Indian Railway Catering And Tourism Corporation LTD. vs. M/S Deepak And Co

Facts

The petitioner, Indian Railway Catering and Tourism Corporation Ltd. (IRCTC), challenged an arbitral award dated April 7, 2021, which allowed claims of the respondent, M/s Deepak and Co., a catering service provider. The dispute arose from a temporary license granted to the respondent for on-board catering services. Key issues involved the provision of a welcome drink, reimbursement for additional meals due to train delays, and GST on production charges. IRCTC issued a policy decision mandating welcome drinks at no extra charge and setting reimbursement rates for additional meals. The respondent initially raised concerns but later provided unconditional acceptance for license extensions. IRCTC sought to adjust charges for welcome drinks it provided when the respondent allegedly failed to do so, leading to disputes over deductions and payments. The respondent invoked arbitration due to these unresolved issues.

Held

The Court held that the petitioner (IRCTC) failed to make out any ground for interference with the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996. The Arbitrator had decided issues 1 and 2 in favor of the respondent (M/s Deepak and Co.) in the interim award, and a substantial claim in the final award was also awarded to the respondent. The Arbitrator's decision to award costs of Rs. 1,10,000/- to the respondent was found to be reasonable and justified, considering that two out of three issues in the interim award and a significant portion of the claim in the final award were decided in the respondent's favor. The Court referenced the Supreme Court's judgment in ONGC v. Afcons Gunanusa JV regarding the distinction between fees and costs in arbitration, affirming the Arbitrator's discretion in awarding costs. Consequently, the petition was dismissed, and the execution petition was allowed, directing the judgment-debtor to pay the awarded amount with interest and costs.

Key Issues

1. Whether the catering services provided by the claimant under the temporary license included the supply of a welcome drink to passengers, as per Section 34 of the Arbitration and Conciliation Act, 1996? The petitioner argued that the respondent was obligated to provide welcome drinks as per a subsequent policy decision, while the respondent contended it was not part of the original tender and they were entitled to charge for it. 2. Whether the claimant is entitled to claim Goods and Services Tax (GST) on production charges/supply of meals post-July 2017, in accordance with the relevant provisions of the GST Act? The respondent argued for its entitlement to claim GST, while the petitioner's stance on this issue is not explicitly detailed in the provided text, but it is implied they contested this claim. 3. Whether alleged wastage of food due to cancellation/non-turn up of passengers is to be borne by the claimant? The petitioner likely argued that the respondent should bear this cost, whereas the respondent would argue otherwise, based on the nature of the contract and potential external factors.