Point of Law : If there was variation in catering charges, revision of license fee was required to be on sales assessment basis and not pro-rata basis.

JUDGMENT :

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/paramete