Madras High Court

Indian Railways Mobile Caterers vs Union Of India on 12 May, 2021

W.P.Nos.6253 & 6254/2021

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED : 12.05.2021

CORAM

THE HONOURABLE MRS. JUSTICE PUSHPA SATHYANARAYANA

W.P.Nos.6253 & 6254 of 2021
and W.M.P.Nos.6858 and 6860 to 6864 of 2021

Indian Railways Mobile Caterers
Association (IRMCA)
Having its Administrative office
at 4 & 5, Arunachalam Lane,
Periamet, Chennai-3
rep. by its President
S.B.Agarwal .. Petitioner in W.P.No.6253/2021

Indian Railways Onboard Catering
Contractor Association (IROCCA)
Having its Administrative office
at 58, Venkatesa Gramani Street,
Chindaripet, Chennai-3
rep. by its President
Mr.Subhashchandra bose .. Petitioner in W.P.No.6254/2021

Vs.

1. Union of India
Ministry of Railways,
Railway Board
Through its Secretary,
Rail Bhawan,
New Delhi-110 001.

2. Indian Railways Catering and Tourism
Corporation Limited (IRCTC),
Through its Chairman and Managing Director,
11th and 12th Floor, Statesman House Building,
B-148, Barakhamba Road,
Cannaught Place,
New Delhi-110 001. .. Respondents in both writ petitions
***

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Common Prayer : Writ Petitions filed under Article 226 of the

Constitution of India praying for a Writ of Certiorarified Mandamus to

call for the record on the file of the first respondent pertaining to the

impugned No.2019/Catering/600/04, dated 23.02.2021 passed by the

first respondent and quash the same, and consequently restore and

operationlise the mobile unit catering licenses being Prepaid catering

services in Rajdhani / Shatabdi / Duranto etc. and Postpaid catering

services in Mail Express Trains of the members of the Petitioner

Association with immediate effect on same terms and conditions as

prior to COVID-19 situation, i.e., 20.03.2020 and further permit the

members of the Petitioner Association to resume catering services being

Prepaid catering services in Rajdhani / Shatabdi / Duranto etc and

Postpaid catering services in Mail Express Trains in the Mobile Units.

*** For Petitioner in : Mr.AR.L.Sundaresan, Senior Counsel WP No.6253/2021 for Mr.T.N.C.Kaushik

For Petitioner in : Mr.Sathish Parasaran, Senior Counsel WP No.6254/2021 for Mr.T.N.C.Kaushik

For Respondents : Mr.Sankara Narayanan, Additional Solicitor General of India

along with by Mr.A.Radhakrishnan, Senior Counsel assisted by Mr.P.T.Ramkumar for R1

and Mr.R.Thiagarajan, Senior Counsel assisted by Mr.V.G.Sureshkumar for R2

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COMMON ORDER

The order of the first respondent dated 23.02.2021 is put to

challenge in both these writ petitions, while seeking for a further

direction to the respondents.

2. The petitioners in both these writ petitions are the

respective Associations, whose members are engaged in the business of

providing catering services in the Trains as well as the other units of the

Indian Railways based on the licences issued by the Railway authorities

and they have been working with the Indian Railways for a fairly long

period with utmost satisfaction of the Indian Railways. The members of

the petitioners' Associations are fully dependent on the catering

contracts awarded by the respondents for various units and employed a

several lakhs of employees in the business. The only source of their

income was the revenue augmented from the contracts entered with the

respondents. Due to unexpected and unpredicted situation on account

of COVID, all these contracts have been suspended since 22.03.2020

resulting in serious financial crunch for the members of the petitioners

associations and they have been finding it very difficult to meet their

day-to-day expenses, including the payment of salaries to their

employees and the cost of sustaining their business.

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3. In the year 2013, the Railway Board had conceived the

Standard Bid Document (in short, "SBD") for provisioning of catering

services on Rajdhani, Shatabdi and Duronto Express trains and

published the same on 02.01.2013. Based on the above SBD, tenders

were floated inviting bids from the prospective bidders for the purpose

of operation, management, supply and services of fully cooked meals,

food to passengers on demand, viz., breakfast, lunch, dinner, snacks,

tea, coffee and other beverages. As per the clauses in the SBD, the

meals/food should be prepared and packed from the base kitchens set

up and located at or around the originating / terminating / en-route

stations on railway premises or non-Railway area authorised by the

railway administration to be set up by the licensees. The food prepared

has to be hygienic, packaged and transported from base kitchens to

pantry cars of the trains ensuring cleanliness hygiene and non-

deterioration of the quality food is supplied along with the distribution

of the packaged drinking water to the passengers on board. The SBD

also allowed the licensee for sale of authorized a-la-carte and other

packed food items/beverages to passengers travelling on the train at

tariff approved by the Railways. Therefore, it is stated that the existing

contracts executed between the licencees and the second respondent

(IRCTC) has a combination of both cooked as well as packed items

(Ready to Eat [RTE] Meal), which includes biscuits, bread, juice, tea http://www.judis.nic.in Page 4/29 W.P.Nos.6253 & 6254/2021

sachets, cold drinks, namkeen, bakery products, sweets,

confectionaries, food products, etc.,

4. The Railway Board issues catering policies from time to

time. Accordingly, the Railway Board issued the 2010 Catering Policy

which empowered the Zonal Railways to publish tenders for various

trains and other units under their jurisdiction and to award licences /

contracts. The Catering Policy 2010 was thereafter superseded by the

Catering Policy 2017, under which, the existing and subsisting catering

licensees were assigned by the Zonal Railways to the second

respondent - IRCTC and tripartite agreements between the Zonal

Railways, the licensees and the second respondent - IRCTC were

executed. Thus the present licencees, who are the members of the

petitioners Associations, are being controlled and governed by the

second respondent. It is stated that the members of the petitioners

associations have vested right to continue till expiry of their contract

period, for so many licencees nearly 4 years are still remaining.

5. While so, in March 2020 due to onset of COVID-19 pandemic

and to contain its spread, the Central Government announced

Nationwide lockdown, by exercising its power under Section 6(2)(i) of

the Disaster Management Act, 2005. In view of the lock down, the

Ministry of Railways - the first respondent, issued an order dated http://www.judis.nic.in Page 5/29 W.P.Nos.6253 & 6254/2021

22.03.2020, by which all the passenger train services of Indian Railways

and Konkan Railways were suspended. Initially, the cancellation was

announced till 31.03.2020, which was extended from time to time. The

cancellation of all the train operations brought the catering services of

the licencees to a grinding halt. In the meantime, the Central

Government announced various measures relaxing the total lockdown

and the relaxation was termed as "Unlock-1". In the said Unlock-1,

many of the migrant workers, pilgrims, tourists, students and other

persons, who were stranded at different places all over the country,

were taken to their destination by operating Shramik Special Trains.

The Government also facilitated for serving cooked food and Packaged

Drinking Water to the stranded passengers travelling in these trains and

those food items were procured from various catering license holders,

including the members of the petitioners associations, who had base

kitchens and other establishment en-route.

6. In the meanwhile, the Central Government also issued

guidelines for opening of hotels, restaurants and other hospitality

services in a phased manner. Though the respondents started train

operations on various routes all across the country, the catering

services of the members of the petitioners associations were not

restored. It is also stated that the trains were operated on the very

same routes as they were by allotting different train numbers. It is http://www.judis.nic.in Page 6/29 W.P.Nos.6253 & 6254/2021

alleged that the Railways had adopted this strategy only to issue new

bid for catering services without permitting the existing license holders,

who are the members of the petitioners associations, from doing their

business.

7. While so, on 20.01.2021, tenders were floated for providing

Ready to Eat (RTE) Meals/food, PAD items and for sale of Packaged

Drinking Water (PDW). As the petitioners felt that the said action of the

respondents was completely arbitrary and unreasonable, the said tender

was challenged in W.P.No.1061 of 2021, wherein, this Court held as

follows :

"9. No prejudice will be caused to the respondents, if the representation of the petitioner dated 04.01.2021 seeking for resumption of the services of their members, is considered by the respondents on par with other services, after giving due consideration to the financial difficulties faced by the members of the petitioner-Association during the period of lock down.

10. Mr.R.Thyagarajan, learned Senior Counsel appearing on behalf of the second respondent, on instructions, would submit that the respondents are willing to consider the petitioner's representation dated 04.01.2021, once the regular train services are resumed. According to him, as on date, regular train services have not been resumed.

11. Mr.AR.L.Sundaresan, learned Senior Counsel appearing for the petitioner would further submit that the petitioner should be given a fair hearing by the respondents while they consider the petitioner's representation seeking for resumption of the services of

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the members of the petitioner-Association, which were earlier suspended by the respondents due to lock down.

12. This Court is of the considered view that the request made by the learned Senior Counsel appearing for the petitioner seems to be fair, considering the difficulties faced by the members of the petitioner Association.

13. For the foregoing reasons, no relief can be granted with regard to the challenge made to the impugned tender. However, this Court directs the first respondent to consider the representation of the petitioner Association dated 04.01.2021 seeking for resumption of services of the members of the petitioner-Association on par with other services and pass final orders on merits and in accordance with law, after giving sufficient opportunity to the petitioner- association and its members to put forward their respective contentions, within a period of four weeks from the date of receipt of a copy of this order."

8. Even prior to the issuance of the above tender notice, the

petitioners had given a representation dated 04.01.2021 to the first

respondent seeking resumption of services for the existing licence-

holders. The petitioners in their representations dated 04.01.2021

requested the respondents to resume the operations for the static units,

which were live prior to the COVID-19 lockdown and the continuance of

suspension of catering services in mobile units is discriminatory. They

had requested the Railway Board and the IRCTC to allow them to

operate the mobile units under the regular contracts in the same

manner in which they were operationalised. As indicated supra, this

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Court, while disposing of the writ petition, had directed the first

respondent to consider the representation of the petitioners associations

dated 04.01.2021 within a period of four weeks. Accordingly, the said

representation was considered by the Railway, pursuant to the direction

from this Court issued on 19.01.2021 in W.P.No.1061 of 2021, and the

impugned order dated 23.02.2021 is the outcome of the same.

9. The Ministry of Railways, in the impugned order issued on

23.02.2021, had ordered the IRCTC to terminate all the existing

contracts of mobile catering, which were kept in abeyance, involving

scope of work of providing cooked food to passengers prepared from

base kitchens. The order further directed the IRCTC to treat the said

case as exception arising out of the pandemic situation and not to treat

the case as contractor's default and not to impose any fine for not

providing catering services and also directed the refund of the Security

Deposit (SD) and advance licence fee in full, after adjusting dues, if

any.

10. The impugned order refers to the instructions issued by the

Railway Board dated 05.08.2020 that only RTE meals would be served

on trains. It is specifically stated that even if trains were to resume

running with regular train numbers also, the cooked food services are

not envisaged to resume. The impugned order only hinted that the http://www.judis.nic.in Page 9/29 W.P.Nos.6253 & 6254/2021

scope of work was to provide cooked food prepared in the nominated

base kitchens and also to setup/operate base kitchens, but with the new

normal life post COVID-19, since only limited special trains were

operated, RTE meals alone were permitted to be supplied. Thus, the

authorities have drawn a distinction in the scope of work agreed for the

members of the petitioners associations and the scope of work

mentioned in the tender dated 20.01.2021. It was contended by the

first respondent that the existing contractors cannot be offered the

contract for supplying RTE foods as there is a vast change in the scope

of contract and being a government entity - the IRCTC is bound to

follow the basic principles of tender which prohibited scope of work of

tender.

11. Heard the learned Senior Counsels on either side and

perused the materials placed before this Court.

12. According to the learned Senior Counsels for the petitioners

though the fresh tender issued was only for providing RTE food / meals

to the passengers, even the existing licence holders would have

implemented the decision of the Railways to serve only RTE foods. It is

specifically pointed out that as per Article 8.1 of the Master Licence

Agreements, which were initially entered into in the year 2013/2014,

the Railways is empowered to change the catering tariff and menu at http://www.judis.nic.in Page 10/29 W.P.Nos.6253 & 6254/2021

any time after the award of the contract and the same can be executed

within the legal framework stated in Article 21.5. Therefore, it was

argued that before taking a decision for floating fresh tenders for

providing RTE and PDW, the existing licence holders could have been

put on notice.

13. The learned Senior Counsels for the Railways and the IRCTC

also pointed out that the tender was even open to the existing licence

holders also to participate and 50% of the contractors have been

awarded only from amongst the existing licence holders through

competitive bidding. Thus, the existing contracts of mobile catering,

which were currently kept in abeyance, were ordered to be terminated

by the IRCTC, based on which, the individual agreements of the

Caterers were terminated on 02.03.2021 and 04.03.2021.

14. The learned Additional Solicitor General of India appearing

on behalf of the Railway Board, Ministry of Railways, Union of India,

invited the attention of this Court to paragraph 23 of the counter-

affidavit, to contend that the scope of the work was revised and

therefore, it was decided to issue fresh tenders. In this regard,

paragraph 23 of the counter-affidavit is extracted hereunder :

"23. With regard to the averments set out in paragraph 22 of the affidavit, it is submitted that this respondent has been floating

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the tenders with modified scope of work as directed by the Ministry of Railways. The respondents took a conscious decision with a view to contain spread of COVID-19 and the action is reasonable and legally sustainable. It is denied that any advance license fee against the renewed licensee is available with this Respondent. It is submitted that 90% of the advance license fee already been refunded to the licensees, which has been accepted without any protest. This Respondent undertakes to refund balance due amount after reconciliation of the outstanding amount."

It was further pointed out by the learned Additional Solicitor General

that the special trains are temporary and ah hoc in nature and the said

trains are identified mostly by replacing the first digit of the existing

train number with "Zero" for administrative convenience only and also

to enable the passengers to correlate the special train numbers with the

regular train numbers; secondly, these trains may be withdrawn at any

time at the instance of the State or the Central Governments to contain

the COVID-19 pandemic and the number of coaches in each of these

trains are also decided depending upon the requirement; Thirdly, only

reserved coaches were permitted in order to identify the passenger

travelling in the trains and to restrict movement. Fourthly, the fare

structure is also different from the regular trains to mitigate

unnecessary travel by passengers. Even the stoppage of the trains are

also not as per the regular time table and it was depending upon the

pandemic situation. However, the learned Additional Solicitor General

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was not able to say whether the existing contractors could carry on with

their supply, instead of inviting new contractors.

15. In the light of the above facts and the challenge made by

the petitioners, the question as to whether the termination is legal has

to be determined in these writ petitions ?

16. In this regard, commercial circulars issued by the Railways

regarding Service of branded Ready To Eat meals on trains assumes

importance. The Commercial Circular No.06/2015, dated 30.01.2015

introduced "RTE meals" and it also defined what are all RTE foods,

short-listing of RTE brands, eligibility criteria for short-listing of RTE

meals brands and availability of branded RTE food items on trains, etc.,.

This Circular was partially modified vide Commercial Circular

No.37/2016, dated 06.07.2016. Yet another Commercial Circular

No.20/2017 dated 27.02.2017 superseded the previous policies and

introduced new Catering Policy 2017. Clause 3.7 of the above policy

provides for method of operation of mobile catering service and sets out

various instructions in terms of preparation of food, service of food in

trains, including sale of a-la-carte items, RTE Meals, both through e-

catering and onboard services by IRCTC. The said policy also was later

reviewed in Commercial Circular No.60/2019, dated 14.11.2019. This

Circular was train specific menu with tariff. All the above circulars http://www.judis.nic.in Page 13/29 W.P.Nos.6253 & 6254/2021

assume importance because when these circulars were issued, the

licencees of the members of the petitioners Associations were subsisting

and they were also bound by it, by issuing suitable amendments.

Hence, without even putting the members of the petitioners

associations on notice, the respondents had issued notice calling for

bids dated 20.01.2021.

16. At this juncture, it would be relevant to advert to Article

21.5 of the Master Licence Agreement, which provides for amendment.

Article 8 provides for changes in menu, tariff and duration of train. All

the above mentioned aspects for not permitting the existing contractors

as pointed out by the learned Additional Solicitor General, are already

provided for in the above said Article 8. Article 8.1 reserves the rights

to change catering tariff, menu for the train at any time after the award

of license with the Railways. Article 8.2 provides the Railway with the

right to change the time table, frequency, halts and stoppages, routes,

rake link originating and / or terminating stations of the train. Article

8.3 speaks about the revision in catering tariff and allowing the licensee

to sell food/meals at the revised rates to the passengers. Importantly,

Article 8.5 specifically states that in the event the licensee is unable to

manage the increased frequency, etc. of the trains, the Railway shall be

entitled to terminate those agreements and impose penalty, as defined

under the agreement. Once there is a change, as mentioned in Article 8, http://www.judis.nic.in Page 14/29 W.P.Nos.6253 & 6254/2021

amendment can be done in terms of Article 21.5, as per which, any

changes or modifications to the agreement or its annexure (s) can only

be made by a written amendment mutually signed by the Parties. In

view of the above, when the Master License Agreement itself provides

for such kind of exigencies, there is no reason why the Railways have to

float a separate tender, keeping the existing contracts in abeyance.

Thus, the claim of the Railways that there is a vast change in the scope

of work is misconceived. It is also not made clear as to whether the

willingness of the incumbent licensees were sought for to serve RTE

foods/meals, before floating the tender and whether the existing

licensees and the members of the petitioners associations had at any

time expressed inability to do so to manage the changes made for food

delivery (RTE) in the Special Trains qua the destination, tariff, menu,

etc. In fact, the commercial circulars amending or modifying the

catering policy always included RTE food/meals also. It is never the

case of the Railways that the members of the petitioners associations

ever expressed any difficulty or inability in the supply of RTE

food/meals. In view of the above clauses, the Railways has got no right

to terminate the existing contracts/licences without invoking the same

under the guise of scope of work.

17. The respondents claimed that exercising the power

conferred with it under the statutes, the first respondent Railway Board http://www.judis.nic.in Page 15/29 W.P.Nos.6253 & 6254/2021

has taken the policy decision of supplying the RTE food on trains in

order to ensure hygiene and safety of the passengers travelling. It is a

reasonable decision taken by the Ministry of Railways during the

pandemic situation. It is also not known when the pandemic will end.

This Court has no hesitation to hold that the Railway is entitled to take

any policy decision within the frame of the statute and whether the

policy decision could be executed haphazardly is the question arises for

consideration before this Court. It is to be stated that on 19.10.2020,

the first respondent Railway Board allowed dine-in facilities in static

units like Food Plaza, Refreshment Rooms, etc., wherever the said

facility was available prior to lockdown, of-course, with a rider that the

said dine-in facility was permitted subject to following of all the safety

norms like maintaining social distancing, wearing of mask, etc. It is

claimed that the said permission was granted taking into consideration

of the fact that in the major static units like Food Plaza, Refreshment

Rooms etc., food is prepared in the kitchen located within the static unit

and served to passengers and also involvement of multiple persons in

food handling is not present. Further, since the static units have more

space, safety of the passengers is ensured through social distancing

norms. The only difference between the static kitchen and base kitchens

and their resultant serving of food is that while in major static units

food is prepared in the kitchen located within the same premises and

served to passengers, it was not possible in on board service, where the http://www.judis.nic.in Page 16/29 W.P.Nos.6253 & 6254/2021

food has to cross multiple hands. Even in such case, whether the COVID

protocol is followed in serving food would be the only question wherever

they are served.

18. Be it as it may, all the contractors, after securing the

contracts, had created the infrastructure facilities inside and outside the

suggested place for cooking, by employing various skilled human

resources. The infrastructure of the petitioners itself is for preparing

food in the base kitchens and pack it to the trains for service. Having

allowed them to invest in the infrastructure and employ numerous

skilled persons in this regard, the Railways could have sought their

willingness to serve RTE food. The submission of the Railways that 50%

of the members of the petitioners associations have been awarded the

new contract itself shows that they are capable of serving RTE food

also. When that being the admitted position, before floating the tender,

the Railways could have very well sought their willingness to serve RTE

food, till the subsistence of their contracts and only in the event anyone

express their inability to do so, their individual agreements could could

have been terminated in accordance with law. In the absence of the

same, the termination appears to be only a colourable exercise of power

and thus, the decision making process of the authorities in floating fresh

tender without amending the existing contracts is arbitrary, irrational

and unreasonable and thus, suffers from mala fide. It is only to be http://www.judis.nic.in Page 17/29 W.P.Nos.6253 & 6254/2021

stated that the authorities have committed wrong in taking advantage

of the above COVID-19 pandemic situation as a weapon, to change the

existing contracts in the special trains, which were being plied with the

change in first digit of the train number. In this regard, learned Senior

Counsels for the petitioners relied on the judgment of the Hon'ble

Supreme Court in Shrilekha Vidyarthi (Kumari) v. State of U.P.,

(1991) 1 SCC 212, wherein, it has been held as follows :

"22. There is an obvious difference in the contracts between private parties and contracts to which the State is a party. Private parties are concerned only with their personal interest whereas the State while exercising its powers and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest. The impact of every State action is also on public interest.

This factor alone is sufficient to import at least the minimal requirements of public law obligations and impress with this character the contracts made by the State or its instrumentality. It is a different matter that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. However, to the extent, challenge is made on the ground of violation of Article 14 by alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. To this extent, the obligation is of a public character invariably in every case irrespective of there being any other right or obligation in addition thereto. An additional contractual obligation cannot divest the

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claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the State in any of its actions.

23. Thus, in a case like the present, if it is shown that the impugned State action is arbitrary and, therefore, violative of Article 14 of the Constitution, there can be no impediment in striking down the impugned act irrespective of the question whether an additional right, contractual or statutory, if any, is also available to the aggrieved persons.

24. The State cannot be attributed the split personality of Dr Jekyll and Mr Hyde in the contractual field so as to impress on it all the characteristics of the State at the threshold while making a contract requiring it to fulfil the obligation of Article 14 of the Constitution and thereafter permitting it to cast off its garb of State to adorn the new robe of a private body during the subsistence of the contract enabling it to act arbitrarily subject only to the contractual obligations and remedies flowing from it. It is really the nature of its personality as State which is significant and must characterize all its actions, in whatever field, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act, even in contractual matters. There is a basic difference between the acts of the State which must invariably be in pubic interest and those of a private individual, engaged in similar activities, being primarily for personal gain, which may or may not promote public interest. Viewed in this manner, in which we find no conceptual difficulty or anachronism, we find no reason why the requirement of Article 14 should not extend even in the sphere of contractual matters for regulating the conduct of the State activity."

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19. At this juncture, it apt to state that the WHO in the interim

guidance for COVID-19 and food safety guidance for food businesses

dated 07.04.2020 elucidated that it is highly unlikely that people can

contract COVID-19 from food or food packaging. WHO laid down

certain guidelines for the food workers. The Railways can ask the

contractors to adopt those guidelines to suit its requirements. In this

backdrop, the claim of the petitioners that the online/e-kitchen food

delivery operators like Swiggy, Zomato, etc., were allowed to operate

the food supply by the Government, and the same was not curtailed,

whereas, the petitioners were not allowed to supply food to the

passengers. The online delivery operators also deliver only the

packaged food which was obviously prepared/cooked in a kitchen. When

the said action was not curtailed, the petitioners service also need not

be curtailed and they should be allowed to resume the service, for

which, any suitable conditions could be imposed. There should not be

any discrimination in the same issue. As stated above, when the

Railways is empowered to take a policy decision to serve only RTE food,

it ought to have assigned the said task to the existing licence holders,

based on their willingness, by making suitable amendments in the

existing contracts. The Railways have mandated the members of the

petitioners associations to establish base kitchens, pursuant to the

contracts and there is no rationale in terminating the same, after

keeping it in abeyance for sometime. If the respondents thought that http://www.judis.nic.in Page 20/29 W.P.Nos.6253 & 6254/2021

the subject contracts have to be terminated, the same should have been

done at the first instance in accordance with law. Having kept the

contracts under suspension for more than a year, there is no cause of

action for the Railways to terminate the same merely because they have

moved this Court for their rights. Admittedly, the Security Deposits and

the Bank Guarantees of the existing contracts are still with the

Railways.

20. It is relevant to note that the National Disaster Management

Authority (in short, "NDMA"), having satisfied that the country is

threatened with the spread of COVID-19 epidemic, which has already

been declared as a pandemic by the World Health Organization (WHO)

and having taken effective measures to prevent its spread across the

country, in exercise of its powers under Section 6(2)(i) of the Disaster

Management Act, 2005, directed the Ministries/ Departments of

Government of India and the Governments of the States and Union

Territories to take effective measures so as to prevent the spread of

COVID-19 in the country and the Ministry of Home Affairs, Government

of India, (in short, "MHA") in tune with the said directions issued

guidelines under Section 10(2)(i) of the said Act in Order No.40-

3/2020-DM-I(A) on 24.03.2020. As the pandemic has been declared as

National Disaster coming under the term force majeure, and the same

has been admitted by the second respondent in paragraph 7 of its http://www.judis.nic.in Page 21/29 W.P.Nos.6253 & 6254/2021

counter, it is relevant to advert to Article 21.9 of the Master License

Agreement, which reads as follows :

"21.9. Force Majeure In the event of any unforeseen event directly interfering with the operation of license arising during the currency of this Agreement ; such as war, insurrection, restraint imposed by the Government, act of legislature or other authority, explosion, accident, strike, riot, lock out, act of public enemy, acts of God, sabotage, etc., the Licensee shall, within a week from the commencement thereof, notify the same in writing to the Railway with reasonable evidence thereof. In such event of force majeure, the conditions of the License will not be enforced by either parties. Further, if mutually agreed by both parties, the tenure of this Agreement may be further extended for the period during which license was not operational."

If the above clause is tested with the pandemic situation, as has been

declared by the NDMA, it is clear that the same has to be treated as the

act of God. While so, the Railways cannot terminate the licenses of the

members of the petitioners Associations and it ought to have extended

the tenure of the agreements for the period during which the licenses

were not operational, once normalcy is restored.

21. In the cases on hand, admittedly, the licences of the

members of the petitioners' association were kept in abeyance,

pursuant to the communication dated 22.03.2020 issued by the first

respondent, in which, cancellation of all originating long-distance

Mail/Express and Intercity trains, including premium trains, was

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extended till 31.03.2020 and thereafter the said cancellation was

extended from time to time. Even otherwise, Article 18.4 of the Master

License Agreement, which deals with termination, says that the Railway

or the Licensee may terminate the agreement without assigning any

reason to the Licensee / Railway, by giving six months prior notice in

writing to the Licensee / Railway. Admittedly, there is no notice of

termination issued in this case in terms of the Agreement, even

assuming that the Railways had the power to terminate the contract

without any reason. It would also pertinent to refer to the impugned

order in this regard, wherein, the IRCTC / the second respondent was

directed to treat the case as exception arising out of pandemic situation

and not to treat the case as contractors' default and thus, not to impose

any fine for not providing catering services and refund the Security

Deposit (SD) and advance license fee in full, after adjusting the dues, if

any. As the first respondent had already found that the contractors are

not at fault, the question of termination will not arise and if the

dispossession is pursuant to force majeure, then the remedy is to

extend the period, during which, the license was not operational.

Therefore, on this score also, it can be easily concluded that the

termination is not valid.

22. With reference to Article 19.1, the License Agreement shall

be terminated without notice only in the event of permanent http://www.judis.nic.in Page 23/29 W.P.Nos.6253 & 6254/2021

cancellation / withdrawal/non-operation of the train service by the

Railways. In these cases, admittedly, it is only the suspension of the

operation of the trains, in view of the order issued by the MHA, as

directed by the NDMA, and it is not a permanent

cancellation/withdrawal/non-operation of the train services. Further,

the impugned order dated 23.02.2021 refers to the COVID-19 pandemic

situation for suspension of its train services and also the resumption of

the same. The impugned order specifically states that the Indian

Railways have gradually started operating the passenger segment

special trains post the lockdown on account of COVID-19 as a

preventive measure to contain the spread of Corona Virus. Further, it

states that the phased introduction of passenger segment trains is being

planned in close co-ordination with State Governments to enable them

efficiently managing COVID-19 pandemic. In such situation, the

termination order cannot be sustained by the authorities.

23. The learned Senior Counsel for the Railways placing reliance

on the decisions of the Supreme Court in Tata Cellular V. Union of

India, reported in (19994) 4 SCC 651, contended that the Court

cannot determine whether a particular policy or decision taken in the

fulfilment of that policy is right or wrong. The Courts are only

concerned with the manner in which the decisions can be taken. As

discussed above, the very agreement provides for all the exigencies http://www.judis.nic.in Page 24/29 W.P.Nos.6253 & 6254/2021

that may arise in such a contract and sets out in-built provisions. Thus,

the Railways, before issuing the termination order, should have

understood the same correctly before taking a decision. Besides the

aspects stated hereinabove, the decision to terminate the contracts

even without following the clauses in the agreements would only go to

show that the same warrants judicial review.

24. The objection that the dispute is only arbitrable and Article

226 of the Constitution cannot be invoked has to be rejected as hyper-

technical as the Mobile Catering and Onboard Catering Contracts are

awarded under the Catering Policy of the Government and the same

could be very well challenged under Article 226 of the Constitution.

Further, the nature of dispute between the members of the petitioners

association and the Railways cannot be brought within the ambit of the

dispute resolution clause of the Agreement, i.e., Article 20 and hence,

the members of the petitioners associations are entitled to invoke the

writ jurisdiction of this Court. At this juncture, it is relevant to note that

the learned Senior Counsel for the petitioners relied on the judgment of

the Hon'ble Supreme Court in Harbanslal Sahnia V. Indian Oil

Corporation Limited, (2003) 2 SCC 107, wherein it has been held as

follows :

"7. So far as the view taken by the High Court that the remedy by way of recourse to arbitration clause was available to the

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appellants and therefore the writ petition filed by the appellants was liable to be dismissed is concerned, suffice it to observe that the rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion. In an appropriate case, in spite of availability of the alternative remedy, the High Court may still exercise its writ jurisdiction in at least three contingencies: (i) where the writ petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. (See Whirlpool Corpn. v. Registrar of Trade Marks (1998) 8 SCC 1. The present case attracts applicability of the first two contingencies. Moreover, as noted, the petitioners' dealership, which is their bread and butter, came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings."

Applying the above principle, the termination of the licences of the

members of the petitioners associations, which is their bread and

butter, hurriedly, without following any of the procedures mandated

under the SBD and the individual Master Licence Agreement, cannot be

stated to be valid and that the act of the respondents entail the

members of the petitioners associations to invoke Article 226, instead of

arbitration proceedings and the same cannot be found fault with.

25. The impugned order, which is addressed to the petitioner in

W.P.No.6253 of 2021 and not even copied to the IRCTC, gives certain

directions to the IRCTC. In view of the above discussion, the impugned http://www.judis.nic.in Page 26/29 W.P.Nos.6253 & 6254/2021

order dated 23.02.2021 giving directions to the IRCTC to terminate all

the existing contracts for Mobile Caterers and the Onboard Catering

Contractors, which are all kept in abeyance, is bad and the same is

liable to be quashed.

26. Accordingly, the impugned order of the first respondent

dated 23.02.2021 is quashed. As a corollary, the termination letters

issued to the individual licence holders of the petitioners associations

dated 02.03.2021 and 04.03.2021 are also quashed.

27. These Writ Petition are disposed of with the above directions

and observations. However there shall be no order as to costs.

Consequently, connected miscellaneous petitions are closed.

12.05.2021 Index : Yes / No Internet: Yes gg

1. The Secretary, Railway Board Ministry of Railways, Government of India, Rail Bhawan, New Delhi-110 001.

2. The Chairman and Managing Director, Indian Railways Catering and Tourism Corporation Limited (IRCTC), 11th and 12th Floor, Statesman House Building, http://www.judis.nic.in Page 27/29 W.P.Nos.6253 & 6254/2021

B-148, Barakhamba Road, Cannaught Place, New Delhi-110 001.

http://www.judis.nic.in Page 28/29 W.P.Nos.6253 & 6254/2021

PUSHPA SATHYANARAYANA, J.

W.P.Nos.6253 & 6254 of 2021 and WMP Nos.6858 & 6860 to 6864 of 2021

12.05.2021

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