IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF APRIL 2019 BEFORE THE HON’BLE MR. JUSTICE ALOK ARADHE WRIT PETITION NO.41573 OF 2016 (GM-TEN) C/W WRIT PETITION NO.26701 OF 2016 (GM-RES) WRIT PETITION NO.41573 OF 2016 BETWEEN:
M/S. K M A CATERERS SITUATED AT 20, ROBERTSON ROAD BANGALORE - 560 005 REPRESENTED BY ITS PARTNER T S KHADEER AHMED.
(BY SRI. JAYA KUMAR S. PATIL, SR. COUNSEL FOR SRI. G.A. ANTHONY CRUZE, ADV.,) AND:
1. THE UNION OF INDIA THE MINISTRY OF RAILWAYS RAIL BHAVAN, NEW DELHI - 110 001 REP BY ITS SECRETARY.
2. THE CHAIRMAN RAILWAY BOARD THE MINISTRY OF RAILWAYS RAIL BHAVAN, NEW DELHI - 110 001.
… PETITIONER 3. INDIAN RAILWAY CATERING AND TOURISM CORPORATION SITUATED AT 11, 12TH FLOOR, STATESMAN HOUSE BUILDING, BARAKHAMBA ROAD, NEW DELHI - 110 001 REP BY ITS MANAGING DIRECTOR.
4. INDIAN RAILWAY CATERING AND TOURISM CORPORATION REGIONAL OFFICE SITUATED AT 2/2 DR. RAJKUMAR ROAD, 4TH BLOCK, RAJAJINAGAR BANGALORE - 560 010 REPRESENTED BY ITS REGIONAL MANAGER.
… RESPONDENTS (BY SRI. N.S. SANJAY GOWDA, ADV. FOR R1 & R2 SRI. VIVEK HOLLA, ADV. FOR R3 & R4) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA, PRAYING TO CALL FOR RELEVANT RECORDS PENDING ON THE FILE OF RESPONDENTS PERTAINING TO AWARD OF CATERING LICENSES IN TRAIN NUMBER 12627-28 SBC-NDLS KARNATAKA EXPRESS & ETC.
WRIT PETITION NO.26701 OF 2016 BETWEEN:
M/S. K M A CATERERS SITUATED AT 20, ROBERTSON ROAD BANGALORE - 560 005 REPRESENTED BY ITS PARTNER T S KHADEER AHMED.
(BY SRI. MOHAMAD TAHIR A, ADV.,) AND:
1. THE UNION OF INDIA THE MINISTRY OF RAILWAYS RAIL BHAVAN, NEW DELHI - 110 001 REP BY ITS SECRETARY.
2. THE CHAIRMAN RAILWAY BOARD THE MINISTRY OF RAILWAYS RAIL BHAVAN, NEW DELHI - 110 001.
3. THE CHIEF COMMERCIAL MANAGER SOUTH WESTERN RAILWAY HEADQUARTER OFFICE, HUBLI-580020.
(BY SRI. C. SHASHIKANTHA, ASG FOR R1 SRI. N.S. SANJAY GOWDA, ADV. FOR R2 & R3) - - -
… PETITIONER … RESPONDENTS THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA, PRAYING TO CALL FOR RELEVANT RECORDS PENDING ON THE FILE OF RESPONDENTS PERTAINING TO SAID LICENSES & ETC.
THESE WRIT PETITIONS COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:-
ORDER In this petition under Article 226 of Constitution of India, the petitioner seeks a writ of certiorari for quashment of impugned notification dated 26.07.2016 issued by respondent No.3 by which bids have been invited for grant of temporary licence for onboard catering services in Karnataka Express. In order to appreciate petitioner’s challenge to the impugned order, few facts need mention, which are stated infra:
2. The Indian Railway Catering and Tourism Corporation (hereinafter referred to as the ‘the Corporation’ for short) had called a tender for operation and management of onboard catering services in respect of Karnataka Express on 29.11.2002 for a period of ten years. The petitioner participated in the bid and was declared as successful tenderer. Subsequently an agreement was executed in favour of the petitioner. After completion of initial term of five years, the Corporation asked for willingness of the petitioner for renewal of licence for remaining five years. The petitioner agreed for renewal of the licence. However, on 19.06.2007, the contract was extended only for a period of 15 months and the petitioner was asked to set up base kitchen. It is the case of the petitioner that terms and conditions of the agreement did not required the petitioner to set up the base kitchen. The petitioner tried its level best to set up the base kitchen. However, the Corporation by an order dated 14.11.2008, terminated the licence of the petitioner on the ground that he did not set up the base kitchen.
3. Being aggrieved, the petitioner approached this Court by filing writ petition viz., W.P.No.14725/2008 which was disposed of by an order dated 10.12.2008 with the direction to the respondents to consider his representation of the petitioner for renewal of the licence and the interim order granted by this Court was continued till disposal of the representation. It is averred in the petition that by ignoring the order passed by this Court, the Corporation by an order dated 16.12.2008 terminated the licence and the petitioner was evicted from the pantry car. The aforesaid order was subject matter of challenge in W.P.No.412/2009. A Bench of this Court by an order dated 3.7.2009, quashed the order of termination dated 16.12.2008 and the matter was remitted to respondent No.4 to reconsider the issue with regard to renewal of licence of the petitioner afresh. The petitioner was also granted the liberty to take recourse to such remedy, in respect of his grievance, if any as may be available to him under the law. The Corporation once again initiated action to grant contract in favour of third party on temporary basis.
4. The petitioner again visited this court by filing W.P.No.19863/09 in which an interim order was passed by which respondents were restrained from taking any decision to finalize the tender. Subsequently, the Corporation withdrew the notice Inviting Tender, as a result of which the writ petition filed by the petitioner was dismissed as infructuous. The Ministry of Railways introduced a new catering policy on 21.07.2010. Clause 18.3 of the aforesaid policy provided for renewal of licence. Whereas, Clause 26.1.4 and Clause 26 made a provision for applicability of the policy. The petitioner approached the Railway Board by submitting a representation on 6.4.2011 seeking renewal of licence and also pointed out that it has set up base kitchens in Delhi, Bengaluru, Bhusaval and Itarsi. However, the representation submitted by the petitioner failed to evoke any response.
5. The petitioner again filed W.P.2692/2015, in which Corporation filed statement of Objections, in which it was admitted that new catering policy has come into force on 21.07.2010 and it is the prerogative of the Railways to take over the management of all mobile catering and Corporation is only responsible for running food plazas, food courts and fast food units. The petitioner filed a memo seeking leave of this Court to withdraw the aforesaid petition, however, during the pendency of the aforesaid writ petition, the Corporation once again on 17.04.2015 issued a quotation for awarding onboard catering licence. The petitioner challenged the action of respondent Corporation in W.P.No.16494/2015, in which an interim order was passed on 20/4/2015. Thereafter, W.P.No.2692/2015 was disposed of as withdrawn on 27.07.2015. It is pleaded in the petition that in view of representation made by the Railways, to the effect that the issue with regard to grant of licence is pending consideration before the Board. Therefore, the petitioner withdrew W.P.No.16494/2015 also on 27.07.2015.
6. After withdrawal of the cases, the petitioner approached the Railways repeatedly for renewal of the licence. However, no action was taken for renewal of the licence. The petitioner therefore, again filed a writ petition viz., W.P.No.26701/2016 in which a Bench of this Court granted an ad interim order on 29.04.2016 directing the respondents not to precipitate the matter with regard to grant of contract to any third party. However, despite the aforesaid interim order, the Railways again issued the impugned quotation on 26.07.2016 to award catering licence. In the aforesaid factual background,. The petitioner has approached this court.
7. Learned Senior Counsel for the petitioner submitted that petitioner was awarded the licence in question for a period of ten years for a consideration of Rs.439 Lakhs which was paid by the petitioner towards concession fee. The petitioner also paid a sum of Rs.3 Lakhs towards security deposit and paid a sum of Rs.34.5 Lakhs p.a. as licence fee. It is further submitted that establishment of base kitchen is not a part of the agreement and therefore the petitioner could not have been asked to set up a base kitchen. It is further submitted that establishment and maintenance of base kitchen is responsibility of the Railways and the Corporation. It is pointed out that the petitioner made all efforts to set up the base kitchen. However, before expiry of the contractual period, the Corporation issued the impugned order terminating the licence of the petitioner and in contravention of the impugned order passed by this Court, the petitioner was forcibly evicted from the pantry car. It is further submitted that in view of the order passed by this Court in W.P.No.412/2009, the respondents ought to have continued the licence of the petitioner for remaining period of three years and nine months. Learned counsel for the petitioner has also invited the attention of this Court to the clauses 3.1, 18.3, 26.1.4 of the Catering Policy. It is further submitted that the report prepared by the respondents themselves shows that the base kitchen set up by the petitioner has capacity to provide more than 3500 meals. However, in derogation of the impugned order passed by this Court in W.P.No.2692/2015, the impugned quotation to award onboard catering licence has been issued. It is also urged that again in violation of the interim order 29.04.2016 passed in W.P.No.26701/2016, the impugned quotation has been issued. However, till today the claim of the petitioner with regard to renewal of licence has not been considered by the Railway Board. It is also pointed out that the petitioner is ready and willing to pay enhanced fee of Rs.65 lakhs instead of fixed licence fee of Rs.34.5 Lakhs in order to avoid the loss to the Railways and the petitioner is entitled to continue for the remaining period of three years and nine months.
8. On the other hand, learned counsel for the respondent submitted that the claim of the petitioner for renewal of licence has been rejected by order dated 27.07.2009 which has not been challenged. It is also pointed that the petitioner was aware about the order dated 27.07.2009 in the year 2009 as well as in the year 2011 itself. In this connection, learned counsel for the respondent has invited the attention of this Court to order dated 17.08.2009 passed in W.P.No.19863/2009. It is further submitted that the petitioner is guilty of suppression of facts inasmuch as in the petition there is no mention about the order dated 27.07.2009. It is also submitted that since the licence was not renewed in favour of the petitioner therefore, the quotations were called and it is open for the petitioner to participate in the process of grant of licence to provide catering services on the train in question. It is further argued that since the Corporation was not impleaded as respondent in W.P.No.26701/2016, therefore, the contention that the quotations have been issued in violation of the impugned order dated 29.04.2016 is misconceived. It is also pointed out that petitioner is seeking a contract in the year 2019 on the basis of rates quoted in the year 2009 and the requirement of base kitchen is inbuilt in the agreement executed with the petitioner. It is further pointed out that clause 10 of the agreement contains an arbitration clause and the managing Director of the Railways is the sole Arbitrator to adjudicate the dispute between the parties.
9. It is also argued that even though the Managing Director of the Railways may be disqualified from acting as an Arbitrator in view of Section 12(5) read with seventh Schedule appended to the Arbitration and Conciliation Act, 1996, still the Arbitration clause would survive for consideration. In support of his submissions, learned counsel for the respondent has placed reliance on the decisions of the Supreme Court in the cases of ‘WELCOM HOTEL AND OTHERS Vs. STATE OF ANDHRA PRADESH AND OTHERS’ (1983) 4 SCC 575, ‘PRESTIGE LIGHTS LTD. Vs. STATE BANK OF INDIA’ (2007) 8 SCC 449, ‘KISHORE SAMRITE Vs. STATE OF UTTAR PRADESH AND OTHERS’ (2013) 2 SCC 398, ‘KAMINI KUMAR DAS CHOUDHURY Vs., STATE OF WEST BENGAL AND OTHERS’ (1972) 2 SCC 420, ‘SHRI M.L.SETHI Vs.
SHRI R.P.KAPUR’ (1972) 2 SCC 427, ‘KERALA SAMSTHANA CHETHU THOZHILALI UNION Vs. STATE OF KERALA AND OTHERS’ (2006) 4 SCC 327, ‘B.L.SREEDHAR AND OTHERS Vs. K.M.MUNIREDDY (DEAD) AND OTHERS’ (2003) 2 SCC 355, ‘P.A.RAHIM AND ANOTHERS Vs. P.K.RAVINDRAN ALIAS RAVICHANDRAN AND OTHERS’ (2005) 13 SCC 176, ‘BSNL AND OTHERS Vs. SUBASH CHANDRA KANCHAN AND ANOTHER’ (2006) 8 SCC 279, ‘KERALA STATE ELECTRICITY BOARD AND ANOTHER Vs. KURIEN E.KALATHIL AND OTHERS’ (2000) 6 SCC 293, ‘NATIONAL HIGHWAYS AUTHORITY OF INDIA Vs. GANGA ENTERPRISES AND ANOTHER’ (2003) 7 SCC 410, ‘EMPIRE JUTE COMPANY LIMITED AND OTHERS Vs. JUTE CORPORATION OF INDIA LIMITED AND ANOTHER’ (2007) 14 SCC 680, ‘TRF LIMITED Vs. ENERGO ENGINEERING PROJECTS LIMITED’ (2017) 8 SCC 377, ‘NATIONAL INSURANCE COMPANY LIMITED Vs. BOGHARA POLYFAB PRIVATE LIMITED’ (2009) 1 SCC 267, ‘SHIV KUMAR TIWARI (DEAD) BY LRS. Vs. JAGAT NARAIN RAI AND OTHERS’ (2001) 10 SCC 11 and a decision of the Karnataka High Court in the case of ‘UNITY SERVICE STATION INDIAN OIL DEALERS Vs. INDIAN OIL CORPORATION LTD., REP. BY ITS GENERAL MANAGER’ ILR 2007 KAR 3431.
10. I have considered the submissions made on both the sides and have perused the record. Before proceeding further, it is apposite to take note of certain well settled legal principles. The supreme Court in ‘BISRA LIME STONE CO. LTD., VS. ORISSA SEB’, AI9 1976 SC 127 has held that high court may refuse to exercise its jurisdiction if there exists a valid arbitration clause, which may be a clause of wide amplitude taking within its sweep questions of law and fact. Similar view has been taken by Supreme Court by ‘RUKMINI BAI GUPTA VS. COLLECTOR’, AIR 1981 SC 479, Similar view has been taken in ‘T.N. ELECTRICITY BOARD VS. SUMATHI’, (2000) 4 SCC 543 and ‘ABL INTERNATIONAL LTD. VS. EXPORT CREDIT GUARANTEE OF CORPN OF INDIA LTD.,’, (2004) 3 SCC 553. In ‘SANJANA M WIG VS.
HINDUSTAN PETROLEUM CORPN LTD.,’, (2005) 8 SCC 242, it has been held that discretionary jurisdiction under Article 226 of the Constitution of India would be refused to be exercised when a dispute between the parties requires adjudication of disputed questions of fact. However, it has been held that if in a given case when an action of a party is dehors the terms and conditions contained in an agreement and beyond the scope and ambit create therefore, the writ petition may be held to be maintainable but indisputedly such a case may be required to be made out. Similar view has been taken in ‘EMPIRE JUTE CO LTD., SUPRA and it has been held that though the power of judicial review vested in the superior courts undoubtedly has wide amplitude, but the same should not be exercised where there exists an arbitration clause or an alternative remedy under the agreement. [SEE:‘STATE OF KERALA AND OTHERS VS. M.K.JOSE’ (2015) 9 SCC 433] 11. In the backdrop of aforesaid well settled legal principles, facts of the case in hand may be examined. The dispute in the instant petition pertains to the claim of the petitioner to run the contract for the remaining period of three years and nine months. From perusal of the pleadings of the parties and in view of rival submissions made at the bar, the disputed questions of fact arise for consideration in this petition viz., whether condition to set up a base kitchen was part of the agreement, whether the petitioner has set up the base kitchen, which has capacity to provide more than 3500 meals, whether the petitioner should be permitted to continue for the remaining period of three years and nine months on enhanced fee of Rs.65 Lakhs instead of fixed licence fee of Rs.34.5 Lakhs, whether the petitioner was aware about the order dated 27.07.2009 with regard to renewal of the licence in the year 2009 as well as 2011 itself and whether petitioner is guilty of suppression of facts are disputed questions of fact, which cannot be adjudicated in a summary proceeding under Article 226 of the Constitution of India.
12. Admittedly, the agreement executed between the parties contains an arbitration clause viz., Clause 10 which reads as under:
In the event of any dispute or difference arising under these conditions of Licence or in connection with this Licence (except as to any matters, the decision of which is specifically provided for by these or the special conditions) the same will be resolved by Arbitration, as per the provisions of ‘The Arbitration and Conciliation Act – 1996.’ The venue of the Arbitration shall be Delhi. All questions, disputes and or differences arising under or in connection with this agreement or in touching or relating to or concerning the construction, or affect of presents (excepts as to matters the decisions whereof is other-wise herein before, expressly provided for) shall be referred to the sole arbitration of the officer/officers or persons nominated by the Managing Director/IRCTC impose decision in this regard shall be binding on the Licensee.
13. In view of availability of remedy of arbitration available to the parties under the agreement especially in the context of disputed questions of fact which arise for consideration in this writ petition, I am inclined to relegate the parties to the remedy of arbitration. When a query was put to the learned counsel for the parties that the officers or the persons nominated by the managing director/IRCTC may not be eligible to act as an Arbitrator in view of Section 12(5) read with VII Schedule appended to the Arbitration and Conciliation Act, 1996, learned counsel for the parties fairly submitted that an independent Arbitrator be appointed to adjudicate the dispute between the parties and they are not averse to resolution of the dispute through Arbitration. It is further submitted that the parties have no objection to the venue of arbitration being Bengaluru.
14. In view of aforesaid submissions made by learned counsel for the parties and in the fact situation of the case, I deem it appropriate to appoint Mr.Justice Ashok B.Hinchigeri a Former Judge of this Court as sole arbitrator to adjudicate the dispute between the parties.
15. A copy of this order be dispatched to the Arbitration Centre, Khanija Bhavan, Bengaluru for necessary action in that regard. Learned counsel for the petitioner to also approach the Arbitration Centre with the relevant papers to be filed therein. The learned Arbitrator appointed herein shall thereupon enter reference and proceed with the matter in accordance with law and the Rules governing the Arbitration Centre.
With the aforesaid observations, petitions are disposed of.
Sd/- JUDGE SS