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2018 Supreme(Del) 2469
IN THE HIGH COURT OF DELHI AT NEW DELHI
PRATHIBA M. SINGH, J.
Indian Railway Catering & Tourism Corp. Ltd. – Petitioner
Versus
M/s Ambuj Hotel & Real Estate (P) Ltd. – Respondent
O.M.P. No. 361 of 2008
Decided On : 12-10-2018
For the Petitioners: Mr. Hitabhilash Mohanty, Mr. Saurav Agrawal
The main legal point established in the judgment is the interpretation of the tender conditions and the authority of the petitioner to terminate the agreement and forfeit the security deposit, license fee, and concession fee in case of unsatisfactory services or breach of terms and conditions.
Headnote:
IRCTC - Termination of Catering Services - General Conditions of License, Section-One, Clause 7.11, 8.1, 8.2 - The court discussed the relevant clauses of the tender document, which allowed the petitioner to terminate the agreement in case of unsatisfactory services and to forfeit the security deposit, license fee, and concession fee in case of breach of terms and conditions. The court upheld the termination of the contract due to poor catering services and public complaints, and set aside the award for refund of concession fee due to misinterpretation of the tender conditions.
Fact of the Case:
The Indian Railway Catering & Tourism Corporation (IRCTC) terminated the catering services awarded to the respondent due to complaints of poor quality services. The respondent challenged the termination and sought refund of concession fee and security deposit.
Finding of the Court:
The court upheld the termination of the contract due to poor catering services and public complaints. The court set aside the award for refund of concession fee due to misinterpretation of the tender conditions.
Issues: Termination of catering services, refund of concession fee and security deposit, misinterpretation of tender conditions.
Ratio Decidendi: The court relied on the relevant clauses of the tender document, which allowed the petitioner to terminate the agreement in case of unsatisfactory services and to forfeit the security deposit, license fee, and concession fee in case of breach of terms and conditions. The court also considered the misinterpretation of the tender conditions in reaching its decision.
Final Decision: The court upheld the termination of the catering services and set aside the award for refund of concession fee. The counter claim of Rs. 40 Lakhs was upheld.
PRATHIBA M. SINGH, J.
1. The Indian Railway Catering & Tourism Corporation (‘IRCTC’) – the Petitioner herein, floated a tender in August, 2005 for “operation and management of catering and on board services nos. 2429-2430 H. Nizamuddin - Bangalore City Rajdhani Express Train.” The Respondent submitted its bid for the same. By letter dated 18th October, 2005 it was communicated by the Petitioner to the Respondent that the decision was taken to award the license to the Respondent.
2. Immediately after the tender was awarded, the Petitioner started receiving complaints as early as in January, 2006 against the Respondent. The various complaints that were received over the period of January to June, 2006, were:
(i) Non-service of dinner/breakfast and other meals on time.
(ii) Non-maintenance of proper hygienic services.
(iii) Non-deployment of adequate staff on train for taking care, providing catering services.
(iv) Not providing food cooked with proper Agmark and other certified products.
(v) Providing adulterated food.
(vi) Misbehaviour of staff deputed by the Respondent.
(vii) Inferior quality of food served to the passengers.
3. In view of all these complaints, the Petitioner took a decision to terminate the catering services awarded to the Respondent on 9th June, 2006. The termination letter has listed all the reasons for the said termination and the termination was to take effect immediately.
4. The termination was challenged in a writ petition. On 20th June, 2006, the Respondent sought refund of concession fee and security deposit and also invoked the arbitration clause. On 28th June, 2006, the Petitioner communicated to the Respondent that the security deposit and the concession fee have been forfeited and cannot be refunded. The learned Arbitrator was also appointed.
5. Before the learned Arbitrator various claims and counter claims were raised, which are as under:-
(A) Claimant’s Prayers and Claims:
| S. No. | Prayer and Claims | Award |
| 1. | The impugned cancellation be held to be void, illegal and arbitrary | Treated as Preliminary issue and decide vide order dated 19.7.2007 and not challenged in any forum, not accepted |
| 2. | Refund of concession fee of Rs. 2,70,37,037 | Rs. 1,65,30868/- |
| 3. | Security deposit of Rs. 20,00,000/- | Nil |
| 4. | License fee paid along with Interest @ 24% from date of deposit | Nil |
| 5. | Loss of Profit of 49043994/- | Nil |
| 6. | Investment in Infrastructure, Utensils, Equipment, Cost in establishing base Kitchen to the tune of Rs. 1,00,00,000/- | Nil |
| 7. | Loss of Good Will to the extent of Rs. 2,00,000/- | Nil |
| 8. | Loss of Opportunity (Rs. 2,00,00,000) | Nil |
| 9. | Compensation for mental torture and harassment (Rs. 1,00,00,000/-) | Nil |
| 10. | Bar operating against the claimant from participating in future projects be removed | Nil |
| 11. | Cost of litigation including costs incurred towards cost and legal service charges. | Nil |
(B) Respondents Counter Claims:
| S. No. | Counter Claims | Award |
| 1. | Loss of good will and reputation (3 crores) | Nil |
| 2. | Loss due to making alternative arrangement and awarding license temporarily (Rs. 40 lacs) | 40 lacs |
| 3. | Loss due to detention at Serum Station on 15.1.06 for 1 hr 15 mtd (50 lakhs) | Nil |
6. The learned Arbitrator awarded Rs. 1,65,30,868/- in favour of the Respondent. The learned Arbitrator also awarded Rs. 40 Lakhs in favour of the Petitioner towards counter claim no. 2. The said award is under challenge before this Court.
7. Before going into the merits of the objections raised by the Petitioner, it is necessary to set out the relevant clauses of the tender document. The same are extracted herein as below:
“TENDER DOCUMENTS
GENERAL CONDITIONS OF LICENSE
SECTION - ONE
7.11 Unsatisfactory services etc.
In the event of unsatisfactory service, poor quality of articles, pe
