Delhi High Court
M/S Stelling Technologies Pvt. ... vs Indian Railway Catering And ... on 5 April, 2019
IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: September 13, 2018
Judgment delivered on: April 05, 2019
+ W.P.(C) 9864/2017, CM No. 40141/2017
M/S STELLING TECHNOLOGIES PVT. LTD. (RAILYATRI.IN)
AND ANR.
..... Petitioners
Through: Mr. Jayant Bhushan, Sr. Adv. with
Mr. Hardeep Singh Anand, Mr. Jiten
Mehra, Ms. Vandana Sehgal,
Mr. Anand Daga, Ms. Gunjan Ahuja
and Mr. Iqram Govind Singh, Advs.
for R3.
versus
INDIAN RAILWAY CATERING AND TOURISM CORPORATION
LTD. ..... Respondent
Through: Mr. Nikhil Majithia, Adv. for IRCTC
AND
+ W.P.(C) 8562/2017, CM No. 35240/2017
MR. ANAND PUROHIT ..... Petitioner
Through: Mr. Sanjay Jain, Sr. Adv. with
Mr. Mandeep Singh Vinaik,
Mr. Yuvraj Sharma and Ms. Sneh
Suman, Advs.
Versus
INDIAN RAILWAY CATERING AND TOURISM CORPORATION
LTD. AND ORS. ..... Respondents
Through: Mr. Nikhil Majithia, Adv. for IRCTC.
Mr. Arjun Garg and Mr. Manish
Yadav, Advs. for R2.
Mr. Jayant Bhushan, Sr. Adv. with
Mr. Hardeep Singh Anand, Mr. Jiten
Mehra, Ms. Vandana Sehgal,
W.P.(C) No. 9864/2017 and connected matters Page 1 of 99
Mr. Anand Daga, Ms. Gunjan Ahuja
and Mr. Iqram Govind Singh, Advs.
for R3.
AND
+ W.P.(C) 8570/2017, CM No. 35264/2017
MR. SANDEEP NIRWAL ..... Petitioner
Through: Mr. Sanjay Jain, Sr. Adv. with
Mr. Mandeep Singh Vinaik,
Mr. Yuvraj Sharma and Ms. Sneh
Suman, Advs.
Versus
INDIAN RAILWAY CATERING AND TOURISM CORPORATION
LTD AND ORS. ..... Respondents
Through: Mr. Nikhil Majithia, Adv. for IRCTC
Mr. Jayant Bhushan, Sr. Adv. with
Mr. Hardeep Singh Anand, Mr. Jiten
Mehra, Ms. Vandana Sehgal,
Mr. Anand Daga, Ms. Gunjan Ahuja
and Mr. Iqram Govind Singh, Advs.
for R3.
AND
+ W.P.(C) 8598/2017, CM No. 35340/2017
MR. AVINASH TIWARY ..... Petitioner
Through: Mr. Sanjay Jain, Sr. Adv. with
Mr. Mandeep Singh Vinaik,
Mr. Yuvraj Sharma and Ms. Sneh
Suman, Advs.
versus
INDIAN RAILWAY CATERING AND TOURISM CORPORATION
LTD AND ORS. ..... Respondents
Through: Mr. Nikhil Majithia, Adv. for IRCTC
Mr. Jayant Bhushan, Sr. Adv. with
Mr. Hardeep Singh Anand, Mr. Jiten
Mehra, Ms. Vandana Sehgal,
Mr. Anand Daga, Ms. Gunjan Ahuja
and Mr. Iqram Govind Singh, Advs.
for R3.
AND
+ W.P.(C) 8613/2017, CM No. 35398/2017
MRS. GEETIKA SURI ..... Petitioner
W.P.(C) No. 9864/2017 and connected matters Page 2 of 99
Through: Mr. Sanjay Jain, Sr. Adv. with
Mr. Mandeep Singh Vinaik,
Mr. Yuvraj Sharma and Ms. Sneh
Suman, Advs.
versus
INDIAN RAILWAY CATERING AND TOURISM CORPORATION
LTD. AND ORS.
..... Respondents
Through: Mr. Nikhil Majithia, Adv. for IRCTC.
Ms. Isha Bhalla, Adv. for R2
Mr. Jayant Bhushan, Sr. Adv. with
Mr. Hardeep Singh Anand, Mr. Jiten
Mehra, Ms. Vandana Sehgal,
Mr. Anand Daga, Ms. Gunjan Ahuja
and Mr. Iqram Govind Singh, Advs.
for R3.
AND
+ W.P.(C) 8625/2017, CM No. 35431/2017
MR. DEEPAK SURI
..... Petitioner
Through: Mr. Sanjay Jain, Sr. Adv. with
Mr. Mandeep Singh Vinaik,
Mr. Yuvraj Sharma and Ms. Sneh
Suman, Advs.
Versus
INDIAN RAILWAY CATERING AND TOURISM CORPORATION
LTD. AND ORS.
..... Respondents
Through: Mr. Nikhil Majithia, Adv. for IRCTC
Ms. Isha Bhalla, Adv. for R2
Mr. Jayant Bhushan, Sr. Adv. with
Mr. Hardeep Singh Anand, Mr. Jiten
Mehra, Ms. Vandana Sehgal,
Mr. Anand Daga, Ms. Gunjan Ahuja
and Mr. Iqram Govind Singh, Advs.
for R3.
W.P.(C) No. 9864/2017 and connected matters Page 3 of 99
CORAM:
HON'BLE MR. JUSTICE V. KAMESWAR RAO
JUDGMENT
V. KAMESWAR RAO, J
W.P.(C) 9864/2017
1. This petition has been filed by M/s Stelling Technologies Pvt.
Ltd., which operates the website known as Railyatri.in.
2. There are two petitioners in this writ petition. It is the case of the
petitioners that petitioner No.1 is an e-commerce entity providing digital
platform services to act as a facilitator between e-ticket booking
passenger and authorized Retail Service Providers (hereinafter referred
to as RSPs). Petitioner no.2 is a shareholder of petitioner no.1. It is
stated by the petitioners that petitioner No.1 is not in the business of
actually booking railway tickets. It is their case that petitioner No.1
hosts a website called "RailYatri.in" and a related phone app. It is with
the help of this digital platform that the petitioner No.1 provide what is
called an e-market place for potential buyers, i.e., train travelers and
sellers to come together for ticket booking. It is their case that on the
digital platform potential buyers of products and services amongst them
those seeking to book railway e-tickets from the authorized RSPs get in
touch with legitimate third party / sellers / vendors and RSPs who have
voluntarily and contractually associated with petitioner no.1 on the said
digital platform including the service of booking e-tickets through the
respondent IRCTC‟s booking engine / interface after following all extent
rules of the respondent. It is stated that the RSPs have contractually
warranted to the petitioners for such contractual relation.
3. It is stated that the respondent (IRCTC) enjoy a monopolistic
position for issuing railway e-tickets. Pursuant to which it has floated
various schemes for their sale. Under one such scheme, which is B2B
Scheme, the respondent has appointed several Principal Service
Providers (hereinafter referred to as PSPs) for the purpose of booking
railway tickets on its web portal. Each PSPs would in turn have several
hundred agents working under it as Retail Service Providers (for short
„RSPs‟). These RSPs, for the purpose of booking railway e-tickets on
the respondent‟s (IRCTC) booking engine / interface, are provided a
unique identification number and a dongle which is their access
credential to the said booking engine / interface. The RSPs are required
to follow certain rules and regulations as mandated by the respondent
(IRCTC) in relation to this activity.
4. The petitioner No.1 having set up its digital platform somewhere
in the year 2015 entered into contractual agreements with several RSPs
in 2017 governing the use of its digital platforms and the service to be
provided by the contracting parties thereto, i.e., RSPs. It is stated that
the said agreements contained specific clauses ensuring compliance with
IRCTC‟s rules and regulations about payments and adherence to RBI‟s
notifications governing digital payments. It was agreed therein that
every potential e-ticket booking rail traveler (customer) using petitioner
No.1‟s digital platform would be directed to the RSPs for them to book
the said e-ticket using authorized booking credential / access code only
through the respondent‟s booking engine / interface.
5. It was on June 19, 2017, that a complaint was filed with the
Deputy Commissioner of Police, Railways and Crime, Delhi ostensibly
on charge of the petitioner No.1 carrying on illegal booking and
providing meals in trains. The said complaint is said to be presently
subject matter of CS (OS) 519/2017 filed by the respondent (IRCTC)
against the petitioner. On July 27, 2017, the respondent (IRCTC) also
filed a complaint with the Cyber Crime Cell, Delhi Police bearing DD
No. 675 alleging therein that the petitioner No.1 was involved in
procuring e-tickets without authorization of the respondent.
6. It is stated that despite the said complaints pending, on
August 8, 2017, 8-9 personnel of the respondent IRCTC along with a
Sub-Inspector of Delhi Police one Mr. Ajit Singh barged into the
petitioner‟s office in NOIDA and threatened the petitioner‟s
management with jail if they did not stop their allegedly illegal activities
and also procured under pressure the only copy of the agreement that the
petitioner had with one of the RSPs. It was vide letter dated August
11, 2017 that the petitioner No.1 recorded the respondent‟s illegal and
high-handed conduct and conveyed the same to the respondent‟s CMD
with copies to the Minister of Railways, Minister of State for Railways,
DG Railway Protection Force, Deputy Commissioner of Police, Crime
and Railways and the Group GM and Assistant Manager of the
respondent (IRCTC). On the same day the respondent (IRCTC) also
issued a notice to the petitioner calling upon them to stop booking e-
tickets and stop directing passengers to the RSPs while also claiming
damages of `50 lacs.
7. It is stated that the respondent (IRCTC) has also complained to
and pressurized One97 Communications Pvt. Ltd. (Paytm) to suspend
their e-payment gateway services which were being provided to the
petitioner No.1 following which Paytm vide its letter dated August 11,
2017 sought a response from the petitioner No.l. The petitioner
explained to Paytm that all the petitioner‟s business activities were
legitimate.
8. Vide letter dated August 16, 2017, the petitioner No.1 sent a
detailed reply to the DCP Cyber Crime Cell setting out its business
operations and showing how the petitioner‟s business activities
surrounding the e-ticket booking services were all legitimate and within
ambit of all laws. In response to the petitioner No.1 letter dated August
11, 2017, the respondent (IRCTC) vide letter August 23, 2017 is said to
have stated that its alleged illegal entry into the petitioner No.1 office in
NOIDA on August 8, 2017 was merely a preventive check based on a
complaint of non-refund of money against a PNR and it was during that
check that the petitioner shared a copy of their commercial agreement
with an RSP. It was further stated therein that no company or
organization not registered with the respondent (IRCTC) could book e-
tickets and therefore called upon the petitioner to provide certain
documents.
9. It is stated that the respondent (IRCTC) unilaterally de-activated
the access credentials of several RSPs associated with the petitioner‟s
rail e-tickets business without affording any opportunity of being heard
to them supposedly for booking tickets through the petitioner‟s digital
platform. Four such RSPs having been de-activated abruptly have filed
petitions being WP(C) nos. 8570/2017, 8562/2017, 8613/2017 and
8598/2017 before this court and another RSP apprehending such de-
activation filed a petition being W.P.(C) 8562/2017 seeking interim
protection against such action. It is stated that action on part of the
respondent (IRCTC) has only resulted in loss of business reputation of
the petitioners and has also brought great amount of suffering to
potential passengers who would have booked tickets through these RSPs.
10. The petitioner No.1, vide counter notice dated September 5,
2017, replied to the respondent‟s (IRCTC) letters dated August 11 and
23 of 2017 and set out therein, its business; how the respondent (IRCTC)
had perhaps not understood the nature of petitioner‟s business; that the
petitioner No.1 had not violated any provisions of the Railways Act,
1989; its reply to the Cyber Crime Cell and illegal pressurizing of Paytm.
The petitioner No.1 further called upon the respondent (IRCTC) to recall
its complaints made to the Cyber Crime Cell and Paytm, restoration of
de-activated RSP‟s access credentials and not to issue any further threats
or disruptive letters to any associate of the petitioner while also claiming
damages of `2 Crores. It is also stated that sometime in October, 2017,
the petitioner No.1 also learnt that M/s. Payworld a PSP appointed by the
respondent IRCTC had put up a notice online stating that the petitioner‟s
digital platforms were illegal and not authorized by the respondent
IRCTC. The petitioners have initiated separate legal action against
them.
11. According to the petitioners the arbitrary and illegal actions of
the respondent (IRCTC) and the coercive steps being taken by them to
pressurize and dismember all business associates of the petitioner No.1
there is real likelihood that the very running of the business of the
petitioner No.1 would be at stake. It is stated that the above mentioned
coercive actions of the respondent IRCTC have already had the effect of
causing serious loss to business reputation as well as financial losses and
grave harassment to the petitioners which might ultimately even lead to
the petitioner No.1 being forced to close down its business.
12. It is the case of the petitioners that IRCTC‟s action is in gross
violation of the petitioner‟s fundamental rights guaranteed under Article
14, 19(1)(g) and 21 of the Constitution of India as they have been
singled out for such coercive treatment whereas other digital platforms
hosts like Google, Justdial, Sulekha, Quikr who also provide similar lead
generating services to authorized RSPs continue to do so without
hindrance from the respondent. According to them respondent IRCTC
has lost sight of the fact that it, being a Government enterprise has a
higher duty cast upon it to not act in the arbitrary manner as it has been
alleged to have been doing.
13. It is their case that the petitioner No.1 does not stock any product
or service but simply acts as a facilitator or a go-between entity and
through its digital platforms simply bring together a potential customer
with a seller of the products / service, which the said potential customer
using the petitioner‟s digital platforms may express interest in
purchasing. The petitioner No.1 additionally provides certain value-
added services to the customers to use its digital platforms such as
provision of e-payment gateway facilities for which the petitioner No.1
tied up with service providers such as Paytm, Airtelmoney etc. for
providing such services; the petitioner No.1 charges a nominal amount
equivalent to 1.25% of the ticket price as a convenience fee for use of its
e-commerce market place which is also transparently and prominently
disclosed to the said customers in the terms and conditions displayed on
the digital platforms and also noted as a separate entry on the receipt
issued to the customers. It is the petitioners‟ case that petitioner No.1
being a largely foreign funded entity, it is covered by the guidelines for
FDI in e-commerce issued vide press note - 3 dated March 29, 2016,
issued by the Ministry of Commerce and Industry and is therefore
permitted to undertake all such activities as noted above.
14. It is further their case that in no condition does the RSP charge
over and above the railway authorized ticket charge and the convenience
fee is to the benefit of the petitioners and not the RSP which is also
agreed to be paid by the customer. According to the petitioners it has
prominently disclaimed on its portals that it is an independent self-
funded entity and is in no way connected with the respondent (IRCTC)
or the Railways. The petitioner No.1 endeavours to make railway ticket
booking and rail travel accessible easily and a pleasurable exercise for
the masses. The services as provided through the petitioner No.1‟s
digital platforms cater to real needs of train travelers, wherein they get
access to genuine e-ticket booking agents, real time train position,
likelihood of a wait-listed ticket getting confirmed, facilities available in
and around railway station, hotel rooms, taxi and bus booking facilitation
etc. and also providing their digital platforms to book online food and
other articles from the petitioner‟s associated vendors.
15. The petitioners‟ business model helps potential rail travelers find
genuine authorized agents (RSPs) who can assist in booking the rail
tickets in a quick, efficient and transparent manner while also protecting
them from being overcharged, from the comfort of their homes. The
petitioner‟s website and mobile application are stated to have been
designed in such a manner that any potential traveler may even be
connected to an RSP having the preferred language skills as preferred by
the customer. The traveler is put in touch with such RSP through mobile
phone which is also stated to be the preferred mode by a large number of
travelers who may otherwise be unable or unwilling to undertake a
purely online transaction.
16. It is their case that the petitioner No.1 conducts its business
strictly in compliance with the extent rules and regulations set in place
by the respondent IRCTC as well as by other Govt. / regulatory entities.
They ensure digital safety and security of all their customers by
following all RBI regulations in relation to online payment services. It
is stated that the RSPs follow a strict protocol while issuing Electronic
Reservation Slip to the customers which conforms to prescribed IRCTC
format. In other words, there is no difference between the manner in
which the RSPs book e-ticket, whether for physical walk-in customers or
for customers that are directed to the RSPs through the petitioner‟s
digital platforms.
17. It is further stated that the RSPs using the petitioner No.1‟s
digital platform never solicit the customer as is prohibited by the
respondent‟s rules. It is only the potential ticket purchaser who on
expressing interest to purchase a railway ticket is directed through the
petitioner‟s platform to contact the authorized RSPs, who are associated
with the petitioner No.1. The booking procedure as followed by the
petitioner No.1 is that when contacted by a potential customer, the RSP
confirms the availability of the ticket sought for and upon confirmation
by the passenger books the same using its own access credential on the
respondent‟s booking engine / interface. The petitioner No.1 does not
book any ticket but merely facilitates such booking and payment
therefor. The petitioner No.1 charges a nominal "market access fee" on
the tickets so purchased and in case of cancellation, the cancellation
charge as stipulated by the respondent IRCTC is refunded to the
customer.
18. It is their case that action of respondent (IRCTC), as noted above
smacks of arbitrariness, malafides and high-handedness apart from being
illegal and have caused grave loss both of reputation and money to the
petitioners. The loss of business reputation is not only limited amongst
its associates but also among the large number of consumers, who use
the petitioner No.1‟s platform. Nowhere in any of the respondent‟s
rules is a RSP prohibited from using his own initiative and enterprise to
expand his business by seeking legitimate lead generating avenues.
19. According to the petitioners the respondent has failed to see the
public good done by them and is acting as if all aspects of railway ticket
booking howsoever remote they may be from the respondent‟s mandate
under the MOU entered into with the Ministry of Railways are its
personal fiefdom and is intimidating and bullying the petitioners.
20. In the affidavits dated November 10, 2017 the petitioners have
mentioned cases of certain RSPs associated with them that have been
targeted by the respondent on several grounds mainly (i) booking
through unauthorized website / app Railyatri.in and (ii) sharing ID
credentials with Railyatri.in and consequently their respective accounts
have been de-activated. It is also stated that no show cause notice was
issued to any of the RSPs prior to such action.
21. The petitioners have additionally filed an affidavit dated
November 14, 2017 wherein case of Mr. Deepak Suri, an RSP operating
under the RSP, ITZ Cash has been brought to light. It is stated that the
said RSP has already filed W.P. (C) 8625/2017 before this court wherein
an interim order dated September 25, 2017 was passed whereby he was
protected against de-activation by the respondent. It is stated that on
October 9, 2017, the said RSP received a ticket booking enquiry through
the petitioner No.1‟s website from one Mr. Vishal Singh. An Electronic
Requisition Slip was electronically filled out and electronically signed by
him and accordingly, a ticket was booked and sent to the customer.
Additionally, the said RSP also asked the customer to provide a copy of
his ID proof via e-mail. Despite efforts, the said RSP could not obtain a
copy of the customer‟s valid ID. It is stated that said customer was only a
decoy and a ploy of the respondent IRCTC with an ulterior motive of
leading the said RSP into violating one of the rules of the ticket booking
policy whereby RSPs are mandated to maintain customer IDs. It is
stated that nowhere in any of the respondent‟s policies is it mandated
that a ticket would be supplied by an agent only on production of an ID
proof by the concerned passenger. It is stated that following the inability
of the RSP to maintain the said customer‟s ID, his access credentials
were de-activated w.e.f November 9, 2017. This action of the
respondent according to the petitioner is in clear violation of the
undertaking given and recorded in this court‟s order dated September 25,
2017. Further on November 13, 2017, another RSP associated with the
petitioners namely Ms. Annu Kumari has been blacklisted and prevented
from accessing her booking account seemingly on similar grounds. An
RTI query was filed with the respondent by another RSP namely Ms.
Geetika Suri asking about the specific rule that prohibits an RSP from
booking tickets for online customer. In response dated September 22,
2017, the respondent has stated that an RSP can only "book ticket in the
normal flow in which customer will physically approach at the outlet of
the RSP and RSP should maintain the written / electronic requisition slip
at their outlet and copy of ID proof of the customer is to be kept for six
months". A further follow up RTI query regarding specific rule
prohibiting a customer from booking a ticket with an RSP without
actually being physically present evoked the response that "ticket can
only be booked when customer approaches". It is stated that no such
specific rule exists whereby a customer is mandated to approach the
concerned RSP physically.
22. In the affidavit dated December 22, 2017, the petitioners have
brought to light similar cases of other RSPs whose accounts have been
de-activated on one pretext or the other by the respondent / IRCTC.
Counteraffidavit by IRCTC
23. The case of the Respondent IRCTC in its counter-affidavit is that
it is a wholly owned Public Sector Enterprise of the Indian Railways
which operates Railways in India and permits carriage of passengers on
the railway trains by way of licence issued to them in the form of railway
tickets as prescribed in Chapter-VIII of the Railways Act, 1989. The
respondent managed e-commerce business on behalf of the Ministry of
Railways and has been given the mandate to issue e-ticket / i-ticket
through its e-commerce website. It is stated that for the said purpose the
respondent has set up its web portal, i.e., irctc.co.in which is in addition
to the physical counters which are still operated by the Railways. It is
stated that the petitioner No.1 does not offer any independent e-ticket to
passengers through its platform due to lack of an independent
relationship with the Ministry of Railways but seeks to sell the
respondent‟s property, i.e., e-tickets owned by the respondent IRCTC
from its website by charging an additional fee from the passengers. It is
pointed out that the petitioner No.1 has not obtained any permission
from the respondent IRCTC to book / sell its e-tickets.
24. According to the respondent it does not owe any public or
statutory duty towards the petitioners arising out of any previous
commercial relationship and therefore the present writ petition is not
maintainable for lack of an underlying foundation in law to maintain an
action under Article 226 of the Constitution. Further, locus standi of the
petitioners to challenge the respondent‟s action in safeguarding its own
property from third parties is challenged. It is also stated that the facts
as averred in the writ petition are highly disputed in nature and can be
tested only by way of evidence in appropriate proceedings and the same
cannot be determined in proceedings under Article 226.
25. The respondent is stated to have entered into an MOU with the
Railways for carrying out certain functions as noted above and with the
employment of advanced technologies, the respondent has expanded its
operations to provide more ways and means for booking a railway ticket
to members of the public. For the said purpose respondent has put in
place various business models through the following three schemes:
1. Internet Café Scheme (ICS)
2. Business to Business Scheme (B2B)
3. Business to Customer (B2C)
Under the ICS Scheme, the respondent appoints a PSP who in
turn appoints an RSP acting as an agent of the PSP and functions as a
retail outlet offering e-ticket booking facility from its premises to
customers who do not wish to travel all the way to a railway station to
physically obtain a ticket for travelling on trains. It is therefore stated
that a direct contractual relationship / understanding exists between the
respondent and the PSP by virtue of which a PSP is authorized to deal
with the respondent‟s property, i.e., access to its website and to carry out
the e-ticketing business on its behalf. Further certain rules and
regulations are also incorporated into the said commercial contracts by
way of annexures which prescribed the permissible activities that can be
carried out by service providers, i.e., PSP/RSP.
26. It is stated that according to the respondent‟s rules and
regulations and contractual stipulations as referred to above, a PSP / RSP
cannot share his ID (access credentials) with any third person as this is
essential to maintain the integrity of the system being operated by the
respondent as well as to prevent misuse of any confidential information
to the benefit / advantage of any third party. This is in light of the fact
that the respondent‟s website is connected to Indian Railways
Information System maintained by CRIS (Central Railway Information
System) which is confidential in nature.
27. Access to the respondent‟s website is given by a PSP to an RSP
under a separate agreement but with the essential condition remaining
that a PSP has to ensure that all activities of an RSP are also within the
ambit of the principal grant by the respondent to the PSP as well as in
compliance with the Railways Act, 1989 and various commercial
circulars issued by the Railway Board. As such a PSP is bound under the
agreement to control the activities of its RSPs. RSPs associated with the
respondent‟s website through a PSP are required to follow certain
mechanism for booking tickets, which includes accepting and
maintaining electronic requests alongwith copy of ID proof from
customers for both booking and cancellation of tickets. An RSP is
further required to issue an Electronic Reservation Slip (ERS) according
to the prescribed format; a receipt for the amount collected from the
customer on its own stationery (including the railway fare); IRCTC
service charges; agent service charges; and payment gateway charges
etc.
28. It is stated that a complaint was received on the twitter handle of
the then Railway Minister from one Mr. Raj Kumar Gupta who claimed
to have booked a ticket from the petitioner‟s app, but a refund for the
same had not been received back upon cancellation despite a significant
period having been passed. Upon enquiry the respondent found that the
said ticket had been booked by an RSP M/s. Sahara Tours and Travels
Hub registered in the name of Mr. Vijay Tiwary and registered with the
PSP M/s. G.I. Technology Pvt. Ltd. It was further found that the said
RSP was sharing its access credentials with the petitioner for the purpose
of booking tickets. Consequently in accordance with e-ticketing service
provider policy a penalty was imposed upon the PSP for sharing access
credentials with the petitioner and for the non-refund of cancellation
amount to the customer by its RSP. It was at this stage that the
respondent became aware of the misappropriation of its property by the
petitioner in collusion with several RSPs.
29. It is stated that the respondent conducted a check of the ticket
booking process flow on Railyatri.in and a ticket was booked on its
website by respondent‟s team. During further investigation by the
respondent‟s anti-fraud team several instances of misuse of access
credential by various RSPs came to surface and the natural step of
safeguarding its own property was carried out by the respondent, i.e., de-
activation of IDs (access credentials) of various RSPs. In this context, it
is the respondent‟s case that all concerned PSPs have accepted the
penalty as imposed and have also deposited the same.
30. A preventive check is stated to have been carried out by the
respondent along with CIB/RPF, Delhi (E) on August 8, 2017 at the
petitioner‟s office on the basis of complaint of non-refund of
cancellation amount against a booked ticket. Subsequently a notice was
issued to the petitioner on August 23, 2017 asking it to stop the
unauthorized service immediately. A complaint was also lodged with
the Cyber Crime Cell, New Delhi.
31. It is stated that the petitioner No.1 itself is unauthorized for
conducting the e-ticketing business and therefore all the content
displayed on its digital platform is without permission of the railways
and the respondent. The petitioner is therefore stated to be deriving
undue commercial gains and benefits from property of the respondent.
The information as used and displayed are the sole property of Indian
Railways and the respondent and use without any prior permission
amounts to misinterpretation / fraud and overcharging to the customer.
Further, information regarding rail e-tickets given on the petitioner‟s
platforms is false and misleading and in such eventualities the
respondent becomes responsible to address the customer‟s complaints.
The respondent‟s action of imposing penalty on PSP and de-activation of
RSP‟s IDs is stated to have been taken to avoid situations of non-refund
cases to customers and safeguard interest of the respondent / railways.
32. The average cost of a ticket is said to be `1,200/- and on a daily
basis 20-25% of e-tickets are said to be cancelled which leads to the
involvement of a huge amount of money which has to be refunded to the
customers. Significant finances are at the disposal of RSPs and other
agents booking on behalf of the respondent and therefore the chances of
fraud in case of unauthorized agencies getting involved in collection of
money for ticket booking process and non-refunding in case of
cancellation are enormous. Since the respondent is currently responsible
for the e-ticket booking process, the action of permitting an unauthorized
agency to accept money from the customer would tantamount to fraud
being played on member of unsuspecting public. Non refund of
concession amount at a large scale would lead to serious financial fraud
the magnitude of which would only surface at a later stage when a large
number of customers have been cheated of their money.
33. Reliance is placed on Section 143 of the Railways Act, 1989 to
state that all activities pertaining to sale of railway tickets including the
activities of procuring and supplying them is barred and consequently
any arrangement providing for procurement of railway tickets would also
be illegal. According to the respondent, the petitioners business model
even as contended by them would be barred as is expressly covered by
the said provision. It is the case of the respondent that it would be
incorrect to state that the petitioner is merely providing a digital platform
to facilitate market place based e-commerce business activity and is in
no way involved in the business of actual booking of railway tickets.
According to the respondent, the petitioner provides for railway tickets
to be booked on its website as opposed to the booking being done by a
potential passenger with the concerned RSP independently. Further, a
potential customer is required to call a landline number which is
maintained by the petitioner and after giving the necessary details he has
to make a decision based on ticket availability and price information as
collected by the petitioner No.1 and not by an authorized RSP.
Moreover, the booking confirmation for the concerned ticket is also
issued by the petitioner via email and SMS and not by the concerned
RSP; the entire commercial activity right from advertising its business of
booking tickets to actually selling it to a potential customer and the
consequent collection of consideration for the sale is also being done by
the petitioner. It is in light of these facts that the respondent states that
the activity of booking a railway ticket is actually being outsourced by
the concerned RSP to the petitioner which is completely impermissible
under the extent of Rules and Regulations.
34. It is stated that RSPs are not permitted or authorized to associate
engage or interact with any third party or for dealing, transacting or
selling the respondent‟s property i.e. e-tickets and any contractual
relation entered into with regard to such activities would be void ab
initio and illegal. It is further stated that the petitioner is also offering
certain value added services without having obtained due permissions
and authorization from Indian Railways or the respondents namely live
train status, PNR status, confirmation chance, live arrival / departure and
seat availability etc. According to the respondent, such information is
based on dynamic data depending on the number of tickets booked or
cancelled all over India on an hour to hour basis and accurate data in this
regard cannot be provided without having access to either the railway
information system or the respondent website. The petitioner is also
stated to be overcharging the customers using the nomenclature
„convenience fee‟ which is over and beyond the maximum permissible
fee as has been fixed by Ministry of Railways. Yet another activity that
is stated to be illegally carried out by the petitioner No.1 is the delivery
of food items to passengers in train compartments and railway platforms
which activity cannot be undertaken without having obtained due
permission from the railways in the form of license for utilization / usage
of their sole and exclusive property.
35. It is stated that the petitioner‟s business model is completely
illegal being entirely based on using the respondent‟s property and the
said activity is in direct competition with the respondents business
activities causing serious loss to them and other PSPs who have entered
into commercial arrangements with them having paid valuable
consideration for the same. Moreover, the petitioners activity is also
stated to deceive members of the general public by creating an
impression that such activities are being carried out with prior
permission and sanction of the railways and respondents. The
respondent has put in place B2B, B2C, and its own website
IRCTC.CO.IN to cater to such segment of customers who would want to
book e-tickets without having to physically go to a railway station or a
retail outlet. According to the respondent, the fact that the petitioner is
conducting its activity through a website while in compliance with extent
RBI Regulations relating to online payments would not confer any
legitimacy on its operations and it would still amount to usurping and
misappropriating the respondent‟s property as also the enormous
goodwill generated by them.
36. The respondent is stated to have taken only necessary steps to
safeguard its own property as well as to protect its financial interests by
taking such actions including deactivation of credentials of RSPs, who
were found to have been indulging in activities as noted above. It is
stated that the respondent does not have any direct contractual
relationship with an RSP and therefore, the question of an RSP being
mandated to maintain a minimum balance with the respondent would not
arise in any manner. Certain financial arrangements for the purpose of
facilitating booking of e-tickets do exists between the respondent and a
PSP in terms of the commercial contracts entered into between them.
However, the same cannot be read to mean that the respondent would
also be privy to the financial arrangements exiting between a PSP and its
RSP. It is further denied that the respondent has pressurized any
payment gateway service provider into discontinuing its services as
provided to the petitioner.
37. In conclusion it is stated that during the pendency of present writ
petition, the respondent through the course of its investigations has found
evidence of illegal activities as referred to above on part of several RSPs
and appropriate action has also been initiated against them.
Rejoinder
38. The petitioners have filed rejoinder affidavit on February 22,
2018 wherein it is stated that a railway ticket does not constitute
„property‟ of the respondent in any manner and it is merely a license
issued by the railways, and not the respondent, to travel on a train. It is
further pointed out that in terms of the MOU entered into between the
respondent and the railways more particularly Commercial Circular No.
73/2001, the respondent is, amongst others the promoter and facilitator
for IT related ticketing services. It is reiterated that the petitioner No.1 is
in no manner involved in the business of procurement and supply of
railway ticket in any manner and is in fact an e-commerce market place
facilitator providing a platform for a prospective traveler and a ticket
booking agent to get in touch and that such activity can not fall within
the ambit of Section 143 of the Railways Act, 1989 in any manner. It is
stated that the actual booking of the ticket in every condition happens
only on the respondent‟s website / portal.
39. It is their case that there are no disputed questions of facts
involved and the only legal issue that remains to be determined is
whether the respondent could arbitrary deactivate access credentials of
any of the RSPs associated with it without having first given them an
opportunity to make their case, thereby crippling the petitioner‟s e-
commerce business even when there has been no express violation of
any prevailing law, Rule or Regulation.
40. According to the petitioners rather than hindering business of the
respondent it is in fact widening the reach and availability of railway
tickets to all sections of society even in places where there are no brick
and mortar ticket outlets or places without access to internet. Moreover,
the petitioner No.1‟s services assist those who may not be tech savvy or
even educated and ultimately it is the revenue of the respondent that is
optimized as more genuine passengers are booking tickets by connecting
with the respondent‟s authorized agents. The petitioners have further
denied that there is any sharing of access credential with any of the RSPs
or that there is any improper access or use of the respondent‟s website.
The petitioners further state that despite repeated allegations of the same,
the respondent has failed to ever reveal or prove the manner in which
such unauthorized sharing of access has been done. In any case, it is
stated that the petitioner would not require sharing of subject access
credential as only the initial interaction takes place between them and a
prospective customer / the purchaser is directed to an RSP. The RSP is
stated to provide its services to a customer directed through the petitioner
much in the same way as it does to one who approaches it directly. The
petitioner is merely a „lead‟ generating service engaged by an RSP.
41. In response to the instances of violations of the respondent‟s
Rules and Regulations by various RSPs the petitioners state that as on
date more than 97% of the refunds are processed by RSPs and paid
through the petitioner‟s platform within 24 hours of cancellation as
opposed to two / three days taken by the respondent IRCTC itself. The
petitioners state that it has clearly mentioned on its website that it is not
associated in any manner with the respondent and further that
prospective customers would be liable to pay a „convenience fee‟ over
and above the cost of the ticket. The respondent is therefore, seeking to
justify its illegal and arbitrary action against the petitioner and the RSPs
under the guise of suspicion and scare mongering without there actually
being a violation of any terms / conditions / rules or law.
42. The petitioners further deny that prospective customers are
required to call a landline phone number maintained by them. It is stated
that the petitioner in fact provide a virtual cloud telephony PBX service
for the benefit of RSPs to automatically connect incoming call from a
potential customer. Therefore, a call made by a customer is never
handled by the petitioner but is in fact automatically routed to any RSP
that might be available at the given time. Further, the ticket confirmation
/ status messages as sent by the petitioner are in addition to those sent by
the respondent. Merely because payment facility, call Centre, telephony
services or hosting of the product for sale is handled by an intermediary
it cannot mean that it is the intermediary that has sold the product itself.
As regards the averment of the respondent that provision of accurate data
with regard to live train status, booking confirmation chances etc. is
based on dynamic data which can be obtained only with access to
railway information systems or the respondent‟s own network, it is the
petitioners case that such information is provided, based on
mathematical probability algorithms which have further been refined by
the petitioner by using techniques such as artificial intelligence and
machine learning.
43. The petitioners state that the respondent is presuming the
existence of a monopoly in its favour and by the impugned actions seeks
to crush all competition. Moreover, once an RSP is blocked /
deactivated / blacklisted it automatically results in money of the RSP
also being blocked and frozen indefinitely. RSPs are nothing but sub
agents of the respondent and this is in nature of an agency coupled with
the subject matter which cannot be terminated to the prejudice of the sub
agent in terms of the Section 202 of the Indian Contract Act, 1872. The
petitioner further refers to Annexure P-12 which is a legal notice dated
August 11, 2017 sent by paytm to the petitioner wherein the
respondent‟s role is clearly spelled out.
W.P.(C) 8562/2017, W.P.(C) 8570/2017, W.P.(C) 8598/2017, W.P.(C)
8613/2017 and W.P.(C) 8625/2017
44. W.P.(C) 8562/2017, W.P.(C) 8570/2017, W.P.(C) 8598/2017,
W.P.(C) 8613/2017, and W.P.(C) 8625/2017 have been filed by RSPs
associated with RailYatri.in (Stelling Technologies), whose RSP
agencies (and related access credentials) have either been terminated /
suspended, or are apprehending such action on part of IRCTC. The
petitioners are all similarly placed, except for the fact that the petitioner
in W.P.(C) 8625/2017, i.e. Mr. Deepak Suri has approached this Court
apprehending such action, while the petitioner in all other petitions have
already been deactivated. For the purpose of convenience, and as agreed
to by all counsels appearing, Mr. Deepak Suri‟s petition is treated as the
lead matter, in the cases pertaining to RSPs.
W.P.(C) 8625/2017
45. The petitioner herein is an RSP duly appointed by M/s
Interactive Tradex Pvt. Ltd. respondent No.2 (a PSP) since August 2017
and is involved in the business providing e-ticket booking services. The
respondent No.2 is a PSP under an agreement with the respondent No.1
in terms of its B2B scheme for the said purpose. The respondent No.3
herein is the petitioner No.1 in W.P.(C) 9864/2017, it is stated that in
September 2016 the petitioner and the respondent No.3 entered into an
agreement whereby the respondent No.3 was to assist the petitioner in its
e-ticketing business and was to direct any enquires in that regard to the
petitioner. Consequent thereto, the petitioner was to directly book
railway tickets for concerned passengers according to their need and
specifications. Respondent No. 3 is stated to simply bring together
proposed sellers and purchaser of products, and in the instant case, the
booking of e-tickets by a passenger, with a duly authorized e-ticketing
agent, such as the petitioner herein. Respondent No. 3 also additionally
provides support services on its digital platforms, such as logistics and
payment collection. The respondent No.3 is therefore stated to be merely
a facilitator of business while not actually involved in the ticket booking
process.
46. It is stated that under the aforesaid B2B scheme, the respondent
IRCTC appoints certain PSPs who in turn have to pay a sum of `25 Lacs
for such appointment along with an annual deposit of `6.25 Lacs. The
PSP may in turn further appoint 250 to 500 RSPs who also deposit
amounts varying from `6,000/- to `10,000/- for such appointment. The
contractual relationship as existing between the PSP and respondent
IRCTC also mandates that the PSP has to ensure that all RSPs appointed
by it must follow all the extent rules and regulations and commercial
circulars issued by the respondent No.1 and the Ministry of Railways.
As such there is no direct privity of contract between respondent No.1
and an RSP such as the petitioner herein. It is stated that even though
the subject Rules provide for a show cause notice to be issued for an
irregularity, the same are quiet as to whom the said notice was to be
issued i.e. the PSP or the RSP who is alleged to have committed the
irregularity.
47. It is stated that in actual practice even for allegations against an
RSP respondent No.1 takes refuge in the fact that there exists no privity
of contract between them and therefore, a show cause is issued only to
the concerned PSP without even informing the RSP about the allegation
and the action proposed to be taken against him. Ultimately, punitive
action be it fine or deactivation is visited on the RSP who is condemned
unheard.
48. It is stated that upon being appointed as an RSP a digital
certificate also called the „access credential‟ in the form of a dongle is
provided and the machine ID of the RSP is also registered by the
registering authority appointed by respondent No.1. This is to check
wrongful access of the respondent‟s system and misuse of the credential
by any third party. Using the said credential an authorized RSP such as
the petitioner herein can directly log on to the respondent No.1‟s web
portal for booking a ticket. A prospective ticket buyer is directed by
respondent No.3 to the mobile phone of the petitioner and following
further interaction a ticket is booked by the petitioner directly according
to the needs of the customers.
49. It is categorically denied that the petitioner has ever shared his
access credentials with the respondent No.3 or transferred his ID. The
petitioner only charges the rates as prescribed by respondent No.1. The
electronic reservation slip as also the receipt of the money paid are
issued to the customers in the prescribed format. The petitioner is stated
to have associated with the respondent No.3 only to augment his income
by making use of the opportunity to expand his business and book more
tickets even while strictly adhering to the extent rules and regulations as
prescribed by respondent No.1. It is stated that at every step of the
process disclaimers are displayed to the effect that respondent No.3 is in
no way associated with the railways or respondent No.1 and that a
nominal market access fee would be imposed upon the customers for
facilities such as online payment gateway services being provided.
50. It is stated that the petitioner learnt that several RSPs associated
with respondent No.3 were proceeded against by the respondent No.1 in
the form of deactivation of concerned RSP agency without affording
them any hearing whatsoever. Certain fines were directed to be paid by
the concerned PSPs and the RSPs were to be permanently deactivated
and debarred. Apprehending such action without following due
procedure of law, from respondent No.1 the petitioner herein has filed
the present writ petition. Respondent / IRCTC has not filed a counter-
affidavit to the petitions filed by the respective RSPs, however, detailed
submissions as addressed by Mr. Majithia, learned counsel for IRCTC
have been dealt with below in succeeding paragraphs.
Counter-affidavit by respondent no.2 in W.P.(C) 8625/2017
51. The respondent No.2, who is the concerned PSP associated with
the petitioner herein has taken the stand in its counter affidavit that its
own contract and agreement with respondent No.1 is not a subject matter
of the present writ petition and that respondent No.3 and the petitioner
had clandestinely entered into a commercial agreement thereby creating
an agency which was prejudicial to the interest of the other respondent.
It is stated that the respondent No.3 while styling itself as a facilitator of
e-commerce market place business is in fact an authorized entity trading
and earning revenue in connivance with the petitioner. An impression is
sought to be created wherein the petitioner is portrayed as an agent of
respondent Nos.1 and 2 when in fact it is acting like a sovereign. Further,
it is stated that development of an app without express authorization of
the respondent No.1‟s portal is a glaring illegality and may have severe
privacy issues.
52. The petitioner having diverted from the specified procedure for
the purpose of booking tickets was issued notices by respondent No.1
informing him of the deactivation of his access credential and therefore,
the respondent No.2 is stated to have no role to play in the matter.
Moreover, all the commercial contracts involved in the matter i.e.
PSP/respondent No.1 and PSP/petitioner have incorporated arbitration
clauses and therefore, the maintainability of the present petition is
challenged. The dispute at hand is an ordinary commercial dispute and
would fall under the domain of private law.
Submissions of Mr. Jayant Bhushan
53. Mr. Jayant Bhushan, learned Sr. Counsel appearing for the
petitioner in W.P.(C) 9864/2017 i.e. M/s Stelling (in short) would submit
that the notice of the IRCTC to it, asking it to stop booking of tickets on
its website and stating that its activities in running the website are illegal
and further suspension of access credentials of RSPs associated with the
petitioner has had a direct effect on its business and therefore the present
petition is certainly maintainable. He reiterates that M/s Stelling is not
involved in the business of directly booking train tickets and merely
operates an e-commerce platform i.e Railyatri.in for bringing together a
purchaser and an RSP to book tickets. The payment made by the
customer is forwarded by M/s Stelling (Railyatri) to the RSP who then
further forwards the same to the respondent IRCTC. The ultimate
booking is done by the RSP concerned. All electronic payments
involved are done in accordance with Govt. of India guidelines for FDI
on e-commerce and extend RBI guidelines.
54. He would state that none of irregularities as contemplated by
IRCTC e-ticketing policy are attracted by the business model as set in
place by M/s Stelling. There is merely an unsubstantiated charge of
sharing of access credentials by the concerned RSPs with M/s Stelling
(Railyatri), however, nothing has been put on record in support of same.
The price charged for every ticket is exactly according to the rates
prescribed by IRCTC and only a small commission is charged to the
customer by M/s Stelling for the convenience of using its website, which
is a contractual relationship.
55. It is his submission that IRCTCs argument of interpreting the
mandate, "ticket should be booked only when the customer approaches"
to mean that a customer must physically approach an RSP for booking a
ticket is totally misconceived in today‟s day and age specially when
Government is promoting the concept of Digital India. It would be
absurd to suggest that the policy must be read in a restricted and
unreasonable manner as indicated above. He would point to the
counter-affidavit filed by IRCTC wherein it has been stated that the B2B
and B2C Models have been specifically envisaged to cater to such
passengers who wish to book e-tickets from the comfort of their homes.
Further the contention that booking receipt must be issued on the RSPs
own stationary would not hold much water once it is accepted that a
ticket can be booked even over the internet from a, remote location.
According to him a reasonable view has to be taken while interpreting
the subject clauses of concerned policies while leaving out small formal
requirements contrary to the main spirit thereof.
56. As regards the contention that M/s Stelling is usurping the role of
Service Providers under the B2C Scheme, it is his submission that there
is a fundamental difference between the operations undertaken by such
Service Providers (for example Makemytrip, Justdial etc.) and M/s
Stelling (Railyatri) inasmuch as the Service Providers booked tickets
themselves whereas M/s Stelling has a platform (Railyatri) for bringing
together the customer and the RSP. Further a Service Provider is paid
`20 to `40 for every ticket booked, whereas M/s Stelling charges only a
small convenience fee to the extent of 1.25% of the ticket amount.
57. He would state that Railway tickets are only a licence to travel
on trains and by no stretch can such tickets be construed to mean to be
property of IRCTC. Further assuming that M/s Stelling does get some
profit indirectly through the sale of Railway Tickets it cannot mean that
such benefits arise out of unauthorized use of IRCTCs property. In
support he would present a hypothetical situation wherein an employee
of an RSP benefits by getting salary. In such a scenario the employee is
benefitting indirectly from the business of sale of tickets but it cannot be
said that the said employee is benefitting on account of sale of IRCTCs
property or that IRCTC‟s permission would be required prior to hiring
any such employee.
58. Mr. Bhushan would reiterate and emphasize that a ticket is only
booked by an authorized agent and that the full value of the ticket is paid
to IRCTC. As regards allegation of violations in terms of Section 143 of
Railways Act, he would submit that M/s Stelling does not carry on the
business of procuring and supplying tickets for travel on Railways.
Further the context under which the said provision was framed makes it
clear that it was to prevent touting of railways tickets and then reselling
to customers later on. It would not apply in a situation where the
customer is genuine and a request is made by him for booking a ticket,
which is ultimately done by an authorized agent only. Even as per
commercial circular no. 64 of 2002 issued by the Railway Board a
person is permitted to purchase a ticket through an attendant or an
authorized person and he does not himself have to be physically present
at the point of booking. In such circumstance, according to him, a
violation under Section 143 would never be made out. He would rely on
a judgment of Kerala High Court in Mathew K. Cherian v. State of
Kerala, 2016 SCC Online Ker 31556.
59. According to him the thrust of IRCTCs case is that any booking
even though done by an RSP at the behest of a customer through M/s
Stelling would be illegal and the allegation that M/s Stelling itself is
booking tickets through misuse of access credentials of authorized RSPs
is merely a supplementary submission to defend its case. A simple
investigation can easily be undertaken to pin point IP addresses of
computer systems used for the purpose of booking tickets. In case, it is
actually found that an unauthorized computer system has been used for
the purpose of booking tickets, access credentials having been illegally
shared, such misuse would be actionable and IRCTC would be within its
rights to take action against such illegal sharing of access credentials.
However, in the present matter no specific instance of such illegal
sharing has been shown.
60. He would state that Railyatri provides a virtual cloud telephony
PBX service for benefit of RSPs to automatically connect an incoming
call from a potential customer. Such a call is not attended by M/s
Stelling and is automatically routed to any RSP that might be free at that
time. According to him this service is similar to that of a "Call Centre"
as envisaged in Govt. of India Guidelines on FDI. According to him FDI
Policy, effective from August 28, 2017, provides for 100% FDI in
market place model of e-commerce and M/s Stelling‟s Railyatri would
be covered under the same. Moreover, restrictions as envisaged in
Clauses 5.1 and 5.2 would not apply to M/s Stelling because the phrase
"Railway Operations" would necessarily mean integral processes
involved in running of railways.
61. As regards complaint of non-refund of cancellation amounts as
raised by IRCTC, he would submit that delayed refunds have been a
perennial problem plaguing IRCTC. Specific instances as re-counted by
the respondent IRCTC have duly been answered by M/s Stelling mainly
on the ground that delays happened only in few cases depending on
specific facts and circumstances of each case. He would submit that
live train status, seat availability, PNR information and other such data is
not proprietary to IRCTC and that such data is openly available on
indianrail.gov.in which is managed by CRIS. Moreover, M/s Stelling
has its own technology for the purpose of obtaining live train running
status. Information with respect to PNR confirmation probability as
presented by M/s Stelling to a customer is based on algorithms using
historical data of tickets booked for the concerned period and is in no
way accessed from confidential internal networks of the respondent
IRCTC.
62. Mr. Bhushan would state that the petitioner cannot be excluded
from entering into any ancillary or side business venture which has not
been declared as a state monopoly under Article 19 (6) of the
Constitution of India. IRCTCs stand that M/s Stelling‟s business has
caused a decline in the footfall on IRCTC‟s website cannot be a ground
to impose restrictions on its business model. Further any such restriction
would be contrary to the provisions of the Competition Act, 2002.
63. In conclusion he would state that the present matter does not
involve any disputed questions of fact but in fact rests upon disputed
principles namely whether a market place based e-commerce entity can
carry on a business incidental to a sector declared as state monopoly and
whether M/s Stelling‟s business model is in fact violative of any of the
extent policies of the respondent IRCTC.
Submissions of Mr. Sanjay Jain.
64. Mr. Sanjay Jain, learned Sr. Counsel as briefed by Mr. Mandeep
Singh Vinaik, Adv. appearing for the petitioners in W.P.(C) Nos.
8562/2017, 8570/2017, 8598/2017, 8613/2017 & 8625/2017, apart from
reiterating the stand taken in the respective petitions would submit that
the crux of the respondent IRCTC‟s case is that ticket bookings were
being undertaken through the Railyatri app, which is not an authorized
app. Upon such allegations being leveled by the respondent IRCTC and
without having given an opportunity to the respective RSPs punitive
action was taken against concerned RSPs thereby de-activating their
access credentials and debarring them from accessing the respondent‟s
network for the purpose of booking of railway tickets. Moreover, in
certain cases IRCTC had already blocked access credentials of RSPs
even before show cause notices were issued to them.
65. He would endeavour to portray the ticket booking process as
conducted by an RSP as follows:
i. Upon entering into a contract with a PSP an RSP is given
access credentials in the form of a pen drive / dongle. When a
customer approaches the RSP the said dongle is attached to the
RSP‟s own PC and using such credentials he is able to log onto
the respondent‟s website using a unique user ID and password as
provided by the PSP.
ii. He would point out that such booking is done on a website
created by a PSP which is in fact a mirror image of IRCTC‟s
website. The payment system is embedded in the PSPs website,
which functions as an online wallet.
iii. Having logged into the website the RSP fills up the
necessary details of the passenger and proposed itinerary based
on which the website shows the real-time options of trains
available at that point of time.
iv. The RSP then interacts with the traveler to ascertain the
final choice and thereafter submits the details and seeks to pay
through the wallet.
iv. At this stage, the PSP‟s site directs the RSP to log-in using
the IRCTC id and Password (which is also unique to every RSP).
Once the RSP has entered the correct user id and password the
payment is instantaneously done and the ticket is booked. A
PNR number is generated and the same is forwarded to the
customer through SMS.
66. Mr. Jain would submit that the process undertaken by an RSP is much
simpler than the one that is available to a prospective customer, i.e., by
logging on to IRCTC‟s website and following several steps in pursuance of
booking a ticket successfully. According to him, the fewer steps as
undertaken by an RSP (as opposed to the multiplicity of steps in the process
undertaken by an individual customer) would in fact lead to lowering the
burden on the respondent‟s network. Moreover, an RSP also helps reduce the
number of simultaneously logged in customers seeking to book tickets.
67. Mr. Jain would submit that "access credentials" is not a software which
can be hacked or illegally shared but is in fact a physical dongle / pen drive
provided by PSP to an RSP. Being merely a platform developed to connect
a customer with an RSP, it would be impossible for such credentials to be
shared with M/s Stelling‟s website.
68. According to him, the petitioner / RSPs can also not be held to be guilty
of using technology to gain unfair advantage. This is because as indicated in
the procedure stated above an RSP can perform only one booking at a given
time and not multiple bookings simultaneously. He would also reiterate that
nowhere in the respondent‟s rules is it mandated that a prospective customer
must physically approach an RSP for the purpose of booking a ticket.
69. He would state that M/s Stelling charges a bare minimal amount of fee
ranging from 0.07 percent to 1 percent of the total booking fee as
"convenience fee". He points out the same is not collected by the RSP but is
in fact charged by M/s Stelling and is not included as part and parcel of the
ticketing fare. The mere representation of the fee so collected on the ticket,
not forming part and parcel of the ticketing fare, cannot be said to be
"overcharging". Moreover, such convenience fee is also charged by
contemporary websites such as Cleartrip.com, Makemytrip.com etc.
70. According to him, the respondent‟s action in de-activating the
petitioner RSPs access credentials even prior to issuance of show cause notice
smacks of malafides and it is contrary to the principle of natural justice and
therefore the entire process would stand vitiated. In this regard he would rely
on Gorkha Security Services v. Govt. of NCT of Delhi 2014 9 SCC 105,
Reliance Telecom ltd. v. Union of India 2017 4 SCC 269 and Smt. S.R.
Venkataraman v. Union of India and Anr. 1979 2 SCC 491.
71. He would state that there is no privity of contract between an RSP and
IRCTC, but even in such a case RSP is in the nature of a sub-agent. The RSP
may seek relief with respect of any decision of IRCTC which affects the RSP.
Reliance is placed on Tashi Delek Gaming Solutions Ltd. and Anr. V. State
of Karnataka and Ors. 2006 (1) UJ 209 (SC). He would further rely on
Kamgar Sabha v. State of Goa and Ors. W.P. No. 243/1995 and Gulam
Abbas and Ors. v. State of Uttar Pradesh and Ors. 1982 1 SCC 71 to state
that this court in exercise of its power in writ jurisdiction can declare an RSP
such as the petitioner to be sub-agent of IRCTC.
72. It is further submitted that the respondent IRCTC‟s stand that it has an
exclusive right as regards supply of e-tickets on payment of fare on account of
such tickets being its "exclusive property" with proprietary rights attached
thereto is erroneous and misconceived inasmuch as IRCTC has no right to
refuse supply of tickets except in circumstances as prescribed under Section
56 of the Railway Act, and in terms of Section 50 of the Railway Act, IRCTC
is obligated to supply tickets on payment of fare and has no discretion to
decide whether such ticket is to be sold or not. He would also draw reference
to Clause 8 of the API agreement entered into between IRCTC and concerned
PSP to submit that in terms of the said Clause no intellectual property or any
other proprietary rights would accrue to either party and that a PSP will not
sue IRCTC for any claim (a) pertaining to intellectual property that the PSP
might develop being based on or related to the PSP agreement and (b) which
may arise in connection with use by PSP for purposes covered under the
agreement. According to him, the said clause therefore merely secures an
undertaking from the PSP against legal action. The said clause further states
that all IP rights on API Specifications and IRCTC websites (besides services
and any derivative work created thereof) would vest with IRCTC alone. Said
rights are not sub-licensable, transferrable or assignable unless otherwise
stated in the PSP agreement. Mr. Jain would further fault the respondent‟s
reliance on clauses 3.1, 3.4 and 3.7 of the PSP agreement inasmuch as
according to him the said clauses merely mandate that IRCTC‟s website
would only be accessed for lawful purposes and that a PSP would not in any
manner alter, reproduce, license or create any derivative work from sale or
transfer of any information, products or services obtained therefrom. It is
further mandated that a PSP shall not create any hyperlink to the website and
that in terms of clause 3.4 any obligation placed on the PSP would also be an
obligation placed on a customer thereof. It is therefore his submission that
such obligations therefore relate only to the PSP‟s customers and not its
agents. As regards clause 3.7 Mr. Jain would submit that only activities
which are premised on deceit, misrepresentation, misfeasance, inducement,
cheating etc. are contemplated to be covered and it in no way deals with
infringement of any IP rights. According to him in the regime of online ticket
booking where the fare amount is either pre-paid or simultaneously credited
to the account of PSP on purchase of each ticket, the possibilities visualized in
clause 3.7 do not arise. Moreover, according to him nothing would turn out
of clause 3.1 of the PSP agreement in the present context since there has been
no modification, copying, distribution, transmission, display, performance,
reproduction, publication, licensing, assignment or creation of derivative
work from the transfer or sale of any information, product or services
obtained from IRCTC‟s website. This is not even the case in the show cause
notice issued to the PSPs.
73. It is Mr. Jain‟s submission that the allegation of violation of IP rights is
therefore only vaguely referred to without identifying the exact nature of the
alleged right being violated and the manner in which such violation is alleged
to have occurred. Moreover, details of any financial loss having occurred
have also not been furnished. It is submitted that data used by Railyatri.in is
either self-generated or otherwise available in public domain and in any event
RSPs do not provide Railyatri any access to the IRCTC website nor is there
any sharing of access credentials. In terms of IRCTC‟s B2B model, a PSP
appointed thereunder pays a pre-determined amount to IRCTC for appointing
sub-agents like RSPs and it is in this manner that IRCTC expands its network
of providing de-centralized customer points to facilitate ticket booking.
According to Mr. Jain, it is therefore, none of IRCTC‟s concern as to whether
third parties like Railyatri, who are not under any contract with them, provide
ticket facilitation services on their own platform and monetize the information
available in public domain or that which is self-generated. He reiterates that
respondent IRCTC has completely glossed over the fact that every
information (PNR details, seat availability and real-time train position) is
available in public domain namely, through the website indianrailways.gov.in.
In conclusion, he would submit that the arrangement between RSPs and third
party entities such as Railyatri is only a win-win situation for IRCTC because
it is earning more revenue through RSPs and there is no guarantee that it
would have earned the same additional revenue but from the customers added
by the said third party entities. According to him, there appears to be no
motive for IRCTC to step in, in the present scenario, apart from some
collateral motive to eliminate the aforesaid third party entities at the behest of
other players such as makemytrip.com.
74. As regards the question of maintainability of the present writ petition
Mr. Jain would state that the writ petition has been filed against the
respondent No.1/IRCTC over the illegal and unlawful deactivation of
petitioner‟s ticketing account without having given a legal and lawful reason
to do so and without having afforded a reasonable opportunity to make its
case. It is submitted that respondent No.1 operates as a monopoly in the area
of railway ticketing. It appoints PSPs as its agent who further appoint RSPs
as sub agents and therefore no direct contractual relationship exist between an
RSP and respondent No.1. In case of any alleged default by an RSP, action is
taken against the PSP by respondent No.1, however, the same is effective
against the RSP as in the instant cases, they were deactivated without any
show cause notice or hearing being afforded. It is stated that there is no other
alternative and more efficacious remedy against the aforesaid action as the
concerned rules of respondent No.1 do provide for a show cause notice to be
issued prior to action being taken, however, it is not specified as to who it
must be given to. In effect therefore, a sham show cause notice is issued to a
PSP without the RSP ever being called upon for an explanation.
75. It is therefore submitted that it is in this context that the petitioner has
approached under writ jurisdiction to safeguard his own employees and
livelihood against the arbitrary, mala fide and illegal orders of deactivation
being passed by respondent No.1 being in complete violation of principle of
natural justice.
76. Reliance is placed on R.D. Shetty vs. the International Airport
Authority, AIR 1979 SC 1628; Ajay Hasia vs. Khalid Mujib Sehravarddi,
(1981) 1 SCC 722; Som Prakash vs. Union of India, AIR 1981 SC 212 to
state that respondent No.1 is an instrumentality of state and therefore,
amenable to writ jurisdiction. Further, reliance is placed on Tata Cellular vs.
UOI, (1994) 6 SCC 651, Harbanslal Sahnia vs. Indian Oil Corporation
(2003) 2 SCC 107; ABL Intl. Ltd. vs. Export Credit Guarantee Corporation
of India Ltd., 2004 (3) SCC 553 to state that even where alternative remedy
in the form of arbitration clause is available the same may be subject matter of
writ jurisdiction in cases were the subject action is in violation of principle of
nature justice and fundamental rights. Reliance is also placed on (i) Chairman
Railway Board and Anr. vs. Chandrima Das and Ors. (2000) 2 SCC 465; (ii)
Noble Resources Ltd. v. State of Orissa and Anr. (2006) 10 SCC 236; (iii)
M.P. State Agro Industries Development Corp. Ltd. and Anr. v. Jahan Khan
(2007) 10 SCC 88; (iv) Saraswati Deswal vs. State of Haryana and Ors.
(2010) 2 SCC 126 to state that availability of alternative remedy would not be
bar to exercise of jurisdiction under Article 226 of the Constitution by this
Court, if actions of the respondent are shown to be manifestly unfair,
arbitrary, unjust, non-transparent and discriminatory.
77. According to him, respondent No.1 has taken / wants to take coercive
action against the petitioners merely because they are accepting ticket
booking requests from genuine travelers through the web portal / app of
Railyatri (Stelling Technologies), which activity is not prohibited under any
statue, law or rules / regulations of the respondent No.1 or the Ministry of
Railways. Relying on Ambuja Hotels and Real Estate Pvt. Ltd. vs. IRCTC,
W.P. (C) 726/2009, decided on April 16, 2009; D.K. Yadav v. J.M.A.
Industries Ltd. (1993) 3 SCC 259 and Uptron India Ltd. v. Shammi Bhan
1998 (6) SCC 538, Mr. Jain would submit that respondent No.1 being an
instrumentality of state is bound to issue a show cause notice and duly follow
principle of natural justice even where there is automatic application of a
norm / clause.
Submissions of Mr. Nikhil Majithia.
78. Mr. Nikhil Majithia, learned counsel appearing for the common
respondent IRCTC would in addition to the stand already taken in the
counter-affidavits state that IRCTC has invested `1171.05 Crores to develop
the online eco system around its website for the purpose of conducting
commercial transactions including sale of e-tickets for rail travel. IRCTC has
the exclusive mandate to sell e-tickets having also been given the rights to
authorize other persons / entities for the purpose. In order to further exploit
the use of internet and increase its outreach to sell e-tickets, IRCTC has
developed its business models namely ICS, B2B and B2C schemes. It is
under these schemes that PSPs and RSPs are appointed with the objective of
leveraging the internet and allied technologies to provide ease of access to
potential customers. Where a customer is not comfortable booking tickets
directly on IRCTC‟s website on his own he may resort to booking the tickets
through such RSPs. To execute the aforementioned models, IRCTC has
entered into commercial contracts with various commercial entities such as
Cleartrip, Makemytrip, Paytm, Justdial, Kotak Mahindra Bank, ITZ Cash
Card Ltd. and several others. He would submit that these commercial entities
have paid huge sums to be associated with IRCTC under the different
business models which is a significant source of revenue for IRCTC.
79. He would submit that M/s Stelling‟s core activity is dependent upon
sale of e-tickets and if there were no e-tickets to sell or no IRCTC website, it
would have no business activity. M/s Stelling has not paid any fees for being
associated with IRCTC or any other fee for being integrated into its network.
According to him, M/s Stelling is unauthorizedly selling tickets and operating
a business in open market by misutilizing IRCTC‟s property. M/s Stelling
has approached this court without having established any legal right to deal
with IRCTC‟s property seeking a declaration that its activities are legal.
According to him M/s Stelling‟s action in associating with different RSPs is
to the detriment of concerned PSPs who have set up their infrastructure but
the fruits of investments made by PSPs are being reaped by M/s Stelling.
80. Mr. Majithia would state that the entire ticket booking process is
carried out on M/s Stelling‟s platforms as it issues an e-ticket. The customer
logs on to M/s Stelling‟s website, fills in all the requisite details, goes through
information, availability of trains and then complete the process of booking
the railway ticket on its website only. Moreover, M/s Stelling also accepts
the money for booking the e-ticket directly from customer. In this regard, he
would make a reference to a similar case before the European Court of Justice
which had rule that Uber was not merely a phone application enabling a user
to connect with owner of a car, in fact the entire manner of process of booking
a cab on Uber resembles an actual taxi service and would therefore be bound
to comply with extent rules and regulations imposed on the traditional taxi
owners.
81. He would draw my attention to a complaint regarding non-refund of
ticket cancellation amount by M/s. Stelling on July 13, 2017. On further
investigation it was found that several RSPs had been booking e-tickets for
M/s Stelling in violation of rules and regulations set out by IRCTC and
without due authorization either from IRCTC or PSP. The violations found
were:
(i) RSPs were booking ticket without obtaining any requisition slip
from the customers.
(ii) RSP was booking ticket without taking identity proof from the
customer such as driving licence, PAN, Aadhar, etc.
(iii) RSP was not providing Electronic Reservation Slip (ERS) to the
customers.
(iv) RSP was not providing any money receipt for sale of e-ticket on
its letterhead.
It was after these violations being found by the anti-fraud team of
IRCTC that show cause notices were issued to concerned PSPs on account of
the fact that under the agreement between IRCTC and PSPs, a PSP was
responsible for all activities of its own RSPs. The PSPs being unable to
furnish information regarding tickets, booked by the anti-fraud team that a
decision was taken to permanently de-activate the concerned RSPs.
Consequently penalty was also imposed upon the concerned PSPs. During
the investigation it was also found that several RSPs were found sharing their
access credentials with M/s Stelling.
82. Mr. Majithia would also point out that the information regarding live
train status, seat availability, ticket confirmation probability etc. as displayed
on M/s Stelling was exactly the same as is visible on irctc.co.in. According to
him this is a clear indication of the fact that M/s Stelling is accessing IRCTCs
website and systems without due authorization or permission and such misuse
of access credentials is completely illegal and amounts to theft and
misappropriation of property.
83. Mr. Majithia has further challenged the very maintainability of the
petition filed by M/s Stelling. He would state that IRCTC having entered into
private arrangements with various PSPs with a view to expand its own
business of sale of e-tickets cannot be said to be discharging a public or
statutory duty. Further there is no privity of contract between IRCTC and M/s
Stelling and therefore there is no corresponding duty or obligation owed to it.
In such a case a writ petition cannot be used for the enforcement of a duty
which does not exist. He would also state that the present petition arising out
of commercial relationships existing between various parties would not be
maintainable on the same ground and the respective parties must be relegated
to pursue their remedies under ordinary civil law.
84. He would state that the present petition involves highly disputed
questions of facts concerning working of technical systems and other related
technologies, the workings of which cannot be ascertained without the help of
proper examination of systems by technical experts. According to him, the
arrangement of booking e-tickets from M/s Stelling‟s website has to be
examined with a view that in today‟s times technology permits control of one
computer system from another system remotely. It is submitted that the
manner of working as claimed by M/s Stelling is strongly disputed by IRCTC
and the same can be verified only by leading evidence which would be
dependent on forensic examination of M/s Stelling system along with the
concerned RSP‟s systems. According to him, all this would ouster writ
jurisdiction.
85. Mr. Majithia would submit that roughly 6.8 lac e-tickets are booked
through IRCTC‟s systems everyday with the total amount in circulation being
`816,000,000/-. It is therefore very important to control activities of
unauthorized persons / entities. Absence of regulation of their activities
would undoubtedly lead to situations where huge amounts of public money is
either siphoned off by other commercial entities or misappropriated.
86. He would draw my attention to Commercial Circular Nos. 56/2008 and
13/2010 issued by Railway Board which exempt only individual users
booking their tickets directly through IRCTC‟s website from providing
identify proof at the time of booking of the e-ticket. Such customers can
book only up to 8 e-tickets a month whereas there is no restriction on the
number of tickets that can be booked by an RSP. It is in this scenario that
rules and regulations have been framed governing the activities of PSPs /
RSPs and strict compliance is sought. It is pointed out that none of the
policies, rules or regulations have been assailed by any of the petitioner and
therefore it would not be open to anyone to obliquely avoid them.
87. Relying on Section 143 of the Railways Act, Mr. Majithia would
submit that the arrangement as set up by M/s Stelling for the purpose of sale
of e-tickets clearly involves procurement of tickets by an unauthorized
person. Challenging M/s Stelling‟s reliance on FDI policies, he would
submit that clauses 5.1 and 5.2 of the same clearly stipulates that no amount
of FDI is permissible for railway operations. Sale of tickets is an integral
process of railway operations and therefore no entity can indirectly deal with
prohibited sectors.
88. In conclusion he would submit that IRCTC has been given the
exclusive right to provide catering services on railway premises and trains
vide Commercial Circular No. 57/2015. According to him, M/s Stelling‟s
claim of providing similar e-catering services is yet another example of their
illegal and unauthorized activities indicative of an intruder seeking to unjustly
enrich itself at the cost of the owner.
89. In response to the petitions filed by the RSPs Mr. Majithia would
submit that in terms of the MOU entered into with the Railways IRCTC is the
only entity that is authorized to not only act as an authorized agent of the
Railways for the purpose of ticketing but is also vested with the rights and
responsibilities of overall development, management and marketing of IT-
based ticketing, e-commerce and allied services. Section 60 (g) of the
Railways Act gives authority to IRCTC as an extended arm of the Railways
for regulating the travelling upon, use, working and management of the
Railways. Based on these duties and authority, IRCTC has the power to
authorize a person / entity to engage in a business involving Railway
property.
90. He would submit that the sale of e-tickets is strictly regulated by
IRCTC in order to prevent any unauthorized and illegal access and usage of
railways property for the conduct of any business whatsoever which solely
thrives over the business of IRCTC, i.e., sale of e-tickets. IRCTC has, all
through these years of service to its customers, built a goodwill and reputation
in the regime of e-ticketing in India. Unauthorized and illegal usage of
IRCTC website and data available on it is most detrimental to its business
interest because it is unchecked and can lead to substantial loss of goodwill
and reputation of IRCTC. The conduct of sales of e-tickets is a subject that
ought to be strictly regulated since it involves funds of the public, and in a
welfare state, the core principle is that of the Government or State‟s liability
towards public welfare. Therefore, the regulations must be airtight, in so far
as to avoid any kind of misfeasance and defaults which may ultimately
degrade and affect the quality of service offered to the public.
91. He would submit that whole nature of business of M/s Stelling
mushrooms from years of research and hard work put in by IRCTC and
Railways in developing an appropriate electronic ticketing experience.
Website of IRCTC is its original creation and it ensues with it intellectual
property rights and related protections against unauthorized usage of all
information and data contained therein in the nature of copyright which exists
on its own and the registration of which is not mandatorily required.
According to him IRCTC would retain all IP rights including copyrights on
API specifications and IRCTC websites besides IRCTC services and any
derivative work created thereof. In this context it is absolutely clear that
express permission / authorization of IRCTC is mandatorily required for any
usage of its website and information available thereon to conduct a business
restricted to the terms and conditions of such usage as agreed upon by IRCTC
and the authorized party or licensee.
92. Mr. Majithia while referring to RSP agreement, as relied upon by the
concerned RSP, would submit that the RSP is under a clear obligation to not
modify, copy, distribute, transmit, display, perform, reproduce, publish,
license, assign, create derivate works from, transfer or sell any information,
products or services obtained from the IRCTC website. According to him, the
very act of RSPs engaging with M/s Stelling, whose whole business relies
upon IRCTC‟s website and the data/information contained thereon, is directly
in contravention of contractual obligations and terms of IRCTC. Even if RSPs
were not actually sharing their access credentials with M/s Stelling, which is
still a moot point, the mere fact that they were aware of the nature of business
activity being conducted by M/s Stelling makes the RSPs liable for each
breach of the obligations they were supposed to comply with.
93. Mr. Majithia would also point to a case wherein an RSP had been
found to be misusing the access credentials issued to him as he was
functioning as a tout. The concerned RSP also admitted to RPF that he had
made some 15 fake IDs on IRCTC website for the purpose.
94. It is submitted that show cause notice was issued to respective PSPs
when certain violations were found in the manner of operations of IRCTC
website and access granted to respective RSPs. It is only after being
unsatisfied with the responses furnished by PSPs that IRCTC took the action
of imposing penalty on them and permanently deactivating access credentials
of the RSPs concerned. In conclusion he would submit that the role of an
RSP is akin to a sub-licensee with whom there is no direct relationship with
the owner / licensor. However, the licensor still retains the right to take action
to secure the subject matter of the license which is being used by the sub-
licensee if it finds that it is being used contrary to terms of the original license
or contract.
95. Challenging the locus and maintainability of the petitions filed by the
respective RSPs Mr. Majithia would submit that an RSP being appointed by a
PSP is granted access to IRCTC‟s websites and systems by the PSP itself and
the respondent No.1 has no role to play in the matter except that the PSP is
required to ensure that all activities of the RSP remain within the ambit of
principle agreement entered into between the PSP and the respondent No.1.
Therefore, the nature of contract between IRCTC and PSP also defines and
limits the nature of activities that can be undertaken by an RSP. It is
submitted that the respondent No.1 took the natural step of safeguarding its
property by deactivating the access credentials of the concerned RSPs upon
coming to know they were also booking e-tickets for third parties without any
prior permission or authorization.
96. There is no privity of contract between the RSP and IRCTC and all the
rights accruing in favour of the RSP flow out of the commercial relationship
between the PSP and its RSPs. The alleged violation of any such right would
result in civil remedy being resorted to where the nature of alleged right
would first have to be established. In the absence of such a right existing
expressly qua IRCTC, a writ petition cannot be resorted to, to first create and
then enforce such a right. Even so under the existing commercial relationship
among the parties involved civil courts of Delhi have been conferred
exclusive jurisdiction. Reliance in this regard is placed on Rajasthan State
Industrial Development and Investment Corporation vs. Diamond and Gem
Development Corporation Ltd. (2013) 5 SCC 470.
97. It is also submitted that the RSP would further not have any locus
standi to file the present writ petition as the concerned PSPs have accepted
the penalty imposed by respondent No.1 and have also willingly deposited the
said amounts. Prior to deactivation of erring RSPs show cause notices were
duly issued to the concerned PSPs and the PSPs having opted to comply with
the order of respondent No.1, a third party such as the petitioner herein cannot
assail the same before this Court. Reliance placed on K.K. Saxena vs.
International Commissioner on Irrigation and Drainage (2015) 4 SCC 670
to submit that in respect of a commercial activity being under taken even by
state instrumentalities a writ petition would not be maintainable.
Submissions of Ms. Isha Bhalla.
98. Ms. Isha Bhalla, learned counsel appearing for respondent no.2 in
W.P.(C) 8625/2017 would submit that the present dispute is an ordinary
commercial dispute subject to jurisdiction of a civil court. According to her
the concerned RSP is hand in glove with M/s Stelling and is seeking
enforcement of contract, which is not amenable to writ jurisdiction.
99. In the face of financial commitments made by a PSP for being
associated with IRCTC, permitting a third party to avail commercial
advantage through backdoor of private agreement with an RSP is abuse of the
process of law and nothing short of jumping the queue for unjust enrichment
at the cost of the concerned PSP.
100. She would submit that the RSP as well as M/s Stelling are seeking
privileges of a tout, which is expressly forbidden by Section 143 of The
Railways Act. Mere use of creative agreements would not change nature of
the activities undertaken by them, and the same would clearly fall afoul of the
extant Rules and Regulations of IRCTC and the Railways. According to her,
the continuation of the arrangement as existing between the concerned RSPs
and RailYatri is not only illegal, but also clearly opposed to public policy.
101. Ms Bhalla would rely on Joshi Technologies International Inc. Vs
Union of India & Ors. to submit that the present disputes flow out of private
agreements, and writ jurisdiction cannot be resorted to for enforcement of the
same. Moreover, arbitration clauses being incorporated into the said
agreements, the present petitions deserve to be dismissed.
102. In conclusion, she would submit that M/s Stelling, under the garb of
"convenience fee", is imposing a levy on the general public, without the
sanction of law as required by Article 264 of the Constitution. The present
issue concerns highly disputed questions of fact, which cannot be decided in
writ jurisdiction.
Reasons and conclusions.
103. Before I deal with the rival submissions advanced before me, it is
necessary to delineate some relevant facts in brief, to appreciate the
controversy, which arises in this batch of petitions.
104. The respondent IRCTC entered into an MoU with the Ministry of
Railways to carry out functions related to booking of tickets by employing
advanced technology. The IRCTC had put in place various models through
the following three schemes:-
1. Internet Café Scheme (ICS)
2. Business to Business Scheme (B2B)
3. Business to Customer (B2C)
Under the ICS Scheme, the respondent appoints a PSP who in turn
appoints an RSP acting as an agent of the PSP and functions as a retail outlet
offering e-ticket booking facility from its premises to customers who do not
wish to travel all the way to a railway station to physically obtain a ticket for
travelling on trains. A contractual relationship / understanding exists between
the respondent IRCTC and the PSP by virtue of which a PSP is authorized to
deal with the respondent‟s property, i.e., access to its website and to carry out
the e-ticketing business on its behalf. This relationship is regulated by Rules
and Regulations and is also incorporated in commercial contracts by way of
annexures which prescribe the permissible activities that can be carried out by
PSP/RSP. In terms of the rules and regulations / policies, a PSP is authorized
to appoint a particular number of RSPs. Their relationship is also governed
by contract. Having said that, it is important to note some of the rules and
regulations and also some provisions of the contracts executed between the
IRCTC / PSP / RSP, as also some of the features of the circulars / policy
guidelines issued by IRCTC.
MEMORANDUM OF UNDERSTANDING BETWEEN THE
MINISTRY OF RAILWAYS AND IRCTC FOR TICKETING
X X X X X X
AND WHEREAS the MOR has identified certain areas of business
interest viz IT enabled retail ticketing and other allied travel, tourism
and ticketing products in transport sector. The expertise developed in
this area will be useful for Indian Railways and can be marketed to other
railway systems world over and any other transport companies like Bus
companies or airlines, etc.
AND WHEREAS the IRCTC will provide quality services and take
marketing initiatives to raise revenues have reached an understanding as
following:-
MoU given below is for the purpose of IT enabled ticketing and
marketing of passenger service / tourism products.
1.1 The purpose of this MoU is to set up the general principle of the
Association for the development of IT enabled ticketing and related
systems in transportation sector and jointly raise the resources for the
same.
1.2 Role of MOR - The MOR agrees to permit IRCTC to enter into
the business of IT enabled services.
1.3 Role of IRCTC- IRCTC will act as a promoter and facilitator
for all the IT related ticketing and allied products in transportation
sector and may for this purpose enter into business agreements with
service providers / corporate bodies etc.
1.4 IRCTC will also develop marketing function for Indian Railways
in customer related areas including ticketing for reserved segment and
E-Commerce.
1.5 IRCTC will be permitted to charge a suitable premium on each
ticket. However, the capital for this enhanced system will have to be
arranged by IRCTC through suitable mechanism.
The entire hardware and software technology as well as
maintenance, development and upgradation along with the kiosks will be
looked after by IRCTC through suitable mechanism.
1.6 Separate working arrangements will be drawn up between MOR
and IRCTC from time to time which would contain the modality and
methodology of working, financing, revenue sharing (if any), respective
responsibilities and roles, code of ethics, security and connectivity
issues, and all other allied matters to provide e-services and Retail
ticketing in customer interface areas and marketing of IT related
ticketing and other products for promoting mutual business or market it
to third parties. The specific working arrangement would also specify
manner of disbursement of receipts and revenue arising out of the
activities as well as respective liabilities and deposit of the fare due to
Railways in prescribed manner.
Agreement between IRCTC and PSP
(Clause 3.7)
It is obligatory on the part of the Second Party to control the activities of
their sub agent. The Second Party shall be equally liable for all civil and
criminal liabilities of their sub-agent. If at any stage the sub-agent of the
Second Party indulges in any fraudulent activity like (but not restricted to)
collection of excess charges, alteration of fares on the tickets, issue of
duplicate ticket etc. Then the second party shall also be liable for such
activity of their sub agents and IRCTC shall be free to take any action under
civil and criminal law.
Termination
9.1 The Second Party will have to control the activities of their sub agents.
In case of any alteration or tampering with the ERP Slip the same is
punishable U/s 420 Indian Penal Code for which the second party as well as
the agent are liable. The second party shall also be liable for the offence
committed by their agent who indulge in any fraudulent activities including
(but not restricted to) collection of excess charges, alternation of fares on the
ticket(s), issue of duplicate tickets. The second party will have to control the
activities of their sub-agents. On receipt any complaint against sub agents
the action taken on sub agent shall also be taken on second party including
deactivation of their user id.
Agreement between PSP and RSP
1. Both parties shall comply to all applicable rules / regulations of Indian
Railway Catering and Tourism Corporation (IRCTC)
Agreement between RSP and Railyatri
Recitals
1. RailYatri is engaged in the business of providing information and
technology solutions to its users through its websites and mobile
application, and is operating as an E-commerce market place.
2. RailYatri under this agreement is an intermediary, and acts like a
facilitator between the traveller (Buyer) and seller (Travel Agent), to
provide support services on its digital and electronic platforms, like
logistics, call center and payment collection, to the Travel Agent, as
permitted by the Government of India‟s March, 2016 Guidelines for
conducting E-commerce.
3. Travel Agent is in the business of booking bus ticket, train tickets,
flight tickets, travel packages & related ancillary services / products as
is a registered Retail Service Provider with IRCTC, and desires to use
RailYatri‟s E-commerce market place platform to expand its business,
which Travel Agent Warrants to RailYatri it is entitled to do.
Agreement
1. RailYatri will provide its E-commerce marketplace and its attendant
digital and electronic networks to the Travel Agent, and act as a facilitator
between prospective traveller who may visit RailYatri‟s E-commerce website
or mobile application, and the Travel Agent. The ticket will be booked by the
Travel Agent (directly or through its affiliates) based on requirement
specified by the Buyer, in terms of its license with IRCTC. RailYatri will only
provide marketing information, payment, communication and support
services to Travel Agent.
2. RailYatri will provide an online dashboard to the Travel Agent for
performance management and monitoring.
3. Compliance with Indian Railway Catering and Tourism Corporation
(IRCTC) Regulations
A. Travel Agent represents and warrants that he / she is an
authorized ticket agent and is registered with IRCTC in this
regard.
B. Travel Agent will be responsible for availing / renewing all
applicable IRCTC licenses from time to time, and will ensure
compliance to all IRCTC rules and regulations in relation to
ticket booking.
C. Travel Agent will charge only prescribed IRCTC charges to
users.
D. Travel Agent will book tickets only using IRCTC registration /
license. In case any booking made other than this mechanism,
then Travel Agent will be responsible for all commercial and
statutory / governmental liabilities, including and not limited to
refund to RY User / RailYatri a penalty equivalent to gross ticket
price (including all charges, commission, fee, etc.)
E. Travel Agent agrees to indemnify RailYatri in case travel agent
violates any norm / rule / regulation of IRCTC and any directive
/ order is issued against RailYatri by any authority.
F. Travel Agent shall ensure that all Electronic Reservation Slips
(ERS) issued by the Travel Agent using RailYatri‟s platform
conform to the format prescribed by IRCTC.
G. Travel Agent shall ensure that cancellation procedures
prescribed by IRCTC are followed.
4. Payments
A. xxxxxxx
B. Travel Agent authorizes RailYatri to collect value of products /
services from Buyer, which RailYatri will then remit to Travel
Agent as Settlement Amount. RailYatri will pay the Travel Agent
the ticket booking amount and all authorized amounts charged
by the Travel Agent to the Buyer like IRCTC‟s service charges,
agent‟s service charges.
C. Travel Agent authorises RailYatri to collect and retain with itself
charges for marketplace services as per the guidelines issued by
Government of India, Ministry of Commerce, Department of
Industrial Policy and Promotion, Press Release Note No.3,
dated March 29, 2016.
D. RailYatri will remit the settlement amount to Travel Agent within
the time frame mentioned in RBI notification RBI/2009-10/231
DPSS.CO.PD.No. 1102/02.14.08/2009-10 dated November 24,
2009. RailYatri may extend line of credit or advance(s) to
Travel Agent prior to sale of service / product, and the
settlement amount will then be adjusted from such line of credit
or advance(s).
E. In case of refund / cancellation, the amount owed by Travel
Agent to RailYatri will be adjusted in settlement amount.
RailYatri will directly make a refund to the Buyer.
5. Bookings, Cancellations and RailYatri's Special Offer to Buyer
A. xxxxxxx
B. xxxxxxx
C. RailYatri, in the course of providing the above-mentioned E-
commerce services, will also be offering Buyer choosing to book
railway tickets, the added facility (Special Offer), of making partial
payments for booked tickets, with the balance (Balance Payment)
being paid to the Travel Agent by RailYatri for and on behalf of the
Buyer, on terms and conditions entered into between RailYatri and the
Buyer, where under the Travel Agent will receive its agreed settlement
from RailYatri.
i. In case of cancellation of ticket as per contractual
agreement between RailYatri and Buyer, the Travel Agent will
be pre-authorized by the Buyer to deposit the cancellation
refund to RailYatri, for onward transmission to the Buyer by
RailYatri, after deduction of the Balance Payment, paid by
RailYatri to Travel Agent, and any facilitation / financing fees,
as may have been contracted between RailYatri and the Buyer.
ii. The contractually agreed cancellation schedule between
the Buyer and RailYatri will be at least 5 days prior to the date
of travel, in case the Buyer does not pay RailYatri the Balance
Payment for the ticket which has been paid to the Travel Agent
by RailYatri on behalf of the Buyer, at least 5 days before the
date of travel.
D. In case the Buyer pays the Balance Payment for the ticket
booking to RailYatri at least 5 days prior to the date of travel, then the
cancellation rules of the railway authorities shall apply to any
cancellation done by the Buyer between 5 days and the date / time of
travel, and full refund money as per railway authorities rules, which
shall be deposited by the Travel Agent to RailYatri, will be refunded to
the Buyer. However, the financing / facilitation fees will still be
deducted for the availed Balance Payment made by RailYatri for and
on behalf of the Buyer.
7. Communication
A. RailYatri will notify the Ticket Agent through dashboard, SMS
and E-mail. Such notifications may be service request of new
booking cancellations, changes to existing ticket, etc.
12. The parties are entering this Agreement as independent contractors,
and this Agreement will not be construed to create a partnership, joint
venture, or employment relationship between them. Neither Party will
represent itself to be an employee or agent of the other or enter into any
agreement or legally binding commitment or statement on the other‟s behalf
or in the other‟s name.
A. It is clearly agreed and understood by the Parties that Travel
Agent is not creating any sub agency with RailYatri and
RailYatri has no liability or privity of contract with IRCTC,
merely by reason of entering this agreement and providing its
platforms to the Travel Agent.
B. The Travel Agent is neither providing RailYatri access
credentials to the web services of IRCTC, nor transferring
Travel Agent‟s ID to RailYatri.
C. The Travel Agent is merely using RailYatri‟s platform to
enhance its rail ticket booking capacity, and Travel Agent will
be solely responsible for following all Rules and Regulations
stipulated by IRCTC for its Retail Service Providers, including
ensuring that using RailYatri‟s platform does not interfere with
the software provided to the Travel Agent by IRCTC.
D. The Travel Agent understands and agrees that the covenants
agreed to herein, including the provisioning of the special offer
by RailYatri to Buyer booking on RailYatri‟s E-commerce
platforms, does not violate or breach any of its contractual /
license obligations with IRCTC
13. Confidentiality
A. xxxxxxx
B. It is expressly provided that login credentials (username -
password) issued by IRCTC to Travel Agent shall never be
disclosed or shared or provided by Travel Agent to any party
including and not limited to RailYatri and it‟s employees.
C. No license or conveyance of any rights to the Receiving Party
under any discoveries, inventions, patents, trade secrets,
copyrights, or other form of intellectual property is expressly
granted or implied by the disclosure or exchange of information
between the parties.
Extant Rules and Regulations
Do's for the Service providers
Mandates for Registration
Registration as an RSP (Retail Service Provider) in IRCTC is issued
for booking of E-Tickets only (except RTSA agents, who are authorized
by Railways).
It is essential to prevent sharing of IDs by PSP/RSP. Hence, Digital
certificate and machine ID of RSP will be mandatory for registration.
IRCTC‟s rules and regulations are to be read properly and followed
strictly. Ignorance of the same cannot be considered as a valid reason.
The Principal Service Provider (PSP) / RSP must be fully aware of the
extant rules.
Mandates for Booking / Cancellation of Tickets
The RSP must ensure that the transaction (Booking or cancellation) is
done with the complete knowledge and acceptance of the customer.
It is mandatory for all RSPs to maintain the written / electronic
requests and a copy of the ID proof from the customers for both
booking and cancellation of the tickets.
The ERS issued by all the PSPs / RSPs should be strictly in the format
prescribed by IRCTC. ERS issued by the PSP / RSP should contain
name and full address contact details of the same RSP and the name of
the PSP.
RSPs must issue receipt of their own stationary for the amount
collected from the customers.
The receipt should contain details like Railway Fare, IRCTC's service
charges, agents service charges, payment gateway charge etc. (The
service Tax as applicable on the agents service charges should be
shown separately in the receipt).
Service charges of PSP / RSP includes booking as well as cancellation
transaction.
Mandates for the PSP
PSP should ensure proper antecedent and character / credential
verification before appointing RSP and keep a record of these
documents and should be able to provide them to IRCTC as and when
required. A declaration to this effect has to be submitted by the PSP at
the time of registration.
It will be obligatory on the part of the PSP to control the activities of
their RSP. The PSP will be equally liable for all civil and criminal
liabilities of their RSP.
PSPs with or without web services should keep a close watch on the
conduct of their RSPs and in case of receipt of complaint against any
RSP by the customers then the agent ID should be deactivated at the
operators end immediately under intimation to IRCTC.
PSP must monitor each RSPs activity. PSPs will have to conduct
decoy checks on 1% of its RSPs every month. Penalty of Rs.50,000/-
multiplied by shortfall of decoy checks in a month will be imposed on
PSPs.
PSPs should educate their RSPs regarding rules and regulation of
IRCTC or about ticket booking software (in case of web services
agents) etc.
Dont's for the Service providers
Sharing of access credentials to web services is strictly prohibited.
Transfer of agent ID given to RSPs by IRCTC or PSPs is Prohibited
and IRCTC will initiate action against the agent group if found guilty
in such matters. Punitive action will be initiated as mentioned in the
Annexure „A‟.
RSPs should not book tickets using any other wrong ID except only
through IRCTC provided agent ids. RSPs if found to be using wrong
id, then their ids will be deactivated immediately. Punitive action will
be initiated as mentioned in the Annexure „A‟.
Book of benami e-tickets is strictly prohibited (anybody doing so will
be prosecuted).
As per clause 3.7 (B2B) and 4.5 (Internet café) agreement(s) which
inter alia provides that the PSP shall be equally liable for all civil
and criminal liabilities of their RSP. If at any stage the sub-RSP of
the PSP indulges in any fraudulent activity like (but not restricted to)
collection of excess charges, alteration of fares on the tickets, issue
of duplicate ticket etc. Then the PSP shall also be liable for such
activity of their RSPs (and IRCTC) shall be free to take any action
under civil and criminal law". The said clause will be applicable if
the mandates are not followed by the PSP / RSP, and following
punitive action will be taken by also invoking the clause 9 (B2B) and
10 (Internet café) of agreement(s):
i) Irregularities Committed by PSPs
S.No. Nature of Irregularities Rule
Major Irregularities
1. X X
2. Un-authorised access Sharing of 1.A penalty of Rs.20,000/- per
access credentials to web complaint will be imposed and
services, Unauthorised Sale of
Agency, etc. 2. The RSP ID of such outlet
will be permanently
deactivated and
Cases involving cyber act
violations will be reported to
Cyber Crime Police as well as
RPF
3. Point of sale fraud-complaints 1.A penalty of Rs.20,000/- per
of complaint will be imposed
4. Non compliance of 1.A penalty of Rs.20,000/- per
Booking/cancellation mandates complaint will be imposed and
- For other fraudulent activities
such as faking as a normal user 2. The RSP ID of such outlet
and booking on website using will be permanently
multiple user IDs, Manipulation deactivated
of ERS, sale of 1 Tickets,
3. Case will also be referred to
Booking of benami tickets,
RPF if found indulge in
Transfer or resale of tickets,
touting activity using personal
blocking accommodation giving
ID
fictitious names, cancellation of
ticket without the knowledge of
customer, Non filing of TDR on
request of Customer
Minor Irregularities
1. Non compliance of other A penalty of upto Rs.5,000/-
mandates Any agent outlet, if per complaint and in the first
found without proper display of instance RSP will be given a
sign board indicating the IRCTC warning and in the second
instructions viz Service charges, instance RSP ID will be
Payment gateway charges, permanently deactivated.
without registration certificate
being displayed, non issuance o
money receipt etc.,
In the case "Address Mis-
match" of the agent
Any advertisement in print or
press media without prior
permission from IRCTC in
writing. Misuse of IRCTC
LOGO without prior permission
from IRCTC
2. If any of the RSPs found not IRCTC will deactivate such
booking tickets (non-transacting Sub user ID permanently with
agents) for six months after the consent of the PSP
registration
3. If PAN No is not provided by Such RSP agency will be
any existing PSP or RSP within disabled till such time the PAN
the stipulated time. No. is provided to IRCTC.
If verified details like address,
PAN No. along with ID Proof is
not provided by New PSP or Registration will not be
RSP processed.
4. Other provisions If complaints are received and
proved against 5 different
RSPs of PSPs in 01 month
then a show cause notice will
be issued.
If between 6-10 complaints
are received and proved
against different RSPs of a
PSPs in 01 month then a PSP
will be deactivated for 01
month.
If between 11-15 complaints
are received and proved
against different RSPs of a
PSPs in 01 month then a PSP
will be deactivated for 03
month. If two such incidences
are reported, the PSP will be
permanently deactivated.
If more than 20 complaints are
received and proved against
different RSPs of a PSPs in 01
month then the services of the
PSP will be terminated for 06
months. If two such incidents
are reported, the PSPs will be
permanently deactivated.
However, i) the number of
instances for imposing penalty
will be counted based on date
of occurrence of incidence as
against date of reporting.
ii) The complaints arising out
of bookings made through
PSPs IDs will only be counted
for penal action against PSPs
iii) the complaints arising out
of bookings made through
Personal IDs will be taken up
through RPF under Railway
Act for touting activity. Such
complaints for tickets booked
on personal ID will not be
counted for the purpose of
suspending PSPs on the
criteria of number of
complaints.
ii) Irregularities Committed by RSPs
For irregularities committed by RSP, necessary action will be
taken against respective PSP also in addition to whatever action
(like deactivation of RSP as decided by competent authority)
taken against RSP. However, in case of criminal activity of
RSP, necessary action will be taken by IRCTC through RPF
against RSP.
105. From the above, it can therefore be concluded that IRCTC has been
mandated by the Ministry of Railways (MOR) with a sole aim of developing
and implementing advanced technologies for the purpose of modernizing its
ticketing processes. MOR is further seen to be interested in developing its
business in the said area by utilizing technology and further aims to market
the expertise so developed. IRCTC has been authorized to sell tickets on its
digital platforms and for the same, it may develop suitable systems and
processes while also engaging third party entities to maximize business. The
responsibility to maintain, operate and with time upgrade the said systems and
processes rests solely with IRCTC. IRCTC has been given the exclusive
mandate to sell tickets to prospective travelers (which is in addition to MOR
operated ticket counters).
106. Under concerned policies, IRCTC has been permitted to engage certain
PSPs, who act as its agents, in furtherance of the stated objectives being the
provision of IT enabled ticketing services to the masses. The PSP is
mandated to follow all the extant rules and regulations relating to rail
ticketing set in place by IRCTC. The PSP may further appoint RSPs to
maximize its own reach while also further acting on and aiding the aforenoted
objective.
107. It is, however, seen that IRCTC obligates the PSP to control the
activities of its RSPs while also ensuring that the RSP complies with the
extant rules and regulations set in place by IRCTC. Accordingly, in their
agreement PSPs and RSPs mutually agree that both parties shall at all times
comply with applicable rules and regulations of IRCTC.
108. IRCTC has set in place detailed guidelines with regard to the standards
of confidentiality to be followed by both the PSPs and RSPs relating to login
and access credentials provided to them, the violation of which entails various
penalties and punitive action. It is to be noted that even in case of a violation
by an RSP, a PSP would be held equally liable and proceeded against.
109. In the agreement between RSPs and M/s Stelling (RailYatri) it is
recorded M/s Stelling is merely a business facilitator that provides an e-
commerce platform to its customers for efficient transaction of business and
wider reach and access into the market. For the said purpose, M/s Stelling has
developed its own set of technologies and processes and now markets the
same to prospective customers, which are the RSPs in the present matter.
110. RailYatri and the RSP have also mutually agreed that the RSP shall at
all times comply with extant IRCTC rules and regulations and that under no
circumstances shall the RSP ever share or disclose its login IDs or access
credentials provided to it by IRCTC.
111. Having noted the relevant provisions of the Rules / Regulations and the
Contract, before I answer the rival contentions of the learned counsel for the
parties on merit, it is necessary to deal with the submission raised by Mr.
Majithia on the maintainability of the writ petition in the absence of any
privity between the petitioners herein and the IRCTC.
112. The pleas advanced by the petitioners including M/s Stelling
Technologies Pvt. Ltd. and RSPs are that (1) the IRCTC has made the
agreement executed by them ineffective and (2) the access credentials of
RSPs to do the e-ticket booking are being / have been deactivated by IRCTC
by giving a sham notice to PSP. It is clear, both the pleas of the petitioners
are directed against the IRCTC. I note complaints have been filed by IRCTC
against M/s Stelling Technologies Pvt. Ltd. with the Delhi Police alleging that
they are carrying on illegal activity of booking and providing meals in trains
and e-ticket booking. That apart, lot of correspondence was exchanged
between M/s. Stelling Technologies Pvt. Ltd. and the IRCTC, which includes
a notice issued by the IRCTC calling upon M/s Stelling Technologies Pvt.
Ltd. to stop booking e-tickets and stop directing passengers to RSPs.
113. Similarly, with regard to the RSPs, there is no dispute that there is no
privity between IRCTC and RSPs. But at the same time, it cannot be denied
that the relationship between IRCTC, PSP and RSP is regulated by the Rules
and Regulations and the do‟s and don‟ts issued by IRCTC. It cannot be
denied that the access credentials have been deactivated by imposing a
penalty on the PSP by the IRCTC and the effect thereof is being felt by the
RSPs. In effect, the petitioners have a grievance against IRCTC. So, surely if
they have grievance, they are within their right to approach against IRCTC,
which they have done in these petitions. There is no dispute that IRCTC is a
"State" within the meaning of Article 12 of the Constitution of India and a
writ petition is maintainable. In so far as the reliance placed by Mr. Majithia
on the Judgments of the Supreme Court, in the case of Joshi Technologies
International Inc. (supra) is concerned, the Supreme Court held that if the
rights are purely of private character, no mandamus can be issued, even if the
respondent is a State within the meaning of Article 12 of the Constitution of
India as the other condition which has to be satisfied is that there should be a
public duty involved. In the case in hand, it is the IRCTC‟s own case that the
rules / regulations / policy and guidelines have been violated. So, the
violation of the rules / regulations and policy surely suggest a public law
element. In so far as the judgment in the case of Anandi Mukta Sadguru
Shree Mukatajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust
and Ors. v. V.R. Rudani and Ors. and Ors. 1989 2 SCC 691 is concerned,
the same is not of any help to IRCTC as in that case, the Supreme Court held
no limitation can be put on the High Courts to issue writ of mandamus as the
power under Article 226 of the Constitution of India is wide enough to
include issuance of writs in the nature of prerogative writs. Similarly, in
Mani Subrat Jain Jain and Ors. v. State of Haryana and ors. 1977 1 SCC
486, the issue was relatable to appointment of appellants as Additional
District and Sessions Judge. The Supreme Court has held that they had no
locus standi to file the petitions as they were not appointed and they had no
right to be appointed. In other words, the Supreme Court held that there has to
be a judicially enforceable as well as legally protectable right in existence,
before a writ of mandamus can be issued. The Judgment in Kotak Mahindra
Bank v. Bank of Baroda and Ors. MANU/DE/0214/2016 has no relevance to
the facts of this case inasmuch as this court held whether the Kotak Mahindra
Bank has any cause of action is doubtful and this court has also held when the
case is not free from factual disputes for which reason also the invocation of
writ remedy is not an appropriate remedy. Similarly in Rajasthan State
Industrial Development and Investment Corporation (supra) the Supreme
Court held that a writ cannot be issued to enforce contractual obligations and
moreover when there is an alternative statutory remedy available, a writ
petition cannot be entertained. In so far as K.K. Saxena (supra) is concerned,
the said judgment is distinguishable on facts, inasmuch as it was held by the
Supreme Court that it was not funded by the Government nor it was
discharging any function under any statute. Suffice it to state that IRCTC is a
"State" within the meaning of Article 12 of the Constitution of India and is
involved in the process of e-ticketing pursuant to an authorization given by
the Railways and has framed rules and regulations for the said purpose and it
is also their case that the said rules / regulations and policies have been
violated by the RSPs and M/s. Stelling. Hence the petitions per-se, are
maintainable and the plea of Mr. Majithia in that regard needs to be rejected.
114. A plea of alternative remedy of Arbitration has also been taken by
Mr. Majithia inasmuch as there is an arbitration clause between the RSPs and
M/s. Stelling and if there is any inter se dispute, the RSP must invoke the said
arbitration clause. Such a plea does not appeal to the Court. Firstly there is
no inter-se dispute between them as they both are contesting the action of
IRCTC, to order de-activation of access credentials of the RSPs. Secondly,
even if the matter goes to the arbitration, it is the action of the IRCTC which
needs to be tested and IRCTC being not a party to arbitration agreement, there
cannot be any adjudication of that aspect in any arbitration proceedings
between M/s. Steeling and RSP as IRCTC is a third party. I am of the view
that such a plea needs to be rejected.
115. Having answered the objections regarding maintainability, the issue
which needs to be decided is whether the petitioner (M/s Stelling
Technologies Pvt. Ltd.) through its e-commerce platform Railyatri.in, is
merely bringing RSP and the customer together for the purpose of booking of
e-tickets as contended by the M/s. Stelling and as such is a permissible
activity. The case of M/s. Stelling is that it acts as a facilitator or go between
the customer and seller of the tickets (RSPs) through its digital platform. It is
not involved in the business of booking train tickets. The payment made by
the customer is forwarded by the M/s. Stelling to the RSP, who then forwards
it to the IRCTC. The ultimate booking is done by the RSP concerned. The
M/s Stelling‟s platform charges nominal amount equivalent to 1.25% of the
ticket as a convenience fee for use of its e-commerce market place. The price
of this ticket is exactly according to the rates prescribed by the IRCTC. It is
the case of M/s Stelling that the RSP does not charge over and above what is
prescribed by the Railways and M/s Stelling‟s platform has prominently
disclaimed on its portal that it is an independent self funded entity and is in no
way connected with IRCTC. It conducts its business directly in compliance
with the extant Rules and Regulations set in place by the Government /
Regulatory entity.
116. The case of the RSPs is on similar lines that the M/s Stelling is only a
facilitator of business which is not actually involved in the ticket booking
process. They state that there is no privity of contract between RSPs and
IRCTC. They deny that they have shared the access credentials with
M/s. Stelling or transferred their IDs. They also charge the rates as prescribed
by the IRCTC. The electronic reservation slip as also the receipt of the
money paid are issued to the customers in the prescribed format.
117. Having noted the case of the petitioners, assuming that the platform
railyatri.in of M/s Stelling is only a facilitator and the access credentials are
not shared with M/s. Stelling, still the creation of a platform by M/s Stelling
for a customer to use and access, through RSP, the network created by IRCTC
from where the ticket is booked, would be impermissible. There is also no
dispute that IRCTC has entered into an MoU with the Railways for the
purpose of e-ticketing. The MoU authorizes the IRCTC to exploit the internet
and increase its outreach to sell e-tickets. The IRCTC has developed various
business models in that regard. There is no dispute that to operate the
Scheme, IRCTC had entered into contracts with commercial entities. The
entities have paid money to be associated with IRCTC. The entities are called
PSPs. These PSPs appoint RSPs. The RSPs are the retail outlets as the name
itself suggests. It is not disputed that the petitioner M/s Stelling which has a
platform railyatri.in is neither a PSP nor an RSP and has no privity of contract
with IRCTC. No money has been paid by M/s Stelling to IRCTC / PSP to be
involved in the process of e-ticket booking or to be integrated in the network
initiated / developed by the IRCTC, which according to this Court is a pre-
requisite to be involved in any manner in the process of e-ticketing and for
which integration fee and Annual maintenance fee is required to be paid.
Neither the petitioner M/s Stelling nor the RSPs have challenged the MoU /
relationship between the Railways / IRCTC on any ground. Further, the RSPs
have not challenged, the policy and the rules framed by IRCTC for governing
the e-ticketing Scheme. So, this Court proceeds on the premise that IRCTC
has the exclusive right with regard to e-ticketing. The IRCTC has framed
rules / regulations / policy, to govern the relationship between it and a
commercial concern in that regard. It is the case of M/s. Stelling‟s that it has
provided a virtual cloud telephony PBX service for the benefit of RSPs to
automatically connect incoming call from a potential customer. The
petitioner clarifies that the call made by the customer is never handled by the
petitioner but is in fact automatically routed to an RSP that might be available
at a given time also suggest that, through the e-commerce platform created by
the M/s. Stelling a customer is connected to the RSP therefrom to PSP and the
network of the IRCTC, which is impermissible as there is a use of
Technology for gaining unfair advantage. That even otherwise, it is conceded
/ admitted by petitioner M/s. Stelling that railyatri.in also accepts money for
booking the e-ticket directly from the customer. The fact that M/s. Stelling
through railyatri.in is collecting money itself suggests, selling of ticket by it.
The scheme evolved by the IRCTC, as stated by Mr. Jain, appearing for
RSPs, is that e-ticket booking is done on the website created by a PSP which
is a mirror image of IRCTC website and the payment is made on the PSPs
website, which functions as an online wallet, whereas, the payment in the
Railyatri app is made in the wallet of M/s Stelling. In fact, it was the
submission of Mr. Bhushan that the payment made by the customer is
forwarded by M/s. Stelling (Railyatri.in) to the RSP who then forwarded it to
IRCTC. So, it is clear that there is a deviation from the procedure as
contemplated under the scheme evolved by the IRCTC. This I say so, in view
of the following clauses in agreement executed between the RSPs and the
M/s. Stelling:-
xxx xxx xxx
2. RailYatri under this agreement is an intermediary, and
acts like a facilitator between the traveller (Buyer) and seller
(Travel Agent), to provide support services on its digital and
electronic platforms, like logistics, call center and payment
collection, to the Travel Agent, as permitted by the Government
of India‟s March, 2016 Guidelines for conducting E-commerce.
xxx xxx xxx
RailYatri will only provide marketing information, payment,
communication and support services to Travel Agent.
xxx xxx xxx
B. Travel Agent authorizes RailYatri to collect value of products /
services from Buyer, which RailYatri will then remit to Travel
Agent as Settlement Amount. RailYatri will pay the Travel Agent
the ticket booking amount and all authorized amounts charged
by the Travel Agent to the Buyer like IRCTC‟s service charges,
agent‟s service charges.
xxx xxx xxx
D. RailYatri will remit the settlement amount to Travel Agent
within the time frame mentioned in RBI notification RBI/2009-
10/231 DPSS.CO.PD.No. 1102/02.14.08/2009-10 dated
November 24, 2009.
xxx xxx xxx
E. In case of refund / cancellation, the amount owed by Travel
Agent to RailYatri will be adjusted in settlement amount.
RailYatri will directly make a refund to the Buyer."
118. That apart, even as per the agreement between M/s Stelling and RSPs
the bookings, cancellations and railyatri special offer to buyer stipulate as
under:-
"5. Bookings, Cancellations and RailYatri's Special Offer to
Buyer
A. xxxxxxx
B. xxxxxxx
C. RailYatri, in the course of providing the above-mentioned E-
commerce services, will also be offering Buyer choosing to book
railway tickets, the added facility (Special Offer), of making partial
payments for booked tickets, with the balance (Balance Payment)
being paid to the Travel Agent by RailYatri for and on behalf of the
Buyer, on terms and conditions entered into between RailYatri and the
Buyer, where under the Travel Agent will receive its agreed settlement
from RailYatri.
i. In case of cancellation of ticket as per contractual
agreement between RailYatri and Buyer, the Travel Agent will
be pre-authorized by the Buyer to deposit the cancellation
refund to RailYatri, for onward transmission to the Buyer by
RailYatri, after deduction of the Balance Payment, paid by
RailYatri to Travel Agent, and any facilitation / financing fees,
as may have been contracted between RailYatri and the Buyer.
ii. The contractually agreed cancellation schedule between
the Buyer and RailYatri will be at least 5 days prior to the date
of travel, in case the Buyer does not pay RailYatri the Balance
Payment for the ticket which has been paid to the Travel Agent
by RailYatri on behalf of the Buyer, at least 5 days before the
date of travel.
D. In case the Buyer pays the Balance Payment for the ticket
booking to RailYatri at least 5 days prior to the date of travel, then the
cancellation rules of the railway authorities shall apply to any
cancellation done by the Buyer between 5 days and the date / time of
travel, and full refund money as per railway authorities rules, which
shall be deposited by the Travel Agent to RailYatri, will be refunded to
the Buyer. However, the financing / facilitation fees will still be
deducted for the availed Balance Payment made by RailYatri for and
on behalf of the Buyer."
119. The said stipulation is contrary to the mandate of Rules and
Regulations framed by the IRCTC inasmuch as it is RSP, who must refund
the money as per cancellation rules to the customer immediately in all cases.
The Rules and Regulations also stipulate whenever the cancellation ticket
amount / the TDR refund amount which is credited back in the PSP‟s / RSP‟s
account used for ticket booking, could not be refunded to the customer due to
various reasons, the money must be returned to IRCTC. The refund should be
made to the customer within3-5 days from the date of receipt from the
IRCTC.
120. Mr. Majithia is justified in saying that unauthorized agents getting
involved in collection of money for ticket booking process and non-refunding
in case of cancellation are enormous is appealing. The plea of Mr. Majithia
that if such activities are not controlled, huge amounts of public money are
susceptible of being siphoned of / misappropriated, is also appealing. In fact,
a reference is made to the case of one Raj Kumar Gupta who claimed to have
booked a ticket from railyatri.in app, but the refund for the same had not been
received back upon cancellation despite a significant period having passed
and during enquiry it was found that the said ticket had been booked by an
RSP M/s. Sahara Tours and Travels Hub registered in the name of Mr. Vijay
Tiwary and registered with the PSP M/s. G.I. Technology Pvt. Ltd. In fact, it
is conceded by M/s. Stelling that delays have happened only in few cases
depending upon specific facts and circumstances. The IRCTC has also given
reference of the case of Mr. Keppuvergan, who booked ticket from Madras to
Nizammuddin, but later on after canceling it, was not given the refund by the
petitioner Deepak Suri. In effect, a further retail outlet has been created by
the RSPs with their tie up with the M/s. Stelling. As per the Rules and
Regulations, the retail outlet can be at the level of the RSP only.
121. The plea of Mr. Bhushan that the facility provided by M/s. Stelling is
to avoid the botheration of the customer to go to the RSP physically and book
the ticket as the same can be booked from the confines of his house appears
appealing on a first blush, but on a deeper consideration of the methodology
evolved by M/s Stelling, through its platform railyatri.in connecting the
customer to the RSPs and booking tickets by collecting money in its wallet
and earning revenue, is surely unauthorized. No such arrangement is
contemplated as per the Rules and Regulations / Policy.
122. Insofar as the submission of Mr. Sanjay Jain, on the plea of Mr.
Majithia that the supply of e-tickets on the payment of fare on account of such
tickets being its exclusive property with proprietary rights, that the same is
erroneous and misconceived as IRCTC has no right to refuse supply of tickets
except in circumstances as prescribed in Section 56 and Section 50 of the
Railway Act is concerned, the plea of Mr. Majithia has to be understood from
the perspective that in terms of authorization given by the railways to IRCTC,
it is IRCTC which has the exclusive right to supply e-tickets on payment of
fare to the public at large but discretion of IRCTC is only to the extent, to
whom the task of supply of e-tickets be delegated to, on its behalf, in terms of
the Rules and Regulations / Policy framed by it. At the same time, it must be
said that the IRCTC has no right to choose the customer / consumer for
supply of e-tickets to travel in the railways.
123. At this stage, I may also deal with one of the plea of Mr. Majithia that
IRCTC has intellectual property right over the website as it is the original
creation of the IRCTC. In this regard, Mr. Sanjay Jain had, by referring to the
PSP Agreement and API Agreement, contended that IRCTC‟s website is not
accessed by the railyatri.in as, no access credentials are shared by the RSPs
and the IPR are not assignable and Clauses 3.1, 3.4 and 3.7 contemplate, the
website can be accessed for lawful purposes and in no way deal with
infringement of IPR rights. Suffice it would be to state, the said argument of
Mr. Majithia would only hold good if it is proved that the access credentials
are shared by the RSPs and M/s Stelling is unauthorizedly accessing the
website of IRCTC and booking the tickets, as the booking of the tickets would
mean that they are accessing the website of the IRCTC.
124. The stand of Mr. Majithia that M/s Stelling is usurping the role of
Service Providers under the B2C Scheme, has been controverted by Mr.
Bhushan by stating that there is a difference between the operations
undertaken by such Service Providers and M/s Stelling through Railyatri as
the Service Providers book tickets themselves whereas M/s Stelling is merely
a platform for bringing together the customer and the RSP and the ticket is
booked by the RSP. This submission of Mr. Bhushan is not at all appealing.
In effect, by resorting to the process of providing the platform to the
customers to reach the RSP, and also M/s Stelling through railyatri.in is in
fact collecting the ticket fare, the same shall have the effect of booking the
tickets, that too without paying integration charges / AMC to IRCTC. Surely,
this shall undermine the role of service providers under B2C.
125. The plea of Mr. Bhushan that the Railway tickets are only license to
travel in trains and by no stretch of imagination can be construed to be the
property of IRCTC and if M/s Stelling get some profit indirectly through the
sale of tickets, it cannot mean such benefit arise out of unauthorized use of
IRCTC‟s property, is a fallacious argument, overlooking the factual aspect
that IRCTC has evolved the network for booking tickets to travel in Railways,
pursuant to an exclusive authorization by the Railways. The same has to be in
the manner, stated by IRCTC, through its rules and regulations / Policy and
not by way of an arrangement entered into by the RSPs. The Railways,
having also outsourced the process of ticketing to IRCTC, the IRCTC has
stepped into the shoes of the Railways, the activity of booking of tickets and
earning revenue, therefrom, cannot be done without authorization from Indian
Railways / IRCTC. It would be an irrelevant plea that full value of the ticket
is being paid to IRCTC, when such an activity itself is unauthorized. It is also
relevant to note the submission of Ms. Isha Bhalla, appearing for respondent
no.2 (PSP) in W.P.(C) 8625/2017, that in the face of the financial
commitments made by a PSP for being associated with IRCTC permitting a
third party to avail commercial advantage through back door of private
agreement with an RSP is a case of unjust enrichment at the cost of PSP, is
appealing.
126. The plea of Mr. Bhushan that the petitioner cannot be excluded from
entering into any ancillary or side business venture, which has not been
declared as a State monopoly under Article 19(6) of the Constitution of India
is concerned, suffice it to state that there is no restriction imposed on the right
of the petitioner to carry out any business, trade or profession. In fact, the
petitioner M/s Stelling, if it chooses to carry out the trade of e-ticket booking,
it can do so, subject to it fulfilling all the conditions that have been put by the
IRCTC under the Rules and Regulations / Policy framed by it. But it cannot
unauthorizedly do it, in terms of agreement with RSPs, by collecting the
money itself.
127. Insofar as the submission of Mr. Sanjay Jain, justifying the RSP‟s
contract with M/s Stelling Technologies Pvt. Ltd, by stating that the process
undertaken is simpler than the one that is available to a prospective customer
i.e. by logging on to IRCTC website, is concerned, the same in any case
cannot justify the relationship when the same is in violation of the Rules and
Regulations and Policy of IRCTC, which the RSPs are required to adhere to.
The two violations, pointed by Mr. Majithia in this case are (1) the customer
is not approaching the RSP directly, and (2) the payment is being collected by
the petitioner M/s Stelling itself.
128. Insofar as the plea of Mr. Jain that the "access credential", is not a
software, which can be hacked or illegally shared, is concerned, the said plea
is inconsequential, when the relationship as entered into between M/s Stelling
Technologies Pvt. Ltd and RSPs could not have been entered into at all. The
plea of Mr. Jain that it is nowhere provided that a prospective customer has to
approach the RSP for the purpose of booking a ticket, is factually incorrect
inasmuch as the rules and regulations clearly provide that "ticket should be
booked only when the customer approaches". The word "approaches" must
be understood in terms of the rules / regulations / Policy framed by IRCTC to
mean only when a customer approaches the RSPs physically and not by
online through app railyatri.in. This I say so when a customer approaches the
RSP physically, it is the RSP, who books the ticket by collecting the payment
in the wallet of PSP unlike when he approaches online, in which case, the
payment is collected by M/s Stelling, which is impermissible.
129. On the plea of violation of principle of natural justice, there is no
dispute that any action, which entails civil consequences must be preceded by
a show cause notice, eliciting reply from the effected party. But in these writ
petitions, in view of the admitted position that the RSPs do not deny, they
have entered into an arrangement with M/s Stelling Technologies Pvt. Ltd in
the manner depicted above, which, according to this Court, is impermissible
and also the fact, this Court has not given any finding that RSPs have shared
access credentials with M/s. Stelling, it may not be necessary to remand the
matter back to IRCTC, for a fresh consideration, when the factum of
agreement between RSPs and M/s. Stelling has not been disputed.
130. In view of aforesaid conclusion, the reliance placed by Mr. Sanjay Jain
on the judgments of the Supreme Court in the case of Gorkha Security
Services (supra), Reliance Telecom Ltd. (supra) and Smt. S.R.
Venkataraman (supra) are distinguishable on facts.
131. In view of my conclusion above, I am of the view that the present writ
petitions are without any merit and the same are dismissed.
CM No. 40141/2017 in W.P.(C) 9864/2017
CM No. 35240/2017 in W.P.(C) 8562/2017
CM No. 35264/2017 in W.P.(C) 8570/2017
CM No. 35340/2017 in W.P.(C) 8598/2017
CM No. 35398/2017 in W.P.(C) 8613/2017
CM No. 35431/2017 in W.P.(C) 8625/2017
Dismissed as infructuous.
V. KAMESWAR RAO, J
APRIL 05, 2019/ak/aky/jg
