The Delhi High Court has dismissed an appeal filed under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996, challenging an interim order of the Sole Arbitrator which had refused to grant interim relief to a catering service provider against Indian Railway Catering and Tourism Corporation Limited (IRCTC).
The dispute arose from a Master License Agreement awarded to the appellant for operating base kitchens and providing onboard catering services on a cluster of trains, including the Purushottam Express running between New Delhi and Puri. The license, granted for a period of five years, was terminated by IRCTC on 2 May 2025 citing persistent passenger complaints, unsatisfactory services, and repeated breaches of contractual obligations.
Following termination, the appellant had approached the Delhi High Court under Section 9 of the Arbitration Act, which initially granted status quo protection. However, the petition was eventually dismissed in December 2025, and the parties were referred to arbitration. The appellant thereafter sought similar interim relief under Section 17 before the Sole Arbitrator, which was declined. This led to the present appeal.
Before the High Court, the appellant contended that the termination was arbitrary, violated principles of natural justice, and was contrary to the contractual procedure, including failure to grant a mandatory cure period. It was argued that the termination order went beyond the grounds mentioned in the show cause notices and that reinstatement was necessary to prevent irreparable financial loss.
IRCTC, on the other hand, defended its action by relying on Clause 6.10 of the Master License Agreement, which permitted termination without notice in case of persistent complaints and unsatisfactory services. It was argued that the contract was determinable in nature and could not be specifically enforced. IRCTC also placed reliance on a large number of passenger complaints logged on its online portal, along with penalty records and prior warnings issued to the appellant.
The Court reiterated the limited scope of interference under Section 37, emphasising that appellate courts should not substitute their views for that of the arbitral tribunal unless the order is perverse, patently illegal, or jurisdictionally flawed. It noted that interim orders under Section 17 are discretionary and interlocutory in nature.
On facts, the Court found that the appellant had been repeatedly informed about service deficiencies through show cause notices, letters, and online complaint records. It observed that the appellant had not disputed the existence of these complaints. The Court further held that Clause 6.10 empowered IRCTC to terminate the contract without prior notice in cases of persistent complaints, and prima facie, the action could not be faulted at the interim stage.
Upholding the arbitrator’s view, the Court ruled that restoration of a terminated contract at an interim stage was neither warranted nor in public interest, especially in a case involving passenger welfare and service quality. The Court also accepted the arbitrator’s prima facie finding that the intent behind the contractual cure-period clause had been substantially met through repeated warnings and communications.
Accordingly, the appeal was dismissed.
Appearances:
For the Appellant: Mr. Sandeep Sethi and Mr. Sudhir Makkar, Sr. Advs. with Mr. Jasmeet Singh, Mr. Mahinder Singh Hura, Mr. Saif Ali, Mr. Pushpendra S. Bhadoriya, Mr. Vijay Sharma, Mr. Krisna Gambhir, Ms. Shreya Sethi, Ms. Riya Kumar, Mr. Akhilesh Kumar, Ms. Aadhya Shrotriya, Ms. Sanya C. Oberoi, Mr. Pranav Menon, Mr. Saurav and Mr. Ajith Willyams, Advocates
For the Respondent: Mr. Saurav Agrawal and Mr. Rajat Malhotra, Advocates with Mr. Saksham Gupta, Ms. Madhu K. Singh, Ms. Kiran Devrani, Mr. Anshuman Chowdhary, Ms. Nikita Rathi and Mr. Parmeet Singh, Advocates
