The Delhi High Court has reaffirmed the authority of arbitral tribunals as the ultimate decision-makers on factual matters, dismissing a challenge from the Indian Railway Catering and Tourism Corporation (IRCTC) in a prolonged dispute with catering contractor Brandavan Foods.
The case stemmed from tenders issued in 2013 for catering services on Rajdhani, Shatabdi, and Duronto trains. Brandavan Foods, a successful bidder, later raised concerns over policy shifts by the Railway Board, including the introduction and removal of “Combo Meals” and mandatory “Welcome Drinks,” which they argued resulted in unforeseen financial losses. They sought compensation for additional meal costs and unpaid welcome drinks.
After an initial writ petition was dismissed, the dispute went to arbitration, where Brandavan was awarded ₹27.82 crore for regular meals served as combo meals and ₹5.35 crore for welcome drinks, along with interest. IRCTC contested the ruling, arguing the arbitrator had overstepped contractual terms and that Brandavan failed to object to policy changes in time.
A single-judge bench partially overturned the arbitration decision, rejecting Brandavan’s claim on meal pricing but upholding their right to reimbursement for welcome drinks and interest. Both parties then escalated the matter to a Division Bench under Section 37 of the Arbitration and Conciliation Act.
The High Court ruled that its role was not to reassess the arbitrator’s interpretation of contract terms but only to examine whether the lower court had misapplied the limited scope of judicial review under Section 34. The Bench found that the arbitrator was justified in awarding reimbursement for welcome drinks since IRCTC failed to provide counter-evidence. However, it flagged a “patent illegality” in the calculation of interest, ruling that amounts not yet due should not have accrued interest retroactively.
Ultimately, the court upheld the arbitrator’s findings on key factual disputes while refining the interest component, reinforcing that courts have minimal grounds to interfere with arbitral decisions unless they violate legal principles.