
Through: Mr. Tushar Mehta, Solicitor General of India with Mr. CICCU Mukhopadhyay, Sr. Adv. with Mr. Saurav Agrawal, Standing Counsel (IRCTC) with Mr. Anshuman Choudhary, Mr. Ajay Sharma, Mr. Shivam Chaudhary & Ms. Aarya Bhatt, Advs.
CORAM:
HON’BLE MR. JUSTICE NAVIN CHAWLA
HON’BLE MS. JUSTICE SHALINDER KAUR
J U D G M E N T
NAVIN CHAWLA, J.
1. This set of cross appeals has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 (in short, A&C Act), challenging the Order dated 13.08.2024 (hereinafter referred to as Impugned Order) passed by the learned Single Judge of this Court in OMP (COMM.)411/2022, OMP (COMM.)47/2023, OMP (COMM.) 517/2022, OMP (COMM.) 500/2022, OMP (COMM.) 46/2023, OMP (COMM.) 495/2022, OMP (COMM.) 504/2022, OMP (COMM.) 447/2022, OMP (COMM.) 506/2022, OMP (COMM.) 505/2022, OMP (COMM.) 502/2022, OMP (COMM.) 45/2023, OMP (COMM.)446/2022, allowing, in part, the said petitions filed by the Indian Railways Catering and Tourism Corporation Ltd. (hereinafter referred to as, IRCTC) under Section 34 of the A&C Act, by partially setting aside the Arbitral Award dated 27.04.2022 passed by the learned Sole Arbitrator (hereinafter referred to as the Impugned Award).
2. Both the parties to the petitions, that is, IRCTC and M/s Brandavan Food Products Ltd., being aggrieved of the parts of the impugned order, have challenged the same in form of this batch of cross-appeals.
3. In these are cross-appeals, IRCTC shall be referred to as the respondent, while M/s Brandavan Food Products Ltd. shall be referred to as the claimant.
4. There were a total of 13 claims filed by the claimant before the learned Sole Arbitrator, with respect to 13 different trains (Rajdhani, Shatabdi and Duranto trains). As similar background facts are involved in the cross-appeals, for the sake of convenience and brevity, the facts from FAO(OS)(COMM) 246/2024 are being referred to.
Brief Background of Facts:
5. The claimant had filed the Statement of Claim before the learned Sole Arbitrator, contending therein that the respondent is a public listed Central Public Sector Enterprise (CPSE) working under the aegis of the Ministry of Railways, Government of India, whereas the claimant is a private contractor providing catering services on the trains run by the Indian Railways.
6. In terms of the Catering Policy of 2010 issued by the Railway Board (hereinafter referred to as 2010 Policy), the tenders for providing catering services on trains were called for on the basis of bids for License Fee payable by the Contractor to the respondent, while the Catering/Apportionment charges were to be reimbursed to the Contractor for providing such catering services as calculated on the basis of Catering Tariff fixed by the Railway Board. The Catering/Apportionment charges are fixed by way of Commercial Circulars issued by the Ministry of Railways, through the Railway Board, and are applicable to all existing licenses/contracts as well as those which are to be issued in the future.
7. In pursuance of the said policies and practices, the Northern Railways published a tender, inviting bids on 27.05.2013 for the provision of Catering Services in, inter alia, the New Delhi-Dibrugarh Rajdhani Express, Train No. 12423-24 for a period of 5+5 years (hereinafter referred to as, Subject Tender).
8. At the relevant time, the Catering/Apportionment Charges for the said tender had been calculated on the basis of the Catering Tariff fixed in the year 1999 vide Letter dated 27.05.1999 (hereinafter referred to as, 1999 Policy) and was a part of the tender document itself.
9. The claimant, on 27.06.2013, submitted its Bid qua the Subject Tender and quoted Rs. 35,63,00,000/- as the License Fee for a period of 5 years.
10. Prior to opening the bids for the Subject Tender, the Ministry of Railways, through the Railway Board, issued a Commercial Circular No. 63/2013 dated 09.10.2013 (hereinafter referred to as, Circular dated 09.10.2013), whereby a new concept of Combo Meal was introduced by the Railway Board as a measure to reduce food wastage for the meal being served for dinner. It provided that instead of a second Regular Meal/full meal being served in the course of the journey, only a Combo Meal, which was a smaller meal consisting of lesser items and quantity of food, shall be served. It was priced at Rs. 66.50/- for 1AC/2AC/3AC, as against the Regular Meal, which was priced at Rs. 129.50/- for 1AC and Rs. 112.50/- for 2AC/3AC.
11. However, after a feedback from the Zonal Railway offices, the Railway Board, vide Commercial Circular No. 67/2013 dated 23.10.2013 (hereinafter referred to as, Circular dated 23.10.2013), discontinued the Combo Meal service by deleting paragraph 1.4 of the Circular dated 09.10.2013, by which the concept of Combo Meal was introduced, and once again decided that a Regular Meal be served as the Second Meal of the day.
12. The claimant asserts that, therefore, the Subject Tender was governed by the Circular dated 09.10.2013 read with the Circular dated 23.10.2013, and, in the course of a journey requiring two meals to be served, the claimant was obliged to serve two Regular Meals instead of one Regular Meal and one Combo Meal. This is not disputed by the respondent.
13. The Northern Railways issued a Letter of Award dated 17.01.2014 (hereinafter referred to as, LOA), and the claimant started providing the catering services on the train with effect from 21.01.2014.
14. The claimant and the Northern Railways thereafter entered into a Master License Agreement dated 21.04.2014 (hereinafter referred to as, MLA).
15. By the Commercial Circular No. 32/2014 dated 06.08.2014 (hereinafter referred to as, Circular dated 06.08.2014), it was stipulated that henceforth a Welcome Drink will be served to all passengers of the AC classes on the commencement of the journey.
16. The claimant asserted that the charges for the Welcome Drink were not notified by the Railways/the respondent herein.
17. The claimant asserted that it made representations to the Northern Railways, dated 22.06.2015, 03.08.2016, 23.08.2016 and 25.11.2016, calling upon the Railways to pay charges for the Welcome Drink. The said issue, however, remained pending with the Railways.
18. A Tripartite Agreement dated 10.08.2017 (hereinafter referred to as, Tripartite Agreement) was executed between the Northern Railways, the respondent, and the claimant, whereby, the management of catering services stood transferred to the respondent.
19. In December 2017, the claimant filed a Writ Petition being, W.P.(C)11548/2017 titled M/S Brandavan Food Products & Anr. v. Union of India & Ors., inter alia seeking quashing of the Circular dated 06.08.2014. The claimant sought the following reliefs in the said petition:
A. Issue an appropriate writ, order or directions quashing the impugned circular bearing Commercial Circular No. 67 of 2013 dated 23-10-2013 and Commercial Circular No. 32 of 2014 dated 6-08-2014 issued by the Respondent; and
B. Issue an appropriate writ, order or direction commanding the Respondent to refund an amount of Rs. 7,82,49,945.00 incurred by the Petitioner for providing regular meal at the price of combo meal from 17.10.2013 to 30.11.2017 along with 18% interest from the date when the amount became due and payable; and / or
C. Issue a writ, rule, order or direction in the nature of Mandamus directing the Respondent to refund an amount of Rs. 1,80,57,132.42 along with 18% interest from the date when the amount became due and payable incurred by the Petitioner for providing Welcome Drink from 01.08.2014 to 30.11.2017.
20. This Court, vide its Judgment dated 23.09.2019, dismissed the said Writ Petition, however, granted liberty to the claimant to initiate arbitration proceedings. We may quote from the said judgment, as under:
17. It is for the petitioner to take up the issues before an appropriate forum. Liberty is granted to the petitioner to take steps for appointment of an arbitrator to look into the grievance of the petitioner. In case such arbitration proceedings are initiated, the learned arbitrator may adjudicate the disputes raised by the petitioner uninfluenced by any observations made by this court.
21. Subsequently, the claimant invoked arbitration proceedings vide Letter dated 02.02.2020, inter-alia claiming from the respondent a sum of Rs.27,82,13,600/- for providing Regular Meals at the price of Combo Meals from October 2013 to March 2020, and Rs.5,34,89,753/- for providing Welcome Drinks from August 2014 to March 2020.
Arbitral Award:
22. The learned Sole Arbitrator, vide the Arbitral Award dated 27.04.2022, allowed the claims of the claimant herein and awarded the claimant sums towards the differential costs for the supply of Second Regular Meals instead of Combo Meals and for the supply of Welcome Drinks, along with simple interest at the rate of 6% per annum payable from January 2018 till the date of the Award and interest at the rate of 9% per annum in case the payment is not made within a period of 4 months.
23. In summary, the learned Sole Arbitrator held as under:-
(a) Giving the benefit of Section 14 of the Limitation Act, 1963 (in short, Limitation Act) to the claimant for the time spent in the Writ Petition, the claimant would be entitled to seek the claim for the period commencing from January, 2015;
(b) Only on the ground that it raised bills without claiming the additional amounts for the Second Regular Meal or the Welcome Drink, and accepted payment of the bills so raised, the claimant cannot be non-suited on the ground that it has waived or abandoned its right to seek recovery of the amount due for the supplies made;
(c) The plea that the claimant unduly benefited due to the increase in tariff pursuant to the Circular dated 09.10.2013, cannot be accepted as the said Circular was issued by the Railways on its own to fix the adequate rate of catering services;
(d) The respondent enjoys a superior and dominant position in the contract over the claimant;
(e) Clause 1.3.1 of the Tender Document does not clothe the respondent with unilateral powers to issue any directions whatsoever which would then automatically deem to bind the claimant. It cannot be used to say that if the respondent directs the claimant to render a particular service which leads to additional costs being incurred, then, even without the express consent of the claimant, the respondent can assume or assert that the claimant will not be reimbursed for such additional costs incurred by it on account of the services rendered by it on the specific instruction of the respondent
(f) Similarly, while Clause 8 of the MLA authorises the respondent to make revisions in the catering menu and tariff, it cannot come to the aid of the respondent to contend that they would not pay for the services rendered;
(g) In the facts of the case, as the respondent called upon the claimant to serve a Second Regular Meal for dinner instead of a Combo Meal, and as rates for both have been specified in the Circular dated 09.10.2013, the respondent cannot invoke Clause 8.1 of the MLA to reimburse the claimant at the rate of the Combo Meal instead of the rate of the Regular Meal;
(h) Similarly, Clause 8.1 of the MLA cannot be invoked to deny the payment/reimburse the claimant for the Welcome Drink;
(i) Clause 1.4 of the MLA also has no application as the rates and prices contained in the Circular dated 09.10.2013 remained unchanged;
(j) The claimant is entitled to seek recoveries of monies due and payable to it on account of having supplied the Second Regular Meal and the Welcome Drink;
(k) As far as the computation of the amount due is concerned, the claimant has based its claim on the Occupancy Certificate, and bills based thereon already submitted by it with the respondent. It has, therefore, discharged its initial burden of proving the computation of the amount. The respondent, however, has not given any contrary figure of the numbers of Second Regular Meals and Welcome Drinks supplied, and in the absence of any contrary evidence, the amount computed by the claimant is accepted;
(l) Even in the absence of the bills on record, the claimant, by producing the Chartered Accountant as a witness, has been able to prove the quantum of its claim in terms of Section 65(g) of the Evidence Act, 1872;
(m) The plea of the respondent that in some trains, like the morning Shatabdi, where in terms of the Circular dated 06.08.2014, Welcome Drinks were to be supplied with the rider that whenever the serving of the Welcome Drink was followed immediately by the serving of breakfast, then the Fruity/tetra-pack to be provided along with the breakfast was not required to be served as it would neutralize the effect of service of Welcome Drink, also cannot be accepted as the respondent failed to prove the same and did not raise any set-off or counter-claim in this regard;
(n) The plea of the respondent that there was a non-joinder of parties inasmuch as the Indian Railways was not impleaded, was also rejected;
Impugned Order:
24. The respondent filed the above mentioned petitions under Section 34 of the A&C Act, challenging the Arbitral Award.
25. The learned Single Judge, vide the Impugned Order, has upheld the Award of the learned Sole Arbitrator as regards the finding on limitation, waiver/estoppel vis-à-vis the Welcome Drink, recovery of monies vis-à-vis the Welcome Drink, computation of claims vis-à-vis the Welcome Drink, and on the interest awarded. However, the Award of the learned Sole Arbitrator has been set aside as far as the findings of the learned Sole Arbitrator on waiver/estoppel vis-à-vis the Second Regular Meal, and the recovery ordered vis-à-vis the Second Regular Meal are concerned.
26. A summary of the findings of the learned Single Judge is as under:-
(a) The finding of the learned Sole Arbitrator on the issue of limitation was upheld;
(b) In terms of Clause 8.1 and Clause 1.4 of the MLA, the respondent had a right to modify/alter the tariff without consultation with the claimant. Therefore, the claimant had no right under the contract to claim the difference in rates specified in the Circular dated 09.10.2013 and the Circular dated 23.10.2013;
(c) Clause 21.6 of the MLA had no application to the facts of the case as the claimant had no legitimate right to make the claim;
(d) The finding of the learned Sole Arbitrator that the bills were raised by the claimant under duress, coercion and because the claimant was in a financially precarious situation, is not supported by any evidence.
(e) The learned Sole Arbitrator has also erred in holding that because the respondent had a dominant position in the contract, the claimant could not have easily surrendered the contract and had no other choice but to raise the bills and receive payments as per the Commercial Circulars. These were mere bald assertions of the claimant without any evidence to support the same;
(f) The claimant cannot claim benefit under the Circular dated 09.10.2013 and in the same breath seek to resile from the Circular dated 23.10.2013 on the ground of it being inequitable;
(g) The doctrine of waiver was irrelevant in the present case as the claimant had entered into the contract with the respondent and did not have any right to seek reimbursement of the price difference for providing the Second Regular Meal as per the charges stipulated in the Circular dated 09.10.2013;
(h) The conduct of the claimant falls squarely within the definition of estoppel as it raised bills upon the changed tariff, accepted payments pursuant to those bills without demur or protest, and issued a letter of protest only after 1.5 years had passed;
(i) By the Circular dated 09.10.2013, there was, in fact, a change in the tariff from Rs.150/- (pre-bid tariff) to Rs.178.50/-, and post the Circular dated 23.10.2013, merely the concept of Combo Meal as the Second Meal was substituted by a Regular Meal, however, no change was made to the tariff pertaining to the Second Meal, which remained at Rs.66.50/-;
(j) The learned Sole Arbitrator had erred in relying upon the respondents letter dated 05.07.2019 to the Railways and the Railways change of policy vide Letter dated 03.10.2019, as the claimant could not have claimed amounts prior to the change of policy;
(k) As far as the Welcome Drink is concerned, it does not fall within the ambit of Clause 8.1 or Clause 1.4 of the MLA, as even though the respondent had the power to modify/alter the menu/tariff, it could not have asked the claimant to provide an additional item without intending to reimburse the claimant for the same;
(l) There was no infirmity in the findings of the learned Sole Arbitrator regarding the quantification of the claim as far as the Welcome Drink is concerned;
(m) The finding on the non-impleadment of the Indian Railways also does not warrant an interference;
(n) As the learned Sole Arbitrator had the discretion to award interest, therefore, the challenge to the award of interest is not interfered with.
Submissions of the learned Solictor General appearing for the Respondent:
27. Mr. Tushar Mehta, the learned Solicitor General, appearing for the respondent, submits that for the catering services, the IRCTC charges the pre-fixed tariff from the customers/passengers and passes it on to the caterers without retaining any amount for itself pursuant to an invoice raised by the Caterer.
28. As far as the claim of the claimant towards the Welcome Drink is concerned, the learned Solicitor General submits that the claimant had supplied the Welcome Drink to the passenger without any demur or protest or objection of any nature whatsoever. It is only after a gap of almost 11 months that a vague representation was made by an association without any material particulars. In the later representations of the claimant, no claim was made for reimbursement towards the past supply of the Welcome Drink. The bills continued to be raised by the claimant without any claim for the Welcome Drink.
29. He submits that in terms of Clause 1.4 and Clause 8.1 of the MLA, an unfettered right has been vested in the respondent to modify/alter the catering tariff and menu including without addition to the tariff. The Circular dated 06.08.2014 was issued in exercise of this power. The claimant accepted the same and did not raise any bill claiming any amount towards the Welcome Drink. Any objection to the supply of Welcome Drink or for the claim of money for the same should have been raised by the claimant immediately as it was to be passed on to the passengers. To get over the same, the claimant raised a vague plea of coercion, which the learned Sole Arbitrator accepted without any evidence.
30. He submits that, on merits, since the claimant failed to provide day-to-day or month-to-month consumption/supply of the Welcome Drink in the monthly bills, the claimant cannot claim any amount qua the same. He submits that the claimant has not discharged the burden of proving the quantity of Welcome Drinks supplied, and even the sole witness of the claimant, that is, CW-1, a Chartered Accountant, has admitted in his cross examination that he was not aware of the number of Welcome Drinks supplied by the claimant. Therefore, the learned Sole Arbitrator and the learned Single Judge erred in allowing the claim towards the supply of Welcome Drinks without any evidence being led by the claimant.
31. He submits that the claimant accepted the LOA and commenced services from 21.01.2014 and, in fact, even raised an invoice on 31.01.2014. He submits that the claimant entered into the MLA, knowing the catering tariff and menu for the different meals. The MLA contained a detailed chart of pre-determined tariff as per the Circular dated 23.10.2013, and the said chart is not disputed by the claimant in its evidence before the learned Sole Arbitrator. He submits that the learned Sole Arbitrator erred in interpreting the said apportionment chart and Clause 1.4 of the MLA in a manner that gives rise to a new contract between the parties.
32. He further submits that the learned Single Judge had rightly held the finding of the learned Sole Arbitrator qua the Second Regular Meal to be patently illegal and perverse. He submits that there was no scope of ambiguity in the applicable rates of the Second Regular Meal and the claimant is bound by the guidelines/policies/instructions issued by the respondent. The learned Solicitor General submits that the finding of the learned Sole Arbitrator that this is not a case of change of tariff, is also erroneous, because vide the Circular dated 09.10.2013 and the Circular Dated 23.10.2013, the tariff had, in fact, been changed from Rs.150/- (pre-bid tariff) to Rs. 178.50. Post the Circular Dated 23.10.2013, merely the concept of the Combo Meal as the Second Meal was substituted by a Regular Meal. No changes were made to the tariff pertaining to the Second Meal, which remained at Rs.66.50-. Hence, the learned Sole Arbitrators view based on equity was patently illegal, as it contravened the agreed terms between the parties. He submits that the plea of coercion has been rejected by the learned Single Judge in the Impugned Order as far as the Second Regular Meal is concerned. He submits that there was, therefore, no reason for the learned Single Judge to have accepted the plea of coercion as far as the claim of Welcome Drink is concerned, as they both rested on the same facts and submission of the claimant. He submits that in case the plea of coercion is to be rejected, the claim of the claimant would be clearly barred by contract as also Principle of Waiver and Estoppel.
33. He submits that the reliance of the claimant on the internal file noting of the Railways and the Railways Board letter dated 03.01.2019 is also ill-founded as the said decision taken by the Railways would operate only prospectively. He submits that these documents were also not relied upon by the claimant before the learned Sole Arbitrator or before the learned Single Judge in the petition filed under Section 34 of the A&C Act. In any case, internal file noting cannot be construed as orders of the Government or create binding obligations on the respondent.
34. He submits that the learned Sole Arbitrator has also erred in allowing the claim of the claimant on the ground of equity. He submits that under Section 28(2) of the A&C Act, the Arbitral Tribunal can decide ex aequo et bono only if the parties have expressly authorized it to do so. He submits that in the present case, no such authorization was given to the learned Sole Arbitrator by the parties.
35. He further submits that there was no evidence led by the claimant towards the quantification of its claim for the Welcome Drink. He submits that the Occupancy Certificate only shows the number of passengers travelling in the train and it is not necessary that every passenger would have had the Welcome Drink. He submits that the claimant did not produce any bill for purchase of Welcome Drink or particulars of the cost incurred by it for the same. He submits that, therefore, the claim of the claimant had been rightly denied by the respondent. In spite of the same, the learned Sole Arbitrator and the learned Single Judge erred in allowing the same by placing the onus to disprove this claim on the respondent.
36. As far as the reliance of the learned Sole Arbitrator and the learned Single Judge on the testimony of the Chartered Accountant is concerned, he submits that the Chartered Accountant produced by the claimant, in his cross-examination, has admitted that he was not aware of the number of the Welcome Drinks supplied by the claimant.
37. He submits that the present case was, therefore, not of mere incorrect appreciation of evidence by an Arbitrator but the case of an Arbitrator rendering his Award without there being any evidence.
38. He submits that even otherwise, the claim as far as the Welcome Drink is concerned, arose with the Commercial Circular 06.08.2014 and in terms of Article 55 of the Schedule to the Limitation Act, the period of limitation shall end on 05.08.2017. Every purported instance of supply will not give rise to a new cause of action. In support, he places reliance on the Judgments of the Supreme Court in Raja Ram Maize Products v. Industrial Court of M.P., (2001) 4 SCC 492 and in BSNL v. Nortel Networks (India) Pvt. Ltd., (2021) 5 SCC 738.
39. He submits that the claim of the claimant qua the Circular dated 06.08.2014, mandating the claimant to serve a Welcome Drink, and the claim of the Claimant qua the Circular dated 23.10.2013, mandating the claimant to serve two Regular Meals instead of one Regular Meal and one Combo Meal, are barred by estoppel and even, in fact, by the MLA. He submits that Clause 1.4 read with Clause 8.1 of the MLA bestowed a unilateral and unfettered right upon the respondent to modify/alter the catering tariff and the menu, including without addition to the tariff. He submits that the Circular dated 06.08.2014 was issued by the respondent in exercise of the said powers.
40. He submits that the claimant had not objected to any such additions/alterations in the menu earlier. Rather, the claimant had merely made vague representations in respect of the additions/alterations in the menu, vide Letters dated 22.06.2015, 03.08.2016, 23.08.2016 and 25.11.2016. However, in none of these representations did the claimant claim any amount for reimbursement for the additions/alterations in the menu. Therefore, the claimant cannot now seek such a claim at this belated stage.
41. He submits that the claim of the claimant qua the Welcome Drink and the Second Regular Meal are barred by limitation as the cause of action for the alleged breach arose with the introduction of the Circulars, and therefore, in terms of Article 55 of the Schedule to the Limitation Act, the period of limitation for the claim of the Second Regular Meal began to run from the date of the Circular dated 23.10.2013, or at best, from the date of commencement of service by claimant, that is, 21.01.2014, or from the date of first invoice, that is, 31.01.2014, and would end on 31.01.2017.
42. He submits that the limitation for the claim of the Welcome Drinks commenced on 06.08.2014 and ended on 05.08.2017. He further submits that the claimant cannot rely on every purported instance of supply of the Second Regular Meal or Welcome Drink as being a cause of action, because the alleged breach that has taken place is a one-time breach and any alleged supply was based on the said breach itself, that is, the Circular dated 23.10.2013 and Circular dated 06.08.2014. In support, he places reliance on the Judgments of the Supreme Court in Raja Ram Maize Products (supra) and in Nortel Networks India Pvt. Ltd. (supra).
43. He submits that even if it is presumed that the claim of the claimant is based on each supply, the learned Sole Arbitrator and the learned Single Judge have failed to appreciate that there were no bills raised by the claimant for the amounts now claimed. Therefore, the cause of action cannot be said to be arising from these bills.
44. He submits that in any case, the claimant cannot take benefit of Section 14 of the Limitation Act for pursuing the Writ Petition filed by it, as the prayer of the claimant therein was seeking setting aside of the Circulars dated 23.10.2013 and 06.08.2014 and consequential relief, however, the relief sought by the claimant in the Statement of Claim before the learned Sole Arbitrator was that of reimbursement of monies. Hence, the relief being different, and the conduct of the claimant not being bona fide, the claimant cannot claim the benefit of Section 14 of the Limitation Act. In support, he places reliance on the Judgment of this Court in Niyogi Offset Printing Press Ltd. v. Doctor Morepen Ltd., 2007 SCC OnLine Del 358.
45. Challenging the award of interest, he submits that the Impugned Award grants interest to the claimant from 01.01.2018. As interest has been awarded on the lump sum amount awarded in favour of the claimant, it would mean that even for the amount that would become due post 01.01.2018, interest has been awarded from date prior thereto. This has also become evident from the claim raised by the claimant in the Execution Proceedings.
46. Defending the setting aside of the Award as far as the claim of the claimant towards the Second Regular Meal is concerned, he submits that the learned Sole Arbitrator had erred in accepting the plea of coercion raised by the claimant in absence of any evidence to support the same. This finding was therefore, rightly set aside by the learned Single Judge. Reiterating that the claimant had not raised any bill towards the enhanced amount of Second Regular Meal, but had continued to raise bill for the Combo Meal, he submits that the MLA had been executed by the claimant after the Commercial Circular dated 23.10.2013 had been issued providing that no extra charge shall be payable for the supply of Second Regular Meal in place of a Combo Meal. He submits that along with the MLA, the chart for Apportionment Charges that was attached also showed the charges in accordance with the Circular dated 23.10.2013, which the claimant accepted. He submits that therefore, the learned Single Judge has rightly held that the claimant was estopped from now claiming the said amount.
47. He submits that the learned Single Judge has rightly held that the respondent, in terms of Clause 1.4 read with Clause 8.1 of the MLA, was within its right to change the menu and tariff and therefore, the claimant was under an obligation to supply the Second Regular Meal though at the charges applicable for a Combo Meal. He submits that the learned Single Judge has rightly held that the Arbitral Award had been passed on ground of equity rather than on contract and had, in fact, created a new contract between the parties. This was not a mere interpretation of contract, but creation of a new contract.
48. He submits that even otherwise, the claim of the claimant towards Regular Second Meal was barred by Law of Limitation as it arose with Commercial Circular dated 23.10.2013.
Submissions of the learned Senior Counsels for the Claimant:
49. Mr. Sanjay Jain and Mr. Joy Basu, the learned senior counsels for the claimant, on the other hand, submitted that the learned Single Judge erred in setting aside the Arbitral Award with respect to the Second Regular Meal. They submit that the learned Single Judge erred in not appreciating the limited jurisdiction of interference with an Arbitral Award enjoyed by a Court under Section 34 of the A&C Act. They submit that the learned Single Judge has exceeded his jurisdiction in setting aside the Award in so far as it had allowed the claim on account of supply of Second Regular Meal in favour of the claimant. They submit that a mere possibility of an alternative view on facts or on the interpretation of the contract, does not entitle the Courts to reverse the findings of the Arbitral Tribunal under Section 34 of the A&C Act.
50. As far as the finding of the learned Single Judge on the claim for Welcome Drink is concerned, they submit that the scope of judicial intervention of this Court under Section 37 of the A&C Act is limited and akin to Section 34 of the A&C Act. In support, they place reliance on the Judgments of the Supreme Court in Konkan Railway Corpn. Ltd. v. Chenab Bridge Project, (2023) 9 SCC 85, Punjab State Civil Supplies Corpn. Ltd. & Anr. v. Sanman Rice Mills & Ors., 2024 SCC OnLine SC 2632 and MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163. They submit that therefore, no interference is called for in the concurrent findings of the learned Sole Arbitrator and the learned Single Judge on this claim.
51. They submit that the claim of the claimant qua the supply of the Second Regular Meal and the Welcome Drinks are not barred by waiver/estoppel. They submit that the claimant has duly agitated the issue of supply of Second Regular Meal and the Welcome Drinks vide Letters dated 22.06.2015, 03.08.2016, 23.08.2016, and 25.11.2016. Further, the claimant, by way of the above mentioned Writ Petition filed before this Court, had also challenged the decision of the respondent to mandate the supply of Welcome Drink. They submit that, in any case, Clause 21.6 of the MLA provides that any delay or omission on part of any party to exercise its rights under the MLA shall not be construed as a waiver. In support, they place reliance on the Judgment of the Supreme Court in Kalpraj Dharamshi & Anr. v. Kotak Investment Advisors Ltd. & Anr., (2021) 10 SCC 401.
52. They submit that the claimant had filed its claim within the limitation period. They submit that the learned Sole Arbitrator and the learned Single Judge have rightly extended the benefit of Section 14 of the Limitation Act to the claimant, as the claimant had bona fidely challenged the Circular dated 06.08.2014 by the above mentioned Writ Petition. While dismissing the Writ Petition, this Court had granted liberty to the petitioner to raise its claims in arbitration, in exercise of which, the claimant had invoked the arbitration agreement between the parties. In support, he places reliance on the Judgments of the Supreme Court in Rameshwarlal v. Municipal Council, Tonk & Ors.,(1996) 6 SCC 100, and M.P. Steel Corpn. v. CCE, (2015) 7 SCC 58.
53. They submit that even on merits, the claimant has proved its claim for the reimbursement for supply of the Second Regular Meal and the Welcome Drink by the Occupancy Certificate duly certified by the Train Superintendent, which provides the number of passengers on the train. The claimant had also filed a detailed computation of its claim certified by CW-1, a Chartered Accountant. They further submit that the rate of the Welcome Drink was calculated in terms of the Circular dated 09.10.2013 and the Railway Policy.
54. They submit that since the claimant have provided the Second Regular Meal instead of the Combo Meal, they were to be compensated for the same, as was rightly held by the learned Sole Arbitrator. However, the learned Single Judge erred in interpreting the Circulars dated 09.10.2013 and 23.10.2013 and Clause 1.4 and 8.1 of the MLA. They submit that the interpretation placed by the learned Sole Arbitrator on the said Circulars, could not have been interfered with by the learned Sole Arbitrator only because it preferred another interpretation to the same.
Analysis and Findings:
55. We have considered the submissions made by the learned counsels for the parties.
Scope of Appeal under Section 37 of the A&C Act
56. At the outset, we may state that the jurisdiction of the Court under Section 37 of the A&C Act is limited only to examine if the learned Court from which the appeal arises, has erred in applying the principles applicable to the limited jurisdiction vested in such Court under Section 34 of the A&C Act. If the Award or part thereof has been set aside by the Court going beyond the limited grounds stated in Section 34 of the A&C Act, the Court in exercise of its powers under Section 37 of the A&C Act, shall set aside such order. Equally, if the learned Court has refused to set aside an Arbitral Award though the grounds set out in Section 34 of the A&C Act were made out, the Court exercising its powers under Section 37 of the A&C Act, shall again set aside such order as also the Arbitral Award. To put it succinctly, the jurisdiction of the Court under Section 34 of the A&C Act and Section 37 of the A&C Act is akin and pari materia as far as considering the challenge to the Arbitral Award is concerned. They are circumscribed by the limited scope of challenge to the Arbitral Award on the grounds mentioned in Section 34 of the A&C Act. This limitation on jurisdiction has been explained by the Supreme Court in MMTC Ltd. (supra), in the following words:
14.As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.
57. The Supreme Court recently, in Punjab State Civil Supplies Corpn. Ltd.(supra), while expounding the law laid down in MMTC Ltd. (supra), and Konkan Railways (supra), held as under:
8. The short question on the submission of the parties, which arises for our consideration is about the scope of powers of the Appellate Court under Section 37 of the Act and whether the Appellate Court was justified in setting aside the award dated 08.11.2012 which had already been confirmed under Section 34 of the Act.
9. The object of the Act is to provide for a speedy and inexpensive alternative mode of settlement of dispute with the minimum of intervention of the courts. Section 5 of the Act is implicit in this regard and prohibits interference by the judicial authority with the arbitration proceedings except where so provided in Part-I of the Act. The judicial interference, if any, is provided inter-alia only by means of Sections 34 and 37 of the Act respectively.
10. Section 34 of the Act provides for getting an arbitral award set aside by moving an application in accordance with sub-Section (2) and sub-Section (3) of Section 34 of the Act which inter-alia provide for the grounds on which an arbitral award is liable to be set aside. One of the main grounds for interference or setting aside an award is where the arbitral award is in conflict with the public policy of India i.e. if the award is induced or affected by fraud or corruption or is in contravention with the fundamental policy of Indian law or it is in conflict with most basic notions of morality and justice. A plain reading of Section 34 reveals that the scope of interference by the court with the arbitral award under Section 34 is very limited and the court is not supposed to travel beyond the aforesaid scope to find out if the award is good or bad.
11. Section 37 of the Act provides for a forum of appeal inter-alia against the order setting aside or refusing to set aside an arbitral award under Section 34 of the Act. The scope of appeal is naturally akin to and limited to the grounds enumerated under Section 34 of the Act.
12. It is pertinent to note that an arbitral award is not liable to be interfered with only on the ground that the award is illegal or is erroneous in law that too upon reappraisal of the evidence adduced before the arbitral trial. Even an award which may not be reasonable or is non-speaking to some extent cannot ordinarily be interfered with by the courts. It is also well settled that even if two views are possible there is no scope for the court to reappraise the evidence and to take the different view other than that has been taken by the arbitrator. The view taken by the arbitrator is normally acceptable and ought to be allowed to prevail.
13. In paragraph 11 of Bharat Coking Coal Ltd. v. L.K. Ahuja, it has been observed as under:
11. There are limitations upon the scope of interference in awards passed by an arbitrator. When the arbitrator has applied his mind to the pleadings, the evidence adduced before him and the terms of the contract, there is no scope for the court to reappraise the matter as if this were an appeal and even if two views are possible, the view taken by the arbitrator would prevail. So long as an award made by an arbitrator can be said to be one by a reasonable person no interference is called for. However, in cases where an arbitrator exceeds the terms of the agreement or passes an award in the absence of any evidence, which is apparent on the face of the award, the same could be set aside.
14. It is equally well settled that the appellate power under Section 37 of the Act is not akin to the normal appellate jurisdiction vested in the civil courts for the reason that the scope of interference of the courts with arbitral proceedings or award is very limited, confined to the ambit of Section 34 of the Act only and even that power cannot be exercised in a casual and a cavalier manner.
15. In Dyna Technology Private Limited v. Crompton Greaves Limited, the court observed as under:
24. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated.
25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act.
16.It is seen that the scope of interference in an appeal under Section 37 of the Act is restricted and subject to the same grounds on which an award can be challenged under Section 34 of the Act. In other words, the powers under Section 37 vested in the court of appeal are not beyond the scope of interference provided under Section 34 of the Act.
17. In paragraph 14 of MMTC Limited v. Vedanta Limited, it has been held as under:
14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.
18. Recently a three-Judge Bench in Konkan Railway Corporation Limited v. Chenab Bridge Project Undertaking referring to MMTC Limited (supra) held that the scope of jurisdiction under Section 34 and Section 37 of the Act is not like a normal appellate jurisdiction and the courts should not interfere with the arbitral award lightly in a casual and a cavalier manner. The mere possibility of an alternative view on facts or interpretation of the contract does not entitle the courts to reverse the findings of the arbitral tribunal.
19. In Bombay Slum Redevelopment Corporation Private Limited v. Samir Narain Bhojwani, a Division Bench of this Court followed and reiterated the principle laid down in the case of MMTC Limited (supra) and UHL Power Company Limited v. State of Himachal Pradesh. It quoted and highlighted paragraph 16 of the latter judgment which extensively relies upon MMTC Limited (supra). It reads as under:
16. As it is, the jurisdiction conferred on courts under Section 34 of the Arbitration Act is fairly narrow, when it comes to the scope of an appeal under Section 37 of the Arbitration Act, the jurisdiction of an appellate court in examining an order, setting aside or refusing to set aside an award, is all the more circumscribed. In MMTC Ltd. v. Vedanta Ltd. [MMTC Ltd. v. Vedanta Ltd., (2019) 4 SCC 163 : (2019) 2 SCC (Civ) 293], the reasons for vesting such a limited jurisdiction on the High Court in exercise of powers under Section 34 of the Arbitration Act have been explained in the following words : (SCC pp. 166-67, para 11)
11. As far as Section 34 is concerned, the position is well-settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided under Section 34(2)(b)(ii) i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the fundamental policy of Indian law would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury [Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., [1948] 1 K.B. 223 (CA)] reasonableness. Furthermore, patent illegality itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract.
20.In view of the above position in law on the subject, the scope of the intervention of the court in arbitral matters is virtually prohibited, if not absolutely barred and that the interference is confined only to the extent envisaged under Section 34 of the Act. The appellate power of Section 37 of the Act is limited within the domain of Section 34 of the Act. It is exercisable only to find out if the court, exercising power under Section 34 of the Act, has acted within its limits as prescribed thereunder or has exceeded or failed to exercise the power so conferred. The Appellate Court has no authority of law to consider the matter in dispute before the arbitral tribunal on merits so as to find out as to whether the decision of the arbitral tribunal is right or wrong upon reappraisal of evidence as if it is sitting in an ordinary court of appeal. It is only where the court exercising power under Section 34 has failed to exercise its jurisdiction vested in it by Section 34 or has travelled beyond its jurisdiction that the appellate court can step in and set aside the order passed under Section 34 of the Act. Its power is more akin to that superintendence as is vested in civil courts while exercising revisionary powers. The arbitral award is not liable to be interfered unless a case for interference as set out in the earlier part of the decision, is made out. It cannot be disturbed only for the reason that instead of the view taken by the arbitral tribunal, the other view which is also a possible view is a better view according to the appellate court.
21. It must also be remembered that proceedings under Section 34 of the Act are summary in nature and are not like a full-fledged regular civil suit. Therefore, the scope of Section 37 of the Act is much more summary in nature and not like an ordinary civil appeal. The award as such cannot be touched unless it is contrary to the substantive provision of law; any provision of the Act or the terms of the agreement.
(Emphasis Supplied)
58. In Delhi Metro Rail Corporation Limited vs. Delhi Airport Metro Express Private Limited, (2024) 6 SCC 357, the Supreme Court reiterated the above principle as under:-
40. A judgment setting aside or refusing to set aside an arbitral award under Section 34 is appealable in the exercise of the jurisdiction of the court under Section 37 of the Arbitration Act. It has been clarified by this Court, in a line of precedent, that the jurisdiction under Section 37 of the Arbitration Act is akin to the jurisdiction of the Court under Section 34 and restricted to the same grounds of challenge as Section 34.
Scope of Interference with an Arbitral Award under Section 34 of the A&C Act:
59. Section 34 of the A&C Act states the grounds for setting aside an Arbitral Award. So far as it is relevant for the grounds on which an Arbitral Award may be set aside by the Court, reads as under:-
(2) An arbitral award may be set aside by the Court only if–
(a) the party making the application establishes on the basis of the record of the arbitral tribunal that–
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that–
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
[Explanation 1.–For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,–
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or justice.
Explanation 2.–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.]
(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.
(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.
(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement.
(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party.
60. A reading of the above provision would show that apart from other specific grounds, an Arbitral Award may be set aside by a Court where the Court finds it to be in conflict with the public policy of India, which concept has been clarified in Explanation 1 and 2 to Section 34(2) of the A&C Act. An Arbitral Award arising out of domestic arbitrations, as is the case herein, may also be set aside by the Court if the Award is vitiated by patent illegality appearing on the face of the Award. Proviso to Section 34(2A) of the A&C Act, however, clarifies and warns that an Award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.
61. In Delhi Metro Rail Corporation Limited (Supra), the Supreme Court relying upon its earlier judgments in Associate Builders vs. DDA, (2015) 3 SCC 49 and Ssangyong Engg. & Construction Co. Ltd. vs. NHAI, (2019) 15 SCC 131, held that the ground of patent illegality is available 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 the view of the Arbitrator is not even a possible view. A finding based on no evidence at all or an Award which ignores the vital evidence in arriving at its decision would be perverse and liable to be set aside under the head of patent illegality. So would be an Award without reasons or where the Arbitrator decides a matter not within his jurisdiction or in violation of the principles of natural justice.
62. From a reading of the above judgments, it is evident that a petition under Section 34 of the A&C Act is not an appeal on merits against the Arbitral Award. The jurisdiction of the Court, while adjudicating on a petition under Section 34 of the A&C Act against a Domestic Award, is on extremely limited grounds.
63. Even on the question of interpretation of the contract, the Supreme Court in Konkan Railways (supra) held that the Arbitral Tribunal is the final authority and the Court, while exercising its power under Section 34 of the A&C Act, cannot interfere with the Arbitral Award merely because the interpretation of the contractual terms by the Arbitral Tribunal is found to be incorrect. The principle that when two constructions are possible, then Court must prefer the one which gives effect and voice to all clauses, does not have absolute application in exercising powers under Section 34 of the A&C Act. While exercising the jurisdiction under Section 34 of the A&C Act, the Court is only to see if the Arbitral Tribunals view is perverse or manifestly arbitrary. The question of reinterpreting a Contract on an alternative view does not arise. Similar restrictions are placed on a Court hearing an appeal against an order passed in a petition under Section 37 of the A&C Act. We may quote from the said judgment as under:-
25.The principle of interpretation of contracts adopted by the Division Bench of the High Court that when two constructions are possible, then courts must prefer the one which gives effect and voice to all clauses, does not have absolute application. The said interpretation is subject to the jurisdiction which a court is called upon to exercise. While exercising jurisdiction under Section 37 of the Act, the Court is concerned about the jurisdiction that the Section 34 Court exercised while considering the challenge to the arbitral award. The jurisdiction under Section 34 of the Act is exercised only to see if the Arbitral Tribunal’s view is perverse or manifestly arbitrary. Accordingly, the question of reinterpreting the contract on an alternative view does not arise. If this is the principle applicable to exercise of jurisdiction under Section 34 of the Act, a Division Bench exercising jurisdiction under Section 37 of the Act cannot reverse an award, much less the decision of a Single Judge, on the ground that they have not given effect and voice to all clauses of the contract. This is where the Division Bench of the High Court committed an error, in re-interpreting a contractual clause while exercising jurisdiction under Section 37 of the Act. In any event, the decision in Radha Sundar Dutta, relied on by the High Court was decided in 1959, and it pertains to proceedings arising under the Village Chaukidari Act, 1870 and Bengal Patni Taluks Regulation of 1819. Reliance on this judgment particularly for interfering with the concurrent interpretations of the contractual clause by the Arbitral Tribunal and Single Judge under Section 34 of the Act is not justified.
Consideration on merits:
64. Keeping the above cardinal principles of law in mind, we now proceed to consider the cross-appeals of the parties.
65. From the above narration of facts, what would be evident is that the dispute before the learned Sole Arbitrator was on two claims of the claimant:-
a) Whether the claimant was entitled to additional payments for having served a Second Regular Meal (dinner) instead of a Combo Meal as the Second Meal;
b) Whether the claimant was entitled to claim reimbursement for the Welcome Drink served by the claimant.
Claim for supply of second Regular Meal:
66. To further appreciate the claim of the claimant qua the supply of Second Regular Meal, a brief timeline of how these claim arose, would need a reiteration:-
i) The Indian Railways had invited bids on 27.05.2013 for the Subject Tender. At the relevant time, the menu and the tariff were governed by the 1999 Policy, issued by the Indian Railways.
ii) The claimant submitted their bids on 27.06.2013, however, before the issuance of the LOA, two major incidents took place:-
a. By Circular dated 09.10.2013, the Indian Railways introduced the concept of a combo meal. The Circular, so far as it is relevant to the present set of appeals, is reproduced hereinunder:-
The Menu & tariff of catering services for Rajdhani/Shatabdi/Duronto express trains was last revised in the year 1999. Rajdhani/Shatabdi/Duronto Express trains are the prestigious premier trains of Indian Railway. Since 1999, the cost of raw materials used for catering services has increased manifold due to inflation etc. A review of menu and tariff has been done through committees set up by the Board to determine the norms for apportionment of catering charges in the fares of Rajdhani/Shatabdi/Duronto express trains. Accordingly, based on the committee’s recommendations, Board has decided to revise the menu and tariff which are given as under.
*****
1.4 The concept of combo meal for Rajdhani/Duronto express trains has been introduced in place of regular Second Meal of the day 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.
******
IA/EC
Type of service
Revised catering charges to be disbursed to the licensee without service tax.
Revised catering charges to be included in fare (Inclusive of present service tax @8.66%.)
(1)
(2)
(3)
..
..
Lunch
129.50
145.00
..
..
..
Dinner
129.50
145.00
Combo meals
66.50
75.00
2AC/3AC/CC
Type of service
Revised catering charges to be disbursed to the licensee without service tax.
Revised catering charges to be included in fare (Inclusive of present service tax @8.66%.)
(1)
(2)
(3)
..
..
Lunch
112.00
125.00
..
..
..
Dinner
112.00
125.00
Combo meals
66.50
75.00
b) Within a few days of the issuance of the Circular dated 09.10.2013, Indian Railways issued the Circular dated 23.10.2013 as Corrigendum no.1 to the Circular dated 09.10.2013, which, so far as is relevant to the issues in the present set of appeals, is reproduced hereinunder:-
(Commercial Circular No. 67 of 2013)
(Corrigendum No.1 to Commercial Circular No. 63 of 2013)
Sub: Revision of Menu/tariff of catering services in Rajdhani/Shatabdi/Duronto Express Trains
Ref: Commercial Circular No. 63/2013 issued vide Board’s letter no. 2011/TG- III/631/5 dated 09/10/13
A. review of decision on revision of menu/tariff of catering services in Rajdhani/Shatabdi Duronto Express Trains has been undertaken based on the feedback received from Zonal Railways.
Accordingly, the following instructions may be complied with immediate effect:-
(i) Regular Meal, in place of Combo Meal, may be restored. Accordingly, Paral.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 pended. Accordingly, Para 13 of CC 63/2013 may be kept pended.
The above changes will be done without any increase in charges.
67. A reading of the above Circulars would show that the Combo Meal, which was introduced by the Circular dated 09.10.2013, was disbanded/discontinued and the Second Regular Meal was re-introduced. There were also changes made in the quantity of the dishes to be served and the composition of the evening tea. It was also provided that the above changes will be done without any increase in charge