The judgment emphasizes the importance of the terms of the contract and the applicability of the policy in determining the rights and obligations of the parties, while highlighting the limited scope of interference under section 34 and 37 of the Arbitration and Conciliation Act.

JUDGMENT

Najmi Waziri, J.

1. These appeals under section 37 of the Arbitration and Conciliation Act, 1996 (`the Act') read with section 13 of the Commercial Courts Act, 2015 impugn the order of the learned Single Judge dated 24.05.2022 which dismissed their petitions under section 34 of the Act against the Arbitral Award dated 02.03.2021 by the learned Sole Arbitrator (`Arbitral Tribunal').

2. The appellants say that on 21.07.2010, a Commercial Catering Policy of 2010 (`CCP 2010') was announced by the Ministry of Railways, it covered all mobile catering services including base kitchens. The policy was amended on 31.12.2012 to include renewal of license of major mobile units; bids were invited for catering services in trains; Standard Bid Document (`SBD') was shown to the bidders; the appellants were successful bidders for various trains routes; they served for an initial period of 5 years under the Master License Agreement (`MLA'); an ad hoc extension of license was granted to them by the respondent IRCTC on the same terms and conditions for another period of 5 years with an enhancement of 10% in the existing license fee on the basis of Clause 17.5 of CCP 2010. The said clause provides as under:

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

3. The appellants continued with the contract but have impugned the imposition of 10% enhancement of the existing license fee. During the pendency of these proceedings, the appellants have paid the revised license fee of 10% for the previous years, subject to the outcome of the arbitral proceedings.

4. Mr. Nidhesh Gupta, the learned Senior Advocate for the appellants contends that:

(i) both the Arbitral Award and the impugned section 34 order too, have erred in not considering that the terms of the MLA are to prevail over CCP 2010;

(ii) the bid was made on the basis of the SBD of 27.05.2013 which led to signing of the MLA on 21.04.2014, in which the tenure of 5 years was stipulated, along with one renewal for another 5 years but there was no mention of a minimum 10% increase in license fee, upon the renewal;

(iii) the only clause of the MLA dealing with renewal of license fee is Article 4.2(b), whereunder it was incumbent upon Railways to reassess the sales and only after such reassessment could the licence fee be varied i.e. it did not necessarily contemplate an increase, let alone impose a minimum 10% increase in license fee. According to the said Article the license fee could be varied, ("may be varied"), i.e. it could be increased or decreased depending only upon a reassessment of sales. The said Article 4.2(b) reads as under:

"4.2(b) In consideration of the provision of the services and the Bid submissions of the Licensee, the Licensee shall pay to Railway an agreed sum of License Pee for the entire duration of the license payable on 2+2+ 1 yearly basis in advance. In case of renewal for another period of five years after completion of initial 5 years, railway shall make re-assessment of sales and accordingly License fee may be varied."

(iv) neither in the SBD nor in the MLA is there any mention of enhancement of 10% of the existing license fee upon renewal, the only reference to 10% is in CCP 2010 but the occasion to refer to CCP 2010 would arise only when there was a cause or occasion for interpretation of any clause of the MLA;

(v) the Arbitral Tribunal is a creation of the contract-the MLA, between the parties, therefore, the scope of its adjudication would cover only the terms of the contract and the contractual obligations and responsibilities of the parties as agreed in the MLA, it is only essentially this document that was required to be examined by the Arbitral Tribunal;

(vi) Referring to the second sentence of Article 4.2(b) of the MLA, the appellants contended that for variation in the license fee upon renewal of the license for another period of 5 years after completion of init