Calcutta High Court: An arbitration application was filed by a service provider seeking appointment of an arbitrator under the Arbitration and Conciliation Act, 1996, to adjudicate disputes regarding the interpretation of a contract for the supply of meals, logistics support, and transportation services provided by the petitioner to IRCTC, which subsequently led to claims for unpaid dues following an alteration in menu requirements imposed by IRCTC. Shampa Sarkar, J., appoints Mr. Probal Kumar Mukherjee, Senior Advocate, Bar Association, as the sole Arbitrator, to arbitrate upon the dispute between the parties.
The petitioner entered into a contractual agreement with IRCTC to provide catering and ancillary services. The contract specified a fixed menu that the petitioner was obligated to follow. However, a significant change occurred on 15-11-2022, when the Ministry of Railways issued a notification granting IRCTC the authority to customize menus. This customization could include regional cuisines, seasonal delicacies, festival food, baby food, diabetic-friendly items, and other health-oriented options.
Acting on this policy change, IRCTC developed and circulated a revised menu to all General Managers across railway zones, including the petitioner’s zone. The petitioner, being contractually bound to IRCTC and acting upon their directions, implemented the new menu and began providing meals accordingly. In consequence, the petitioner raised monthly bills from December 2023 through September 2024, reflecting the increased cost associated with the additional menu offerings. Despite repeated invoices, IRCTC failed to remit payment, leading to a monetary dispute.
Owing to the unresolved financial dispute, the petitioner invoked the arbitration clause of the contract via notice dated 24-12-2024. With no arbitrator being appointed under the terms of the agreement, the petitioner approached the Court under Section 11 of the Arbitration and Conciliation Act, seeking judicial appointment of a sole arbitrator.
The Court examined the arbitration clause contained in Clause 8 of the Notice Inviting E-Tender (NIT), which governed the agreement between the parties. The clause explicitly mandated that any disputes between the service provider and IRCTC would be referred to arbitration, with a sole arbitrator to be appointed by the Group General Manager, Kolkata. However, considering Section 12(5) read with the Fifth and Seventh Schedules of the Arbitration and Conciliation Act, 1996, such unilateral appointment mechanisms have been rendered invalid in law. Hence, the petitioner’s approach to the Court for appointment of an independent arbitrator was found to be legally appropriate.
On the substantive issue raised by IRCTC, whether the revised menu was covered under the original contract, the Court rejected the preliminary objection. It referred to a clause which expressly allowed IRCTC/Railways to unilaterally change the supply schedule, including the menu, and made such decisions binding on the service provider. The Court found that the revised menu, though introduced later based on Government policy, was indeed implemented by IRCTC under a contractual clause that permitted such unilateral modifications. Consequently, the dispute over the revised menu fell within the ambit of the original contract, at least prima facie.
Further, the Court addressed IRCTC’s apprehension that the petitioner may challenge the Government policy itself. This concern was dismissed as unfounded, with the Court clarifying that the petitioner was not challenging the policy but was merely seeking compensation for services rendered under the revised menu.
The Court held that the arbitration clause contained in the contract was valid and applicable to the present dispute. It acknowledged that although the original clause allowed IRCTC to unilaterally appoint an arbitrator, this mechanism stood invalid under current arbitration jurisprudence. Therefore, the Court was empowered to appoint an arbitrator under Section 11 of the Act.
Accordingly, the application was allowed, and Mr. Probal Kumar Mukherjee, Senior Advocate, was appointed as the sole arbitrator to adjudicate the disputes between the parties. His appointment was made subject to compliance with the disclosure and independence requirements under Section 12 of the Arbitration and Conciliation Act. The arbitrator was granted liberty to fix his own remuneration in accordance with the statutory Schedule.
[Doon Caterers v. IRCTC, AP-COM/268/2025, decided on 08-04-2025]
Advocates who appeared in this case :
Ms. Kishwar Rahman, Adv., Mr. Prateek Kumar, Adv., Ms. Anugraha Sundas, Adv. …for the petitioner
Mr. Sarosij Dasgupta, Adv., Mr. Sabyasachi De, Adv., Ms. Afreen Begum, Adv. …for the respondent
Buy Arbitration and Conciliation Act, 1996 HERE
