M/S Kwality Caterers vs Union Of India & Another
2011 Latest Caselaw 6274 Del

          *IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                  Date of decision: 21st December, 2011

+                        LPA No. 1003/2011

M/S KWALITY CATERERS                             ..... Appellant
                   Through: Mr. Naresh Thanai, Advocate

                                   Versus

UNION OF INDIA & ANOTHER                                   ..... Respondents
                    Through: Nemo

CORAM :-
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

                               JUDGMENT

RAJIV SAHAI ENDLAW, J.

1. The appeal impugns the order dated 25 th November, 2011 of the

learned Single Judge disposing of W.P.(C) No. 5041/2011 preferred by the

appellant by relegating the appellant to the Courts at Kolkata, inter alia on

the ground that it is more convenient for the Courts at Kolkata to deal with

the controversy, than this Court. The learned Single Judge in this regard has

relied on Sterling Agro Industries Ltd. v. Union of India 181 (2011) DLT

658 where a five-Judge Bench of this Court has held that the Court may

refuse to exercise jurisdiction under Article 226 if the jurisdiction is

invoked in a malafide manner or if, depending upon the factual matrix, it is

found that it is more convenient for some other Court to deal with the

controversy. The learned Single Judge for the said reason did not deal with

the merits of the controversy. We also, as such have heard the counsel for

the appellant only on the said aspect.

2. The factual matrix is as follows. The Indian Railways Catering and

Tourism Corporation Limited (IRCTC) having its office within the

jurisdiction of this Court, had in or about the year 2005 invited bids for

operation and management of catering and on board services inter alia in

respect of train no.s 8603-04 & 2817-18 known as Jharkhand Swarna Jayanti

Kranti Express Train running between Delhi and Hatia (Ranchi, Jharkhand)

Railway Station. The appellant being the highest bidder was awarded the

contract and an agreement dated 29th July, 2005 was executed at Delhi

between the appellant and IRCTC. The said contract inter alia provided for

arbitration of disputes and provided for the jurisdiction of the Courts situated

in the State of Delhi. The said contract was for a period of five years,

expiring in July, 2010.

3. That in the year 2010, the Railway Board, Ministry of Railways,

Government of India decided to take over the catering and allied services

from the IRCTC and published the Catering Policy 2010 which came into

force on 21st July, 2010 in supersession of earlier policies. As per the said

Policy, the Railways decided to take over management of all mobile catering

services from IRCTC. It further provided that all existing major and minor

catering units will be awarded and managed by the zonal railways and all

contracts, till then being managed by IRCTC, on expiry of the term thereof,

will be awarded by the zonal railways and IRCTC will not renew any

contract required to be handed over to the zonal railways on the expiry of the

term thereof. It yet further provided that all existing contracts were to be

managed by the zonal railways and were to be transferred to the zonal

railways and the zonal railways only were made responsible for ensuring

standards of services and the decision as to the extent, type and scale of

catering services required to be provided on board trains was also vested in

the zonal railways. The zonal railways were also made responsible for

ensuring quality and quantity of food etc. The awarding of, management

and monitoring of contracts was also left to the zonal railways. The Policy

further provided for the transfer of agreements/licences granted by IRCTC to

zonal railways.

4. It is not in dispute that the contract (supra) of the appellant fell within

the domain of South Eastern Railways, Kolkata.

5. In view of the changed Policy and to provide for the interregnum,

IRCTC vide its letter dated 22 nd June, 2010 extended the term of the contract

(supra) which was to expire on 28 th July, 2010, till 2nd January, 2011.

However, on 24th December, 2010 a Tripartite Agreement was signed at

Kolkata between the South Eastern Railways, IRCTC and the appellant

whereunder in accordance with the Catering Policy 2010, the contract

(supra) which was earlier between the IRCTC and the appellant was

assigned by IRCTC in favour of South Eastern Railways, Kolkata. The said

Tripartite Agreement inter alia provided "the terms and conditions as

provided in the agreement dated 29 th July, 2005 signed between M/s Kwality

Caterers and IRCTC and extension letter dated 22 nd June, 2010 shall form

the basis of this agreement. However, the following amendments shall

prevail over the earlier agreement". The amendments inter alia were that the

power of termination of the contract was to be with the South Eastern

Railways, the power of inspection and imposition of fines was also to be

with the South Eastern Railways and the appellant was to pay all dues w.e.f.

24th December, 2010 to South Eastern Railways. By yet another

amendment, the power of appointment of sole arbitrator which under the

initial agreement (supra) was of IRCTC, was vested with the Chief

Commercial Manager, South Eastern Railways.

6. The South Eastern Railways vide letter dated 20th January, 2011

extended the term of the contract dated 24th December, 2010 which was

executed at Kolkata and which was to expire on 2 nd January, 2011, for a

further period of six months or until the finalization of further contract

whichever may be earlier and with further right to enhance the licence fee

w.e.f. 21st January, 2011.

7. The Railway Board at New Delhi vide its letter dated 1 st July, 2011 to

all zonal railways informed that the zonal railways "may permit further

extension" of contracts earlier awarded for another six months w.e.f. 21 st

July, 2011 or until finalization of new contracts, "with a view to ensure

uninterrupted catering services" in the trains.

8. However, the South Eastern Railways, Kolkata vide its letter dated

15th July, 2011 to the appellant, refused extension of the contract to the

appellant beyond 21 st July, 2011 and called upon the appellant to vacate the

pantry car of the train immediately.

9. Challenging the aforesaid letter dated 15th July, 2011 of the South

Eastern Railways, Kolkata, the appellant filed the writ petition (supra) and

vide order dated 20 th July, 2011 the learned Single Judge restrained the

respondent from implementing the said letter dated 15 th July, 2011. The

respondent Railways in their counter affidavit before the learned Single

Judge inter alia took objection to the territorial jurisdiction of this Court to

entertain the Writ Petition and which objection as aforesaid found favour

with the learned Single Judge who has dismissed the Writ Petition on the

ground that this Court does not have the territorial jurisdiction and/or that

the Court at Kolkata is the forum conveniens for entertaining the writ

petition.

10. The counsel for the appellant, in support of his contention that this

Court is the only Court having jurisdiction to entertain the grievance and/or

is the appropriate Court to entertain the petition has contended :-

(i) that the agreement with respect to which the dispute has arisen is but

an extension of the agreement initially signed on 29 th July, 2005 which

expressly provided for the jurisdiction of the Courts situated at Delhi;

(ii) that notwithstanding the absence of the words "only" or "expressly" in

the agreement dated 29 th July, 2005, it is clear that the agreement was for

exclusive jurisdiction of the Courts at Delhi only. Reliance in this regard

is placed on Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd 2004

(4) SCALE 617;

(iii) that even now it is the Railways Board at Delhi which is taking all

the policy decisions and guiding the respective zonal railways and the

Railway Board at Delhi has directed for extension of the contract and the

South Eastern Railways is acting in contravention of the said decision of

the Railway Board and the petitioner/appellant in the Writ Petition is

merely seeking to enforce the decision of the Railway Board at Delhi and

thus this Court will have the jurisdiction;

(iv) that earlier also, though prior to 2010, arbitration proceedings relating

to the agreement were filed at Delhi;

(v) that the learned Single Judge has wrongly assumed that the train

subject matter of the agreement was not touching Delhi when in fact it is

running between Delhi and Hatia (Ranchi) as aforesaid;

(vi) that since the agreement in the present case provides for the exclusive

jurisdiction of the Courts at Delhi and the cause of action also has

substantially arisen at Delhi, Sterling Agro Industries Ltd. (supra) has

no application in the present case. Reliance is placed on the judgment

dated 28th May, 2009 of the Division Bench of this Court in LPA

182/2009 titled Basant Bagde v. M/s Hindustan Prefab Ltd. where

finding the tender process to have taken place, work order having been

issued, monies having been paid, agreement having been executed at

Delhi, it was held that the Writ Petition under article 226 of the

Constitution of India was entertainable at Delhi;

(vii) reliance is also placed on Rajendran Chingaravelu v. R.K. Mishra,

Additional Commissioner of Income Tax (2010) 1 SCC 457 laying down

that Writ Petition under Article 226 of the Constitution can be entertained

by the High Court within whose jurisdiction the cause of action arises

wholly or in part and that even if a small fraction of the cause of action

accrues within the territory of a State, the High Court of that State will

have the jurisdiction;

(viii) reliance is also placed on Oil and Natural Gas Commission v.

Utpal Kumar Basu (1994) 4 SCC 711 again laying down that the High

Court within those jurisdiction even a small part of cause of action

accrues, will have jurisdiction to entertain the petition.

The thrust of the argument is that even though the Tripartite Agreement

dated 24th December, 2010 (supra) was executed at Kolkata but the same

also did not tinker with the term of the initial agreement dated 29th July,

2005 vesting the jurisdiction exclusively in the Courts at Delhi. On enquiry

as to how the parties by consent could vest the jurisdiction in an alien Court,

it is contended that the parties in the present case even though executed the

agreement at Kolkata, were entitled to retain the clause in the earlier

agreement of exclusive jurisdiction of the Delhi Courts for the reason of the

train subject matter of the agreement running between Delhi and Hatia

(Ranchi).

11. Having given our thought to the argument aforesaid, we are unable to

persuade ourselves to hold that the High Court at Delhi would have

jurisdiction in the present facts and/or the High Courts at Kolkata would not

be the appropriate Court to entertain the present controversy. However, since

the learned Single Judge has virtually not given any reason, we deemed it

prudent to not only lay out the facts in detail as above but to also state the

reasons which have prevailed with us.

12. Though undoubtedly the initial contract dated 29 th July, 2005 was

executed at Delhi but the same was for the period till 28 th July, 2010 only.

In July, 2010 there was a drastic change in policy with respect to such

contracts. While earlier (i.e. when the contract dated 29th July, 2005 was

entered into) the Railways had hived off the mobile catering services to

IRCTC and which in turn had awarded the contract to the appellant, under

the Catering Policy 2010, the Railways decided to remove IRCTC and to

take over the catering services unto itself and for better management thereof

entrusted the same to the zonal railways. Thus the powers which earlier

were exercised by IRCTC vis-à-vis the train subject matter of the agreement

aforesaid, stood vested in the South Eastern Railways. Even though the

subject train plies between Delhi and Hatia (Ranchi) but still the

management of the contract with respect thereto fell in the lap of South

Eastern Railways and of which as aforesaid there is no dispute. Thus, the

factum of Delhi being one of the stations between which the train plies, is

immaterial.

13. IRCTC had in the initial agreement dated 29 th July, 2005 provided for

jurisdiction of the Courts at Delhi because then IRCTC was to manage the

contract and IRCTC had its office at Delhi. However, the said position

changed upon assignment of the contract by IRCTC in favour of South

Eastern Railways, Kolkata and which assignment was with the consent of

the appellant; upon such assignment, the powers which under the initial

contract were to be exercised by IRCTC, came to be exercised by the South

Eastern Railways, Kolkata. It is important to note that when South Eastern

Railways, Kolkata extended the licence for further six months from 2 nd

January, 2011, it did not extend the initial contract dated 29th July, 2005 but

the contract dated 24th December, 2010 which was signed at Kolkata.

14. That takes us to the next argument of the effect of the Tripartite

Agreement dated 24th December, 2010 not amending the clause in the initial

agreement with respect to the jurisdiction of the Courts at Delhi. We may

notice that the initial agreement not only provided for the jurisdiction of the

Courts at Delhi but also provided for the arbitration of the disputes and in

which arbitration the sole arbitrator was to be appointed by the Managing

Director, IRCTC. In the Tripartite Agreement it was however expressly

provided that the right of appointment of the arbitrator stood assigned to the

Chief Commercial Manager, South Eastern Railways. It thus cannot be said

that the parties at the time of entering into the Tripartite Agreement did not

touch the Dispute Resolution Mechanism. The said Mechanism having

provided for arbitration, the parties agreed to the arbitration of arbitrator to

be appointed by the CCM, South Eastern Railways and who can reasonably

be expected to nominate an officer of the South Eastern Railways only as the

Arbitrator. The clause in the initial agreement as to the jurisdiction of the

Courts at Delhi and the amended agreement dated 24th December, 2010 have

to be viewed in the light of the said change/amendment.

15. The grievance of the appellant in the Writ Petition is also with respect

to the decision of the South Eastern Railways, Kolkata. It is inter alia the

plea of the appellant that notwithstanding the directive of the Railway Board

at New Delhi for renewal of the existing contracts, the South Eastern

Railways, Kolkata has not done so. The challenge in a Writ Petition is to the

arbitrary action of the South Eastern Railways, Kolkata. The Court

competent to entertain such a challenge would be the Court at Kolkata only

within whose territorial jurisdiction the South Eastern Railways with respect

to whose action writ of certiorari is claimed is situated and not this Court. It

is for this reason only that much emphasis cannot be laid on the agreement,

even if any, between the parties of the jurisdiction of the Courts at Delhi.

The said agreement was in the context of the then decision making authority

being situated within the jurisdiction of this Court. However, now when

under the changed policy and the agreement and to which the appellant has

consented, the decision making authority is situated outside the jurisdiction

of this Court, it cannot be said that the agreement of the jurisdiction of the

Courts at Delhi subsists. In the said state of affairs, the judgments aforesaid

cited by the counsel for the appellant are not found to be applicable.

16. It cannot also be lost sight of that the appellant is approaching the

Court in the exercise of its jurisdiction under Article 226 of the Constitution

for impugning the action of the South Eastern Railways and seeking

directive against the South Eastern Railways, Kolkata who are beyond the

jurisdiction of this Court. The Catering Policy 2010 having vested all

decisions in the matter in the zonal railways and the subject train having

fallen in the South Eastern Zone, such jurisdiction can be exercised only by

the High Court having jurisdiction over the said zone and which this Court

admittedly does not have. We may notice that the Supreme Court recently in

Interglobe Aviation Ltd. v. N. Satchidanand (2011) 7 SCC 463 has held

that a clause in an agreement which ousts jurisdiction of all Courts having

jurisdiction and conferring jurisdiction exclusively in one Court is valid only

when the cause of action in part accrues within the jurisdiction of the Court

in which exclusive jurisdiction is conferred and would have no application

where no part of cause of action has accrued within the jurisdiction of such

Court. It was further held that such an invalid clause conferring exclusive

jurisdiction in the Courts at Delhi would not be validated if the entire cause

of action had accrued outside Delhi and merely because the flight with

respect whereto grievance was made had originated at Delhi. Similarly, in

the present case, the clause even if any, of exclusive jurisdiction of Courts at

Delhi would be invalid when the cause of action for the writ petition is the

action of the South Eastern Railways at Kolkata.

We therefore do not find any merit in the appeal and dismiss the same.

No order as to costs.

RAJIV SAHAI ENDLAW, J

ACTING CHIEF JUSTICE

DECEMBER 21, 2011/M