162 (2009) DELHI LAW TIMES 219
DELHI HIGH COURT
Shiv Narayan Dhingra, J.
BHARAT CATERING CORPORATION - PETITIONER
Versus
INDIAN RAILWAY CATERING & TOURISM CORP. LTD. - RESPONDENT
OMP No. 281 of 2009
Decided on : 26.5.2009
termination of contract - catering services - The court dismissed the petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking to stay the termination of the catering contract and restrain the respondent from giving effect to the termination letter. The court found that the scope of Section 9 is not to restore a terminated contract and that the termination was justified based on the petitioner's conduct as reflected in the termination letter.
Fact of the Case:
The petitioner's firm, awarded a catering contract by the respondent, faced internal disputes among the partners, resulting in representations to the respondent, lodging of FIRs against each other, and ultimately the termination of the contract by the respondent.
Finding of the Court:
The court found that the termination of the contract was justified based on the petitioner's conduct as reflected in the termination letter. The court dismissed the petition under Section 9 of the Arbitration and Conciliation Act, 1996.
Issues: Dispute over the constitution of the firm, expulsion of partners, and internal conflicts leading to the termination of the catering contract.
Ratio Decidendi: The scope of Section 9 is not to restore a terminated contract, and the termination of the contract was justified based on the petitioner's conduct as reflected in the termination letter.
Final Decision: The petition was dismissed by the court, and any opinion expressed in the judgment was stated to have no bearing on the arbitrator's decision if the arbitration clause is invoked.
Shiv Narayan Dhingra, J.-The petitioners firm having five partners was awarded catering contract by the respondent for various trains for providing mobile and static catering services. It was one of the conditions of the tender that in case of any change to be made in the constitution of the firm an approval shall be sought from the respondent. During continuation of the contract, one of the partners made representation to the respondent that the firm had been dissolved and he had become the sole proprietor of the firm. Thereafter, another partner approached the respondent saying that the representation made by the partner to respondent was wrong and in fact he had been expelled and the other partner was the sole proprietor. Four partners continued to make allegations against each other and kept making representations to the respondent that the other was no longer the partner of the firm and the business now belonged to him. The licence fees, running into several lacs of rupees in respect of the contract also became due. The partners lodged FIRs against each other and also made representations to the respondent and filed dissolution deed of the firm and other documents and letters resulting into the respondent cancelling the contract vide letter dated 6th May, 2009. The letter dated 6th May, 2009 is self-explanatory and gives all details and chain of events as to how various representations were made to the respondent regarding constitution of the firm, expelling of the partners, etc. The letter observed that in view of the inter se quarrel between the partners of the firm and the fact that despite giving opportunities to the partners to appear in person before Board Committee on 27th April, 2009 along with their affidavits and undertakings, two of partners did not appear resulting into a serious doubt regarding existence of the firm and legal status of the licence. The respondent also notified that it was not clear as to who was actually running the catering service. The respondent observed that in such a scenario, the travelling public ought not to suffer inconvenience and there would also be problems regarding fixing of responsibility in case of breach of the terms of the licence or non-service or improper service. Thus, the licence was terminated by letter dated 6th May, 2009.
2. The petitioner by this petition under Section 9 of the Arbitration and Conciliation Act, 1996 made a prayer that the operation of this termination letter dated 6th May, 2009 should be stayed by the Court and the respondent should be restrained from giving effect to impugned letter dated 6th May, 2009 and the petitioner should be allowed to continue with the catering service and vending service in the trains being run by respondent.
3. During arguments, Counsel for the petitioner brought all the four partners in the Court and submitted that now they were one again and explained the reasons of their non appearance before the respondents committee on the date fixed before it. It is, however, not in dispute that the different partners filed letters and representations before the respondent making allegations against each other and it is also not in dispute that even an FIR was lodged by one of the partners against the others. It is also revealed on perusal of record that the dissolution deed of the partnership firm was also filed before the respondent.
4. It only seems that the four partners, after termination of the contract, had come to the Court together with the sole purpose to take relief from the Court and to represent to the Court that they are one, though till other day they were at loggerheads.
5. Be that as it may, the scope and ambit of Section 9 is not to restore the contract which has already been terminated. The contract between the respondent and the petitioner created a commercial relationship between the parties. The termination of contract is one of the facets of the contract and as per contract entered into between the partie
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