M/S.Vasantham Catering vs. The General Manager/Mcs

Facts

The petitioner, M/s. Vasantham Catering, was awarded a temporary 90-day license by IRCTC (respondents) for on-board catering services, commencing November 25, 2020. The license fee paid was Rs. 63,006/- per round trip plus GST, totaling Rs. 74,347/-. The contract stipulated that only pre-packed approved/branded items, tea, and coffee could be sold, with cooked meals prohibited. The petitioner repeatedly represented that passengers demanded cooked food and requested permission to sell it or exit the contract. Following inspections and a show cause notice dated January 28, 2021, alleging the sale of unapproved and cooked food, the petitioner replied on January 29, 2021, reiterating their position. Despite this, the first respondent issued an order dated February 10, 2021, terminating the contract and debarring the petitioner from future tenders for six months.

Held

The Court held that the impugned order dated 10.02.2021, passed by the first respondent, was bereft of reasons and relied on inspection reports that were not furnished to the petitioner. The Court found that the petitioner's representations regarding the lack of demand for pre-packed food and passenger preference for cooked food were not adequately considered. Instead of acting upon these representations, the respondents proceeded with an inquiry and imposed a penalty. The Court emphasized that the inspection reports, which formed the basis of the impugned order, were not provided to the petitioner, thereby violating principles of natural justice. Consequently, the Court found the impugned order to be unsustainable. The Court quashed the impugned order and directed that any claim for refund of license fee by the petitioner should be prosecuted independently and considered by the respondents. The Court did not expressly leave any issue undecided.

Key Issues

1. Whether the impugned order dated 10.02.2021, terminating the petitioner's catering license and debarring them from future tenders, is vitiated by a lack of reasoned consideration and procedural impropriety, particularly concerning the non-furnishing of inspection reports relied upon by the respondent? (Question of law and fact, turning on principles of natural justice and administrative law). Petitioner's arguments: The petitioner contended that the impugned order was passed without proper consideration of their reply to the show cause notice and relied on inspection reports that were not provided to them, thus violating principles of natural justice. They argued that their representations regarding passenger demand for cooked food should have been acted upon. Respondents' arguments: The respondents argued that the petitioner violated the terms of the contract by selling cooked food, as indicated by inspection reports. They stated that the petitioner was given show cause notices and failed to take corrective measures. They also noted a delay in the payment of the second installment of the license fee. They maintained that the contract did not allow for an "honorary exit" and that the petitioner had to face the consequences of non-adherence to terms.