The Delhi High Court recently upheld the scope of the arbitral tribunal’s jurisdiction in a ruling against the Indian Railway Catering and Tourism Corporation (IRCTC) in its ongoing dispute with Brandavan Foods. The court emphasized that under Section 34 of the Arbitration and Conciliation Act, the arbitral tribunal is the final arbiter on factual aspects and contractual interpretations. The ruling reinforces the limited role of courts in reviewing arbitral awards, stating that they cannot interfere unless the arbitrator has acted beyond the law.
The case arose from a 2013 tender issued by IRCTC for catering services, in which Brandavan Foods secured a contract for providing meals on Rajdhani, Shatabdi, and Duranto trains. Brandavan claimed to have incurred unforeseen costs due to changes in railway meal policies, including the introduction of “Combo Meals” and the mandatory provision of “Welcome Drinks.” They sought reimbursement for these additional expenses, amounting to ₹27.82 crore for regular meals served as combo meals and ₹5.35 crore for welcome drinks between 2013 and 2020.
In arbitration, the sole arbitrator awarded Brandavan the amount claimed, with 6% interest from January 2018 and 9% if unpaid after four months. However, IRCTC challenged the award in the Delhi High Court, citing incorrect interpretation of contract terms, insufficient evidence, and unauthorized decisions by the arbitrator.
While the Single-Judge bench partially overturned the award, the Division Bench of Justices Navin Chawla and Shailender Kaur ruled that courts have a limited jurisdiction in arbitral matters and cannot re-evaluate the merits of the case. The court found that the arbitrator’s decision on welcome drinks and interest was justified but disagreed with the award concerning the regular meal charge.
The Court further ruled that IRCTC’s arguments regarding Brandavan’s failure to issue invoices for welcome drinks did not constitute a waiver, as such administrative oversights could not invalidate the claim unless both parties explicitly agreed otherwise. Additionally, the Court ruled that interest should only apply to amounts due, rejecting IRCTC’s request for retroactive application of interest.
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