VIBHU BAKHRU, J

1. The parties have filed the present petitions under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter the ‘A&C Act’) impugning an arbitral award dated 02.03.2021 (hereafter the ‘impugned award’) delivered by an Arbitral Tribunal comprising of a Sole Arbitrator (hereafter the ‘Arbitral Tribunal’).

2. The impugned award was rendered in the context of disputes that have arisen between the parties in relation to the renewal of the Master License Agreement dated 21.04.2014 (hereafter ‘the MLA’).

3. The MLA was for a period of five years. However, it was stipulated that the same may be renewed for a period of five years subject to satisfactory performance as per the provisions of the MLA. Undisputedly, the performance of M/s Brandavan Food Products (hereafter ‘Brandavan’) was satisfactory. Indian Railway Catering and Tourism Corporation Limited (hereafter ‘IRCTC’) was willing to renew the license, albeit on certain conditions. The dispute between the parties relates to imposition of three conditions: (i) change in the scope of services by removing the services relating to preparation of food and consequent reduction in the fee by 75%; (ii) increase in the license fee by 10%; and (iii) revision of fee on a pro rata basis. Whilst Brandavan claims that it is entitled to renewal of the license on the same terms and conditions, IRCTC claims that renewal of the license amounts to issuance of a fresh license and it is not precluded from imposing such conditions as it considers apposite. It also claims that the renewal of the license is not a matter of right.

Factual Context

4. On 21.07.2010, the Ministry of Railways introduced the Catering Policy, 2010 (hereafter the ‘2010 Policy’) through the Railway Board.

5. As per Clause 3.3.1 of the 2010 Policy, except food plaza, food courts and fast food units – which were to be managed by IRCTC – all other existing major and minor catering units were to be awarded and managed by the Zonal Railways.

6. In terms of Clause 4.1 of the 2010 Policy, the Railways would engage a professional agency to draft a Standard Bid Document (hereafter the ‘SBD’) to commence the tendering process. Rail India Technical and Economic Services drafted the SBD and the same was published on 02.01.2013. Thereafter, on 12.03.2013, certain modifications were carried out by the Railway Board to the SBD for awarding of contracts for Rajdhani/Shatabdi/Duranto/Mail Express Trains.

7. On 27.05.2013, the Chief Commercial Manager of the Northern Railway invited tenders for catering services on train no. 12423/24, “New Delhi – Dibrugarh Town Rajdhani Express”.

8. Pursuant to the aforesaid invitation to tender, Brandavan submitted its bid and was found to be the highest bidder. Accordingly, on 17.01.2014, a Letter of Award (hereafter the ‘LoA’) was issued to Brandavan.

9. Subsequently, the parties signed the MLA on 21.04.2014 for a period of five years renewable for another period of five years subject to satisfactory performance by Brandavan.

10. On 27.02.2017, the Railway Board introduced a new Catering Policy of 2017 (hereafter the ‘2017 Policy’) by commercial circular no. 20/2017. The 2017 Policy introduced the concept of unbundling of catering services, which intended to segregate the services of food preparation and food distribution. As per the 2017 Policy, IRCTC was to fully and solely assume the service of preparation of the food and the scope of work of licensees was limited to distribute the food prepared by IRCTC. The catering services were withdrawn from the Zonal Railways.

11. In terms of the 2017 Policy, the extant licenses would continue on the agreed terms and conditions but were to be assigned to IRCTC. On 10.08.2017, a tripartite agreement was signed between the Chief Commercial Manager of Northern Railway, Brandavan and IRCTC. In terms of the said tripartite agreement, the rights and liabilities of the Railways under the MLA were assigned to IRCTC.

12. The various criteria/parameters to judge the satisfactory performance were provided by office orders/circulars dated 11.07.2019 and 18.07.2019, issued by IRCTC. These parameters were based on the criteria of assessment as stipulated in Annexure III of the MLA. As per the circulars, the renewal of the MLA would be based on various parameters on which the licensees would be marked, both positively and negatively. A licensee had to obtain 60% marks (that is, 114 marks out of a total of 190) to be able to renew the license.

13. On completion of the initial period of five years of the term of the MLA on 20.01.2019, IRCTC granted ad-hoc extensions on the same terms and conditions.

14. Brandavan’s performance was found to be satisfactory based on the aforementioned criteria as stipulated. According to Brandavan, the MLA was required to be renewed for the remaining period of five years, in terms of Clause 3.1 of the MLA.

15. IRCTC sent a letter dated 23.09.2019, whereby it sought acceptance of Brandavan to five conditions for further renewal of the license. Brandavan contended that the conditions were impermissible and substantially altered the terms and conditions of the license. It asserted that it was entitled to renewal of the license on the same terms and conditions. In particular, Brandavan challenged three of the five conditions as imposed.

16. The three conditions imposed by IRCTC for renewal of license that were challenged by Brandavan are set out below:

“A. Condition No. (i): Application of unbundling model under the Catering Policy, 2017 to the present contract;

B. Condition No. (ii): Enhancement of quoted license fee by 10% as a condition of renewal; and

C. Condition No. (iii): Revision of license fee on pro rata basis upon revision of catering tariff.”

17. On 05.10.2019, Brandavan invoked the Arbitration Clause, as contained in the MLA and sought reference of the disputes to arbitration. Thereafter, Brandavan approached this Court by way of a petition under Section 11 of the A&C Act for the appointment of an arbitrator. Subsequently, by an order dated 11.12.2019, this Court appointed the learned Sole Arbitrator to adjudicate the disputes between the parties.

18. Brandavan raised the following claims before the Arbitral Tribunal:

“A. Pass an award granting a declaration in favour of the Claimant that the Claimant is entitled to renewal of its Master License Agreement (MLA) dated 21.04.2019 for a period till 20.04.2024 on the same terms and conditions contained in it having fulfilled / satisfied the condition of satisfactory performance contained in Clause 3.1 of the MLA; and

B. Pass an award declaring that the three conditions being sought to be imposed by the Respondent in its offer letter dated 23.09.2019 is illegal, void and hence unenforceable; and

C. Pass and award directing the Respondent to grant renewal of the catering contract of the Claimant, namely the Master License Agreement (MLA) dated 21.04.2019 for a period till 20.01.2024 on the same terms and conditions and on payments of license fee of Rs. 35.63 Cr on the same terms and conditions.

D. Pass such other and further order (s) as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the case.”

19. IRCTC filed its Statement of Defence, however, it did not raise any counter-claims.

20. The Arbitral Tribunal did not accept Brandavan’s contention regarding increase in the license fee. The Arbitral Tribunal held that the same was contemplated under the 2010 Policy, which was incorporated as part of the MLA. However, the Arbitral Tribunal accepted Brandavan’s challenge to the remaining two conditions. The Arbitral Tribunal found that the scope of service under the license could not be drastically altered and the issue regarding revision of fees on a pro rata basis stood concluded between the parties, in view of an arbitral award rendered earlier. The Arbitral Tribunal rejected IRCTC’s contention that Brandavan was not entitled to renewal of the license and such renewal could not be considered as a fresh license enabling IRCTC to impose such further conditions as it considers necessary.

21. Brandavan’s challenge to the impugned award is limited to the extent it rejected its contention that it was entitled to renewal of a license on the same terms and conditions without increase in the license fees. IRCTC challenges the impugned award on the ground that renewal of the license amounts to a fresh license and IRCTC is entitled to impose such conditions as it considers fit. IRCTC contends that the Arbitral Tribunal’s decision, to the extent it rejects the said contention and consequently, the two other conditions as imposed by IRCTC, is patently erroneous and vitiates the impugned award on the ground of patent illegality.

22. Whilst IRCTC is aggrieved by the impugned award to the extent that the conditions imposed by it for renewal of license fee were rejected; Brandavan is aggrieved by the impugned award to the extent that its claim for renewal without any increase in the license fee was rejected.

Submissions

23. As noticed at the outset, the controversy between the parties relates to three conditions for renewal imposed by IRCTC, in terms of its letter dated 23.09.2019. The three conditions as set out in the said letter are reproduced below:

“1. To implement Government Mandate of unbundling under Catering Policy 2017, pick up major meals from nominated IRCTC owned / managed kitchens. In such cases, license will raise the bill of only service part i.e. 25% of catering tariff of the concerned meal.

2. Quoted License fee will be enhanced by 10% as per “clause no.17.5” in CP 2010 and “clause no.3.2 and 21.1” of master license agreement of SBD contracts. The applicable GST will be applied after these enhancements. In such cases where the meals shall be supplied from the kitchens nominated by IRCTC, the quoted license fee shall be reduced on pro-rata basis. The proportion of catering bills payable to the licensee reduced due to supply of meals by IRCTC shall reduce the license fee paid by the license in the same ratio.

3. In Case of Revision of Catering Tariff the license fee payable payable to IRCTC shall be raised based on pro-rata from the date of revision of catering tariff.”

24. As noted above, IRCTC is aggrieved by the impugned award to the extent the Arbitral Tribunal accepted Brandavan’s challenge to the first and third conditions as set out above. And, Brandavan is aggrieved with the Arbitral Tribunal’s decision holding that it is liable to pay the increased license fee on renewal of the license.

25. Mr. Majithia, learned counsel appearing for IRCTC, assailed the impugned award on, essentially, five fronts.

26. First, he contended that renewal of license amounted to fresh license and IRCTC was entitled to impose such terms and conditions as it considered fit. It was not obliged to renew the license on the same terms and conditions as set out in the MLA. He contended that the Arbitral Tribunal had grossly erred in not considering the essence of the license granted to Brandavan. He further stated that the Arbitral Tribunal had erred in not considering the statutory definition of a license under Sections 42 and 52 of the Indian Easements Act, 1882. Notwithstanding that the Arbitral Tribunal rejected Brandavan’s contention that the license was for a tenure of ten years, and it failed to apply the statutory principles as applicable to a license. The license, having expired by efflux of time, stood extinguished and renewal of the same would amount to a fresh license. He contended that the entire approach of the Arbitral Tribunal was thus, flawed and therefore, the impugned award was liable to be set aside.

27. Second, he submitted that the Arbitral Tribunal had erred in interpreting the MLA by referring to other documents such as the 2010 Policy, SBDs, commercial circulars etc. The MLA provided that it may be renewed; it did not provide that it shall be renewed. Thus, Brandavan had no vested right for renewal of the license for a further period of five years. Brandavan was only eligible for being considered for a fresh license and there was no question of any automatic renewal.

28. Third, he contended that the Arbitral Tribunal had grossly erred in referring to the doctrine of legitimate expectation as the same was wholly inapplicable against a government policy.

29. Fourth, he submitted that the Arbitral Tribunal had ignored Article 21.1 of the MLA, which entitled Railways to apply the latest catering policy. The conditions imposed by IRCTC were in conformity with the 2017 Policy and therefore, the same could not be set aside.

30. Fifth, he submitted that the Arbitral Tribunal had not considered its plea that the MLA was not specifically enforceable.

31. Mr. Bishnoi, learned counsel appearing for Brandavan, had countered the aforesaid submissions. He submitted that the terms of the MLA were explicit and it was agreed that that it will be renewed on the same terms and conditions. He submitted that in these circumstances, it was not open for IRCTC to insist on any increase in the license fee.

32. He submitted that the Arbitral Tribunal had, in effect, accepted that the MLA between the parties was a binding contract. Nonetheless, the Arbitral Tribunal had rewritten the same by accepting that IRCTC could charge a higher license fee. He referred the decision of the Supreme Court in PSA SICAL Terminals Pvt. Ltd. v. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin & Ors.: 2021 SCC OnLine SC 508, in support of his contention that rewriting of a contract would be in conflict with the public policy of India and the impugned award to that extent would be liable to be set aside under Section 34(2)(b)(ii) of the A&C Act. He submitted that the Arbitral Tribunal had erred in proceeding on the basis that Brandavan was relying on the 2010 Policy in support of its claim. He submitted that Brandavan’s claim for renewal of license was based solely on Clauses 3.1 and 3.2 of the MLA. Lastly, he submitted that Clause 17.5 of the 2010 Policy, which provided for 10% increase in the license fee was only applicable to Minor Units and not to Major Units. He submitted that since ‘Mobile Units’ are Major Units, there was no stipulation regarding increase in the license fee.

33. It is apparent from the above submissions that the disputes between the parties, essentially, relates to Brandavan’s claim for renewal of the MLA for a further period of five years on the same terms and conditions.

Reasons & Conclusions

Brandavan’s challenge to the impugned award

34. Brandavan’s challenge in the present petition is confined to increase in license fee on renewal. The Arbitral Tribunal accepted the contention that once the parties have finalized and executed the MLA, further ancillary documents could not be referred to change the substantive and material terms of the contract. However, the ancillary documents could be looked into for other purposes. It is settled law that contemporaneous documents and correspondence are relevant in understanding the intention of the parties and therefore, in interpreting the terms of a contract.

35. Undisputedly, the MLA was entered into by the parties in terms of the 2010 Policy, which was then in vogue. In terms of the 2010 Policy, Railways had prepared the SBDs and tenders were invited on the said basis. Brandavan had also relied upon the terms of the SBD in support of its contention regarding revision of license fee pursuant to the revision in catering charges. The dispute regarding the same was the subject matter of another arbitration, which had culminated in an award in favour of Brandavan. The said award rested on express terms of the SBD (including Clause 1.3.3). The 2010 Policy would also be material in ascertaining the disputes between the parties. There is no dispute that the MLA was entered into, pursuant to the 2010 Policy. The Arbitral Tribunal had proceeded to hold that certain relevant terms of the 2010 Policy must be read as a part of the MLA. This Court finds no infirmity with the said view. Some of the relevant terms of the 2010 Policy – to the extent the same are not repugnant or in conflict with the MLA – are necessarily required to be referred while considering the arrangement between the parties. This Court concurs with the approach of the Arbitral Tribunal. In any view of the matter, the said approach is neither contrary to law nor can be held to be patently erroneous.

36. The next question to be addressed is whether the stipulation of increase in license fee on each renewal, as provided in Clause 17.5 of the 2010 Policy, is wholly inapplicable to licenses in respect of Major Units.

37. Clause 16 of the 2010 Policy provided for the tenure of various units. Sub-clause 16.1 of the 2010 Policy provided for the tenure of Major Units and General Minor Units. Sub-clause 16.2 of the 2010 Policy provided for tenure of Special Minor Units. Clause 17 of the 2010 Policy provided for renewal of the licenses. The relevant extracts of Clauses 16 and 17 of the 2010 policy are set out below:

“16 TENURE

16.1 TENURE OF MAJOR UNITS & GENERAL MINOR UNITS

16.1.1 Tenure of all major units including food courts, fast food units (except Food Plazas, Base Kitchens and AVMS) will be for a period of 5 years. There will be no renewals.

16.1.2 Tenure of AVMs will be made for a period of 5 years. There will be no renewals as per policy as these are major units.

16.1.3 Allotment of all General Minor Units at A, B & C category stations shall be awarded for a period of 5 years with a provision for renewal after every 3 years on satisfactory performance and payment of all dues and arrears and withdrawal of court cases, if any. Allotment of all General Minor Units at D, E & F Category stations will be for a period of 5 years with a provision for renewal after every 5 years for a further period of 5 years on satisfactory performance and payment of all dues and arrears and withdrawal of court cases, if any.

xxxx xxxx xxxx

16.2 TENURE OF SPECIAL MINOR UNITS

16.2.1 Special Minor Units at A, B, and C category stations shall be awarded for a period of 5 years with a renewal after every 3 years on satisfactory performance and payment of all dues and arrears and withdrawal of court cases, if any.

16.2.2 Special Minor Units at D, E, F category stations shall be awarded for a period of 5 years with a provision for renewal after every 5 years for a further period of 5 years on satisfactory performance and payment of all dues and arrears and withdrawal of court cases, if any. Efforts must, however, be made at the time of renewal to ensure a minimum increase of 10% over the prevailing license fee.

16.2.3 License fee will be reassessed and revised at the time of each renewal. To arrive at a realistic figure zonal railways will ensure that a fresh assessment of sales turnover/revenue is conducted during the peak season and lean season of the year immediately preceding the year of renewal with the periodicity of three - three months in order to assess the actual sales turnover so as to fix the revised license fee.

17 RENEWAL

Renewal will not be a matter of right. The licensee must apply for renewal minimum 6 (six) months in advance before the expiry of the contract. Renewal will be based on the following:-

xxxx xxxx xxxx

17.2 Payment of all dues/ arrears - No Dues Certificate from the concerned authority, must be attached along with the application for renewal.

17.3 The applicant must submit the documents afresh along with the renewal application regarding the details mentioned in para 14.2.1.1, 14.2.1.2 and 14.2.1.3 and in case of GMUs relevant documents as mentioned in the Standard Bid Documents will be required to be submitted afresh along with the above mentioned documents.

17.4 The Annual Confidential Reports (ACRs) on catering performance will be modified in accordance with this policy. The detailed instructions on ACRs will be issued by the Railway Board, ACRs maintained by the Railways for the Licensee seeking renewal shall be scrutinised by the Competent Authority granting renewal. Based on the ACRs for the period of tenure the marks will be allotted to the licensee. A minimum cut off criteria based on the grading of the ACRs for grant of renewal must be notified by the zonal railways in advance.

17.5 The license fee shall be revised and reassessed at the time of each renewal subject to a minimum increase of 10% of the existing license fee.”

38. Sub-clause 16.1.1 of the 2010 Policy was substituted by a circular dated 31.12.2012 by the following clause:

“16.1.1 Tenure of all major units including food courts, fast food units (except Food Plazas, Mobile Units and Base Kitchen) will be for a period of 5 years. There will be no renewals. In case of Mobile Units and base Kitchen, the tenure will be 5 years with one renewal for 5 years subject to satisfactory performance and payment of all dues and arrears and withdrawal of court cases, if any.”

39. The 2010 Policy, as initially issued, did not provide for renewal in respect of a Major Unit. However, the same was amended by the circular dated 31.12.2012. At the time of issuance of the 2010 Policy, Clause 17.5 of the 2010 Policy, which provided for a minimum increase of 10% in the license fee, was inapplicable to Major Units as there was no provision for renewal of a license of a Major Unit. The Arbitral Tribunal held that after the substitution of Clause 16.1.1 of the 2010 Policy, a license for a Major Unit could be renewed for a further period of five years and therefore, there was no reason to exclude the applicability of Clause 17.5 of the 2010 Policy to such renewal post amendment of Clause 16.1.1 of the 2010 Policy. The Arbitral Tribunal held that Clauses 16 and 17 of the 2010 Policy were to be read conjunctively. With the substitution of Clause 16.1.1 of the 2010 Policy to provide for renewal of a license for a Mobile Unit and Base Kitchen, the attendant provisions for renewal under Clause 17 of the 2010 Policy also became applicable.

40. The MLA did not expressly provide for any increase in the license fee. However, there was no provision that proscribed increase in the license fee. The recitals to the MLA referred to the 2010 Policy and undisputedly, the tenders for providing catering services were issued in terms of the 2010 Policy.

41. The decision as to interpretation of a contract falls squarely within the jurisdiction of an arbitral tribunal; and unless this Court finds that such interpretation is manifestly erroneous and strikes at the root of the dispute, no interference would be warranted in these proceedings.

42. This Court finds no ground to fault with the Arbitral Tribunal’s interpretation of the MLA. Clearly, the said interpretation is a plausible one and therefore, not amenable to challenge under Section 34 of the A&C Act.

43. In view of the above, this Court finds no merit in Brandavan’s petition [OMP(COMM) No.292/2021]. And, the same is liable to be dismissed.

IRCTC’s challenge to the impugned award

44. IRCTC is aggrieved by the impugned award to the extent the Arbitral Tribunal had accepted Brandavan’s challenge to the first and third conditions and had found the same to be impermissible. The first condition being to restrict the scope of work to picking up major meals from nominated IRCTC owned / managed kitchens and in such cases, restricting charges to 25% of catering tariff of the concerned meals. And, the third condition being revision of the license fee on a pro rata basis, in case of revision of catering tariff.

45. As noted above, IRCTC’s challenge to the impugned award is founded on the following assertions: (a) that Brandavan had no right to seek renewal of the license; (b) that license is a grant and not a contract; and, (c) that renewal of the license amounts to a fresh grant and therefore, IRCTC is not precluded from imposing such conditions as it considers necessary.

46. Mr. Majithia drew the attention of this Court to Section 52 of the Indian Easement Act, 1882. He has also referred to various decisions as referred before the Arbitral Tribunal, in support of his contention that renewal of a license amounts to issuing a fresh license.

47. Section 52 of the Indian Easements Act, 1882 is set out below:

“52. “License” defined.—Where one person grants to another, or to a definite number of other persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a license.”

48. A plain reading of the aforesaid definition indicates that license referred to under Section 52 of the Indian Easement Act, 1882 is in respect of an immovable property. Thus, per se, this definition of license under Section 52 of the Indian Easement Act, 1882 is not applicable to the license granted to provide catering services.

49. Mr. Majithia referred to the decisions of the Supreme Court in Provash Chandra Dalui & Anr. v. Biswanath Banerjee: 1989 Supp. (1) SCC 487; State of West Bengal & Ors. v. Calcutta Mineral Supply Co. Pvt. Ltd. & Anr.: (2015) 8 SCC 655 [LQ/SC/2015/702] ; and, State of Gujarat & Ors. v. Nirmalaben S. Mehta & Anr: (2016) 9 SCC 240, in support of his contention that renewal of a license would amount to a fresh grant; therefore, IRCTC was entitled to impose fresh conditions.

50. None of the aforesaid authorities are applicable in the facts of the present case. In Provash Chandra Dalui & Anr. v. Biswanath Banerjee (supra), the issue involved was whether the appellants were thika tenant under the Calcutta Thika Tenancy Ordinance, 1948. In terms of Section 2(5) of the said ordinance, a person who holds land under another person under a registered lease in which the duration of the lease is expressly stated to be for a period of not less than twelve years, was excluded. In this context, the question which fell for consideration of the Court was whether the lease granted was not less than a period of twelve years. In that case, the original landlord had leased out the premises under a registered lease deed, for a period of ten years commencing from 01.04.1946 at a rent of Rs.200/-. However, it was specified in the lease deed that if the lessee did not fail to pay the rent to the lessor and the rate and taxes to the municipality during that period, the lease would be extended for a further period of five years albeit on a higher rent of Rs.250/- and likewise for a further period of five years on a rent of Rs.300/-. The lessee was further entitled to extend the same by a maximum period of one year at further enhanced rent of Rs.500. The Court accepted that the lease was, in fact, for a period of twenty years and therefore, the same was for a period of not less than twelve years. It is in this context that the Court had held that the word ‘extension’ would ordinarily imply continued existence but renewal of a lease would, in fact, amount to execution of a lease.

51. Clearly the said case has no application in the facts of the present case.

52. In State of Gujarat & Ors. v. Nirmalaben S. Mehta & Anr. (supra), the Court was concerned with the question of renewal of a mining lease under the Mineral Concession Rules, 1960. The mines were located in Jamnagar District, which was declared as a reserve area for exploitation of bauxite. The State Government had issued a notification, where the bauxite areas of Jamnagar and Junagadh Districts were de-reserved but also sought permission of the Central Government to impose certain conditions on the leaseholders. The Court found that the Central Government had granted such permission for imposition of certain conditions on the leaseholders under Rule 27(3) of the Mineral Concession Rules, 1960. Indisputably, the mining lease was required to be renewed under the relevant act and rules.

53. Similarly, in State of West Bengal & Ors. v. Calcutta Mineral Supply Co. Pvt. Ltd. & Anr. (supra), the relevant clause of the lease deed expressly provided that successive renewals would be “subject to the rules and terms and conditions of the lease and such other terms and conditions as the State Government may from time to time consider necessary to impose and include in such renewed lease or leases”.

54. None of the authorities referred to by Mr. Majithia pertains to licenses in the nature as granted by IRCTC. The cases referred to either relate to immovable property or licenses under a statutory regime.

55. The Arbitral Tribunal had held that the license is a contract between the parties and the rights and obligations would be governed by the terms and conditions of the MLA and other documents, which form an integral part of that contract.

56. The Arbitral Tribunal had further held that the law and principle relating to difference between a lease and a license, as explained by various judgments in the context of the Transfer of Property Act, 1882, were stricto sensu inapplicable in case of license granted for catering services. This Court does not find any infirmity with the said view.

57. Mr. Majithia had referred to Article 21.1 of the MLA and, on the strength of the said agreement, contended that the MLA was required to be implemented on the basis of the Railway’s latest catering policy. He submitted that therefore, the 2017 Policy, which provided for unbundling the catering services, was applicable. Article 21.1 of the MLA reads as under:

“ARTICLE 21 MISCELLANEOUS

21.1 Interpretation

This 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. In the event of any interpretation of the provisions of this 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.”

58. As is apparent from the plain language of Article 21.1 of the MLA, the same provides an aid for interpretation of the MLA. In case of any question regarding interpretation of the MLA, the same would require to be interpreted on the basis of the latest catering policy as applicable. The Arbitral Tribunal had found that in the present case, the 2017 Policy was not applicable. The contention that Article 21.1 of the MLA incorporates the latest catering policy in the MLA, is clearly unmerited. As noted above, Article 21.1 of the MLA provides an aid to the interpretation and does not modify the substantive term of the MLA. The Arbitral Tribunal had read in the 2010 Policy in the MLA, not because of Article 21.1 of the MLA, but because the MLA was entered into pursuant to the 2010 Policy and the same was material to ascertain the intention of the parties. This Court finds no merit in the contention that the Arbitral Tribunal had erred in holding that the 2017 Policy was not applicable as the substantive term of the MLA could not be altered.

59. The next question to be examined is whether the Arbitral Tribunal had erred in finding that Brandavan was entitled to renewal of the license for a term of five years. According to IRCTC, as noticed above, Brandavan had no right for renewal of the license for a further period of five years and its license to provide catering services was terminated by efflux of time. Brandavan had relied on Article 3 of the MLA and on the strength of the said article, claimed that it was entitled to renewal of license on the same terms and conditions for a further period of five years. The said article reads as under:

“ARTICLE 3 TENURE OF THE AGREEMENT

3.1 The Tenure of the Agreement will commence on the Commencement Date which has been agreed by the parties for a period of 5 (Five) years, on completion of 5 years, one renewal for a period of 5 years may be given subject to satisfactory performance as per provisions of Article 9, 14 ">Article 9, 14 and Article 18 herein below, respectively, and shall continue until a period of five (5+5) years from the Commencement Date.

3.2 Renewal will be based on recommendation made by an evaluation committee nominated by the railways based on the satisfactory performance. The satisfactory performance will include complaints and deficiency in service. Performance of service will be based on APARs which would be maintained as per the guidelines issued vide the New Catering policy 2010. The major parameters for recording the irregularities/deficiencies will be as under:

(a) Complaints based (b) Inspections based (c) Supervision based (d) Passenger Feedback based and (e) Third party Audit based.”

60. Article 9 of the MLA provides for performance levels to be delivered. Article 14 of the MLA contains covenants, which entitled the Railways to certain audit and inspection rights. Article 18 of the MLA contains provisions regarding termination. Admittedly, Brandavan had met the performance standards as required. There is no allegation that any audit rights as contemplated under Article 14 of the MLA were infringed or that IRCTC had terminated the license under Article 18 of the MLA.

61. As is apparent from the plain language of Article 3.1 of the MLA, the parties had agreed that the MLA ‘may’, subject to the satisfactory performance, be extended for a period of five years.

62. As noticed above, Clause 16.1.1 of the 2010 Policy provided that in case of Mobile Units and Base Kitchen, the tenure ‘will’ be five years with one renewal for five years subject to satisfactory performance and payment of all dues and arrears.

63. The Arbitral Tribunal also noted that in terms of the 2010 Policy, the Railways had prepared the SBD. Article 1.4 of the SBD provided for the tenure of license. The said article reads as under:

“1.4 Tenure of License

1.4.1 The tenure of License shall be for a period of (5 + 5) years subject to satisfactory performance. The License agreement shall be as per Section D.

1.4.2 On completion of 5 years, one renewal for a period of 5 years will be given subject to satisfactory performance.”

64. Although Article 3.1 of the MLA used the word ‘may’, the Arbitral Tribunal was of the view that the same did not vest an absolute right to refuse renewal. The word ‘may’ was used because the renewal of license was subject to Brandavan’s performance being satisfactory and other conditions. Undisputedly, the MLA was entered pursuant to the 2010 Policy and in the backdrop of the SBD prepared by the Railways in terms of the 2010 Policy. In view of the above, the Arbitral Tribunal had interpreted Article 3.1.1 of the MLA in light of the aforesaid documents, which used the word ‘will’ in the relevant clauses concerning renewal of license. The Arbitral Tribunal concluded that IRCTC had reserved its discretion to renew the MLA but the same was not absolute; it was conditional on satisfactory performance on the part of Brandavan. If the performance was satisfactory and Brandavan had paid its dues, IRCTC could not refuse renewal of license.

65. The Arbitral Tribunal also referred to the doctrine of legitimate expectation and held that Brandavan had legitimate expectation that the license would be renewed on its satisfactory performance as per the MLA. According to IRCTC, the principles of legitimate expectation are not applicable contrary to the prevalent policy. However, it is seen that the Arbitral Tribunal’s decision that Brandavan was entitled to a renewal of five years was based largely on interpretation of Article 3.1 of the MLA read with the 2010 Policy and the SBD. The Arbitral Tribunal had, in addition, referred to principles of legitimate expectation. The Arbitral Tribunal had also noted that the renewal of license could not be granted solely on the basis of legitimate expectation. However, the principle could be used for interpreting the intention of the parties.

66. Considering that the decision of the Arbitral Tribunal is based on interpretation of the MLA, the same cannot be interfered with as this Court does not find the said interpretation to be an impossible one. It is not necessary for this Court to re-adjudicate the disputes as it is well settled that the scope of examination under Section 34 of the A&C Act is limited. Unless the court finds that the view of an arbitral tribunal is one that no reasonable person can accept, the arbitral award cannot be set aside. In this case, the Court does not find that the Arbitral Tribunal’s view is, ex facie, erroneous and not a plausible one.

67. Mr. Majithia had also contended that the Arbitral Tribunal had completely ignored the contention that the agreement is a determinable one and the impugned award, which was in the nature of directing specific performance of the MLA, could not be granted. The said contention is also unpersuasive. The said question did not arise in the given facts. The dispute before the Arbitral Tribunal was, essentially, confined to the validity of three conditions that IRCTC sought to impose for renewal of the MLA. The first condition was with regard to substantially limiting the scope of services in terms of the 2017 Policy. The Arbitral Tribunal found that the terms of the 2017 Policy could not be applied to alter the substantive term of the agreement. In terms of the 2017 Policy, IRCTC would takeover activities of preparation of food and the scope of work under the license would be confined to distribution of the meals/food articles. Indisputably, this would reduce the scope of the license substantially. According to IRCTC, Brandavan would only be entitled to 25% of the fees charged. Clearly, reducing the scope to this extent would alter the contract between the parties. The Arbitral Tribunal found that this was impermissible.

68. The question whether IRCTC could terminate the MLA was not the dispute before the Arbitral Tribunal as it was not IRCTC’s case that it had terminated the MLA, in accordance with Article 18 of the MLA. The Arbitral Tribunal had returned a finding that the condition imposed for restricting the scope of services by unbundling the catering services and reserving the service of preparation of food, was impermissible under the MLA.

69. The next aspect to examine is the Arbitral Tribunal’s decision regarding the third condition. The third condition relates to whether on revision of catering charges, it was permissible for IRCTC to provide for variation in the license fees on a pro-rata basis.

70. It was Brandavan’s case that in terms of the MLA, if there was variation in the catering charges, the revision of the license fee was required to be on sales assessment basis and not pro-rata basis. Admittedly, the said dispute was subject matter of an arbitration between the parties, which had culminated in the arbitral award dated 09.09.2016. The Railways had challenged the said award before this Court [OMP(COMM.) 119/2017 captioned “Union of India v. Brandavan Food Products”]. However, the said petition was dismissed by an order dated 09.09.2016. The Railways had not appealed that order and the arbitral award became final.

71. IRCTC had contended that the arbitral award was erroneous for various reasons. However, the Arbitral Tribunal had declined to accept the same as the arbitral award, which settled the issue between the parties, had attained finality. Thus, it was not open for IRCTC now to contend that the contract between them contemplated revision of license fee on a pro-rata basis commensurate with any increase in the catering charges. The limited question to be addressed by the Arbitral Tribunal was whether it was open for IRCTC to impose the condition, which was contrary to the contract between the parties. In view of the Arbitral Tribunal’s conclusion that Brandavan was entitled to renewal of the MLA without alteration of any substantive terms; the imposition of such a condition was held to be impermissible.

72. This Court finds no infirmity with the aforesaid view and the petition filed by IRCTC [O.M.P. (COMM) 330/2021] is liable to be dismissed.

Conclusion

73. This Court finds no ground to interfere with the impugned award. The petitions are unmerited and are, accordingly, dismissed. All pending applications are also disposed of.

74. The parties are left to bear their own costs.