South Western Railway Catering … vs The Union Of India on 19 February, 2024

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Karnataka High Court

South Western Railway Catering … vs The Union Of India on 19 February, 2024

Author: M. Nagaprasanna

Bench: M. Nagaprasanna

                            1



Reserved on : 15.02.2024
Pronounced on :19.02.2024                                R
      IN THE HIGH COURT OF KARNATAKA AT BENGALURU

        DATED THIS THE 19TH DAY OF FEBRUARY, 2024

                         BEFORE

        THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

         WRIT PETITION No.4162 OF 2024 (GM - RES)

                            C/W

         WRIT PETITION No.4296 OF 2024 (GM - TEN)


IN WRIT PETITION No.4162 OF 2024

BETWEEN:


SOUTH WESTERN RAILWAY
CATERING CONTRACTORS
ASSOCIATION (REGD.)
REGISTERED UNDER KARNATAKA
SOCIETIES REGISTRATION ACT, 1960
NO.14 Y, 1ST FLOOR, 16TH MAIN,
3RD BLOCK, RAJAJINAGAR,
BENGALURU - 560 010,
REPRESENTED BY ITS
GENERAL SECRETARY,
V.S. MANOGAR,
S/O. LATE D.S. VITAL.

                                             ... PETITIONER

(BY SRI JAYAKUMAR S.PATIL, SR.ADVOCATE A/W
                             2



     SRI MAHAMMAD TAHIR A., ADVOCATE)

AND:

1.     THE UNION OF INDIA
       THE MINISTRY OF RAILWAYS,
       RAISINA ROAD,
       NEW DELHI - 110 001,
       REPRESENTED BY
       ITS SECRETARY.

2.     THE CHAIRMAN
       THE RAILWAY BOARD,
       THE MINISTRY OF RAILWAYS,
       RAIL BHAWAN, RAISINA ROAD,
       NEW DELHI - 110 001.

3.     THE DIRECTOR (TOURISM AND CATERING)
       THE DEPARTMENT OF TOURISM AND CATERING,
       THE MINISTRY OF RAILWAYS,
       THE RAILWAY BOARD,
       RAIL BHAWAN, RAISINA ROAD,
       NEW DELHI - 110 001.

4.     THE GENERAL MANAGERS
       ALL INDIAN ZONAL RAILWAYS AND
       ALL PUBLIC SECTORS UNDERTAKING
       UNDER THE INDIAN RAILWAYS,
       RAIL BHAWAN, RAISINA ROAD,
       NEW DELHI - 110 001.
                                          ... RESPONDENTS

(BY SRI TUSHAR MEHTA, SOLICITOR GENERAL OF INDIA FOR
    SRI S.RAJASHEKAR, ADVOCATE)


     THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE
                             3



IMPUGNED COMMERCIAL CIRCULAR 24 OF 2023 DATED 14.11.23
VIDE NO. 2023/CATERING/600/06 AS ADDENDUM TO PARA 1 AND
3 OF CATERING POLICY 2017 ISSUED BY THE R3 THE DIRECTOR,
TOURISM AND CATERING, RAILWAY BOARD, THE MINISTRY OF
RAILWAYS VIDE ANNEXURE-E BY TREATING IT AS UNJUST, UNFAIR
AND ULTRA VIRES AND ETC.,


IN WRIT PETITION No.4296 OF 2024

BETWEEN:

SOUTH WESTERN RAILWAY
CATERING CONTRACTORS
ASSOCIATION (REGD.)
NO 14 Y, 1ST FLOOR, 16TH MAIN,
3RD BLOCK, RAJAJINAGAR,
BENGALURU - 560 010.
REPRESENTED BY ITS
GENERAL SECRETARY
V.S.MANOGAR S/O LATE D.S. VITAL.
                                             ... PETITIONER

(BY SRI JAYAKUMAR S.PATIL, SR.ADVOCATE A/W
    SRI MAHAMMAD TAHIR A., ADVOCATE)

AND:

1.     THE UNION OF INDIA
       THE MINISTRY OF RAILWAYS,
       RAISINA ROAD,
       NEW DELHI 110001,
       REPRESENTED BY ITS SECRETARY.

2.     THE CHAIRMAN,
       THE RAILWAY BOARD
       THE MINISTRY OF RAILWAYS,
       RAIL BHAWAN, RAISINA ROAD,
                                4



     NEW DELHI - 110 001.

3.   THE DIRECTOR (TOURISM AND CATERING)
     THE DEPARTMENT OF TOURISM AND CATERING,
     THE MINISTRY OF RAILWAYS,
     THE RAILWAY BOARD,
     RAIL BHAWAN, RAISINA ROAD,
     NEW DELHI - 110 001.

4.   INDIAN RAILWAY CATERING TOURISM AND
     CORPORATION LTD., (IRCTC)
     SITUATED AT 10TH AND 11TH FLOOR,
     STATEMENT HOUSE BUILDING,
     BARAKHAMBA ROAD,
     CONNAUGHT PLACE,
     NEW DELHI - 110 001
     REPRESENTED BY ITS
     GROUP GENERAL MANAGER / PROCUREMENT.
                                         ... RESPONDENTS

(BY SRI TUSHAR MEHTA, SOLICITOR GENERAL OF INDIA FOR
    SMT.SADHANA DESAI, CGC FOR R-1 TO R-3;
    SRI ABHINAY Y.T., ADVOCATE FOR C/R-4)


     THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND

227 OF THE CONSTITUTION OF INDIA PRAYING TO a) CALL FOR

RELEVANT RECORDS PENDING ON THE FILE OF RESPONDENTS -

RAILWAYS;   b)   QUASH        THE   IMPUGNED   E-OPEN   TENDER

SUBMISSION DATED 15/02/2024 FOR PROVISION OF ONBOARD

CATERING    SERVICES     IN     TRAINS   E-OPEN   TENDER   NO.

2024/IRCTC/P AND T/CLUSTER/FEB/EZ/ECR/CLT/A-1 (STANDARD
                                  5



BID DOCUMENT FOR CLUSTER OF TRAINS) ISSUED BY IRCTC,

DELHI / 4TH RESPONDENT VIDE ANNEXURE-H BY TREATING IT AS

UNJUST, UNFIAR AND ULTRA VIRES AND ETC.,




      THESE    WRIT      PETITIONS     HAVING      BEEN   HEARD      AND

RESERVED      FOR   ORDERS      ON   15.02.2024,    COMING     ON    FOR

PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:-



                                ORDER

The petitioner in Writ Petition No.4162 of 2024 calls in

question a Commercial Circular notified on 14-11-2023/Catering

Policy by which addendum is issued to paragraphs 1 and 3 of the

Catering Policy of the year 2017 issued by the 3rd

respondent/Director (Tourism and Catering), Railway Board of the

Ministry of Railways and has sought for certain consequential reliefs

by issuance of a direction in the nature of mandamus.

The companion petition, Writ Petition No.4296 of 2024 is an

offshoot of Writ Petition No.4162 of 2024, as subsequent tender
6

notified pursuant to the policy in Circular No.24 of 2023 is called in

question in the said writ petition. Therefore, the facts obtaining in

Writ Petition No.4162 of 2024 are narrated.

2. Sans details, facts in brief are as follows:-

The petitioner is a registered Railway Catering Contractors

Association, registration of which is said to have been with effect

from 30-11-2006. The petitioner is a conglomeration of catering

contractors in the Railways. On 25-02-2016 the Union of India

through the Railway Minister presented its Railway Budget. In the

said Railway Budget certain assurances were projected with regard

to catering and stalls at stations. This results in notification of a

policy on 27-02-2017. The budget speech was incorporated in the

preamble to the notification. The policy was called Catering Policy,

2017 which was notified by Commercial Circular No.20 of 2017. The

policy was put in place and catering services were undertaken by

several contractors or even the Railways in terms of the policy.

7

3. On 12-10-2023 expression of interest was notified for the

interested contractors seeking empanelment for provision of on-

board catering services in various types of trains of Indian Railways.

The members of the petitioner/Association expressed their interest

and are said to have been empanelled as eligible persons who could

be considered for award of contracts as and when the tender would

be notified. The eligibility of members of the Association of the

petitioner is valid up to 31-12-2024. Therefore, the empanelment of

several catering contractors is valid till the end of current year.

When things stood thus, a commercial circular in Commercial

Circular No.24 of 2023 is notified by the respondents/ Railways.

This was an addendum to paragraphs 1 and 3 of the Catering Policy

of 2017. Certain changes were brought into paragraphs 1 and 3 of

the subsisting catering policy of 2017. The challenge is to the said

addendum brought into the aforesaid paragraphs, of the 2017

policy. The matters are heard by the consent of the parties.

4. Heard Sri Jayakumar S.Patil, learned senior counsel

appearing for the petitioner and Sri Tushar Mehta, learned Solicitor

General of India appearing for the respondents and Sri Abhinay
8

Y.T., learned counsel for the caveator/Respondent No.4 in

W.P.No.4296 of 2024.

SUBMISSIONS:

PETITIONER’S:

5. The learned senior counsel Sri Jayakumar S.Patil would

contend that earlier Catering Policy of 2017 was pursuant to a

decision of the cabinet, as the Union of India through the Minister

for Railways while presenting the Budget had projected a particular

policy which was brought into effect. It was a cabinet decision.

Therefore, any addendum to the said policy should necessarily go

before the cabinet. In the case at hand, the impugned addendum

is done by the Minister for Railways and the Railway Board.

Therefore, it is tinkering or addition done without competence. In

effect, the submission is that the addendum should be quashed on

the score that it is a product of incompetence. He would contend

that paragraphs 1 and 3 of the Catering Policy clearly indicated as

to how the kitchens should operate and what kitchens were

supposed to be operated by the Indian Railway Catering and
9

Tourism Corporation Limited (‘IRCTC’ for short) of the Railways. It

was clearly indicated that IRCTC would begin to manage catering

services in a phased manner and would unbundle catering services

by creating a distinction between food preparation and food

distribution by adding 10 more IRCTC operated, mechanized,

sophisticated base kitchens.

5.1. He would contend that the addendum runs completely

contrary to what the policy was earlier. It is his submission that no

contractor outside IRCTC was to get involved and now it is thrown

open. It is for this reason, the submission is, that it is blatantly

contrary to the earlier policy. Taking this Court through the

Transaction of Business Rules he would seek to buttress his

submission that it is the cabinet and the cabinet alone that should

tinker with the policy and not the Ministry of Railways.

SOLICITOR GENERAL OF INDIA:

6. Per-contra, the learned Solicitor General of India

Sri.Tushar Mehta representing the Union of India would vehemently

refute the submissions to contend that the speech of the Railway
10

Minister undoubtedly projected certain traits to be the contents of

the policy. He would submit that up to 2017 there were two distinct

budgets presented in the Parliament – one general budget by the

Finance Minister and the other Railway budget by the Railway

Minister. This distinction was taken away subsequently. Therefore,

it is a common budget now presented through the general budget.

It is, therefore, the speech is different. This would not mean that

the policy has to remain stagnant throughout. Insofar as Railways is

concerned, the Ministry of Railways is where initiation of policies

would end. Commercial Circular No.20 of 2017 also made the same

journey and addendum through Commercial Circular No.24 of 2023

has travelled the same way up to the Railway Minister. Even under

the Transaction of Business Rules, if the cabinet has to put its seal,

it can always be ratified by the cabinet. On the merit of the matter,

he would explain the need as to why this addendum came about.

6.1. Explaining succinctly, the learned Solicitor General would

contend that IRCTC had entered into contracts with other

contractors. Those contractors had only certain kitchens. Hygiene

became a big problem in the catering of Railways, as the
11

contractors to whom IRCTC had entrusted food distribution would

blame the person who had prepared the food. Therefore, to bring

in accountability, there is certain tweaking made to the policy as to

who should have the base kitchen and from where the food should

come. He would submit that the present food packets have a QR

code on it and the moment the QR code is scanned the kitchen from

where the food comes can be seen in real time. The hygiene

maintained in the kitchen can also be viewed. For maintenance of

hygiene, responsibility and accountability for the food served in the

trains, the present addendum has come about. He would submit,

that he has in the statement of objections averred that none of the

present contractors would suffer any prejudice due to addendum.

He would therefore, contend that Commercial Circular No.24 of

2023 will not take away any of the rights of the petitioner or the

Members of the Association. He would seek dismissal of the

petition, on the score that this Court in exercise of its jurisdiction

under Article 226 of the Constitution of India would not enter into

this arena of catering policy.

12

7. I have given my anxious consideration to the submissions

made by the respective learned counsel and have perused the

material on record.

8. The afore-narrated facts are not in dispute. In the light of

the submissions and contra submissions, I deem it appropriate to

narrate the facts in little more detail. On 25-02-2016, the Indian

Railway budget speech, was made by the then Railway Minister.

Certain contents of the speech are considered to be germane, they

are therefore noticed. Clause-69 of the speech dealt with ‘Catering

and Stalls at Stations’. It reads as follows:

“Catering and stalls at stations:

69. Catering has been an important parameter for customer
satisfaction. In pursuit of our objective to provide quality
food to our customers, the following measures related to
catering services are proposed.

i. IRCTC would begin to manage catering
services in a phased manner. IRCTC would
unbundle catering services by creating a
distinction primarily between food
preparation and food distribution.

ii. Extending e-catering services from existing 45
large stations to all 408 ‘A-1’ and ‘A’ class stations.

13

iii. Explore the possibility of making mandatory
catering services optional in trains. Local cuisine of
choice will be made available to passengers.

iv. Adding 10 more IRCTC operated, mechanized,
sophisticated base kitchens to ensure fresh and
hygienic supply of food on trains.

v. Mandating third party audit in order to ensure
desired level of quality in catering services.

vi. Introducing a new policy of multi-purpose as
against existing single purpose stalls at stations
where each stall can provide multiple services
required by passengers including milk products and
OTC medicines.

vii. Enforcing reservation in catering units to Scheduled
Castes, Scheduled Tribes, Other Backward Classes,
Women, Divyang, etc. We will also introduce a
sub-quota of 33% for women in each of the
reserved categories. Further, to build local
ownership and empowerment, a process of giving
weightage to district domicile holders for
commercial licenses at stations would be initiated.

viii. Exploring the feasibility of providing an option to
our customers for drinking tea in kulhad.”

(Emphasis added)

Certain social initiatives also form the budget speech.

9. The budget speech was then translated into a decision by

the Railway Board and after its approval by the Railway Minister, a
14

commercial circular in Commercial Circular No.20 of 2017 is

notified. The approval for such notification reads as follows:

“No.2016/TG-III/600/1/Pt. New Delhi, dated 27-02-2017
The General Managers,
All Indian Railways.

The Chairman & Managing Director,
Indian Railway Catering & Tourism Corporation Ltd.,
New Delhi.

(Commercial Circular No.20/2017)
Sub: Catering Policy 2017.

Hon’ble MR during Rail Budget 2016-17 has announced as
under:

“69(i) IRCTC would begin to manage catering
services in a phased manner. IRCTC would
unbundle catering services by creating a distinction
primarily between food preparation and food
distribution.

69(iv) Adding 10 more IRCTC operated,
mechanized, sophisticated base kitchens to ensure
fresh and hygienic supply of food on trains.”

In the light of the above, a new catering policy, in
supersession of Catering Policy 2010 and related
guidelines, has been formulated and is enclosed for
implementation. The revised policy guidelines will be
implemented with immediate effect.

This has the concurrence of Finance & Legal Directorates
of Ministry of Railways.

Kindly acknowledge receipt of this letter.

                  ...                  ...
                                                           Sd/-
                                                    (Shelly Srivastava)
                                           Director/Tourism & Catering
                               15



                                                 Railway Board."


                                             (Emphasis added)

In Commercial Circular No.20 of 2017 the subject was Catering

Policy 2017. It would read that the Railway Minster during the Rail

Budget 2016-17 had announced that IRCTC would unbundle

catering services by creating a distinction primarily between food

preparation and food distribution and this was in supersession of

the Catering Policy of 2010 and related guidelines. It was further

observed that the subject revised policy would be implemented with

immediate effect. It has the concurrence of the Ministry of

Railways. Pursuant to this, the policy of 2017 comes about. The

objectives are as follows:

“OBJECTIVES

With the objective to provide quality food to our
customers unbundling of catering services on trains has
been envisaged in Catering Policy 2017. This policy
supersedes Catering Policy 2010 and related instructions,
unless specifically referred to in this policy document.

IRCTC has been mandated to carry out the unbundling by
creating a distinction primarily between food preparation
and food distribution. In order to upgrade quality of food
preparation IRCTC shall be setting up new kitchens and
upgrade existing ones.

16

Modifications have been necessitated in the management of
catering service on mobile and static units to implement social
objectives of the Government besides encouraging fair
competition in allotment of catering units over stations.

IRCTC shall be responsible for catering services through mobile
catering units, Base Kitchens, Cell Kitchens, Refreshment Rooms
at A1 and A category of stations, Food Plazas, Food Courts,
Train Side Vending, Jan Ahaars. All other catering units like
Refreshment Rooms at B and below category of stations, AVMs,
Milk Stalls, trolleys shall be managed by the Zonal Railways.”

(Emphasis added)

Certain other clauses of the policy are germane to be noticed and

they read as follows:

“3.7 Method of Operation of Mobile Catering Service
3.7.1 Preparation of Food: To ensure quality, hygiene and
cleanliness, meals for all mobile units will be picked
up from the nominated kitchens owned, operated
and managed by IRCTC. This is subject to Business
Plan for mobile catering as well as Base Kitchens,
as approved by Board.

3.7.2 Service of Food in Trains: IRCTC can engage service
providers from hospitality industry for service of food in
train.

                  ...                  ...                  ...

     3.8    Setting up and operation of Kitchen Units

3.8.1 All four Base Kitchens under departmental
operation of Zonal Railways (Nagpur, Chhtrapati
Shivaji Terminus, Mumbai Central and Balharshah)
shall be handed over to IRCTC on ‘as is where is
basis’ i.e., the infrastructure including equipments
shall be transferred to IRCTC. All kitchen units i.e.,
17

Refreshment Rooms at A1 and A category stations
(i.e., excluding Refreshment Rooms at B and below
category stations being minor units that will remain
with Railways). Jan Ahaar, Cell Kitchens shall also
be handed over to IRCTC on ‘as is where is basis’
i.e., the infrastructure including equipments shall
be transferred to IRCTC
… … …

3.8.4 IRCTC shall not out rightly outsource or issue
licenses for providing of catering services to private
licensees. IRCTC shall retain the ownership and
shall be fully accountable for all the issues
pertaining to setting up and operation of the Base
Kitchens and quality of food.

… … …

3.8.8 It shall be mandatory for IRCTC to establish the
kitchens in a time bound manner as stipulated
hereunder. The location and area of the land for
construction of Base Kitchens shall be decided
mutually by the Divisions and IRCTC to be approved
by Zonal Railways. IRCTC and Divisions shall jointly
prepare a General Agreement Drawing (GAD) of the
proposed kitchen duly showing addition/alteration.
Sr.DCM in the Division and CCM (Catering)/CCM will
be the nodal officer for matters relating to handing
over of the land and setting up of the kitchens.
Following time frame shall be followed for setting
up of the kitchen.

… …. …

3.8.11 There shall be no lease/licensing of land to third party for
the purpose of setting up of Base Kitchens/Kitchen Units.
IRCTC will design its model for operation and
maintenance without assigning any right/lien to third
party over the space allotted.”

(Emphasis added)

These are the clauses of the policy, that are projected by the

learned senior counsel for the petitioner, to be germane. The

objectives of the policy, as was found in the preamble to the policy,
18

were distinction between food preparation and food distribution.

Clause 3.7.1 deals with preparation of food to ensure quality,

hygiene, cleanliness and meals for mobile units. Clause 3.8 deals

with setting up and operation of kitchen units and four base kitchen

units were to be under the departmental operation. Clause 3.8.4

depicted that IRCTC should not out rightly outsource any license to

private licensees and it was mandatory for the IRCTC to establish

kitchen in a time bound manner. It further depicted that there

would be no lease/licenses to the third party for the purpose of

setting up of base kitchens and kitchen units.

10. During the subsistence of the policy, the Railway notified

Expression of Interest-2024 calling for expression of interest from

the bidders who want to participate in any ensuing tender. It would

be allotted to those who are empanelled pursuant to the

assessment of documents of their respective expression of interest.

The members of the Association or the Association itself claim that

they have been empanelled and the empanelment is in force up to

31-12-2024 and have produced documents of such empanelment

dated 20-10-2023.

19

11. After the said empanelment comes the addendum to the

Catering Policy insofar as paragraphs 1 and 3 of Commercial

Circular No.20 of 2017, through its Commercial Circular No.24 of

2023. The addendum insofar as it is relevant reads as follows:

“1. Objective
From the experience gained during the past few years
after implementation of Catering Policy 2017, it has been
necessitated that state of the art Base Kitchen
infrastructure, adequate logistics and service
infrastructure, deployment of qualified and skilled
manpower to handle food production and services have to
be put in place not only at originating but also at enroute
stations to ensure service of good quality and hygienic
food to passengers on trains. Hence, it is imperative that
an experienced professional agency is vested with full
accountability of production of meals and services on
board under IRCTC’s direct supervision and monitoring of
entire operations.

3. Catering Services in Mobile Units
3.1 Management of Catering Services
3.1.1 Catering services on trains over Indian Railways shall be
managed by IRCTC under the framework of this policy
and related instructions issued by Railway Board from
time to time. The trains for catering services shall be
approved by the Board.

3.1.2 Sharing of revenue/license fee between IR and IRCTC
shall continue to be governed as per para 3.1 and para
3.8.2 of Catering Policy 2017.

… … …

3.3 System of Allotment and Operationalization of
Contract.

20

3.3.1 Tenders shall be awarded for a cluster, consisting of
locations required for commissioning of Base Kitchens and
the trains identified in the cluster for service, through Two
Packet Tender Systems (e-tender). The selected Service
Provider shall be responsible for commissioning and
operation of Base Kitchens at required locations along
with service of meals in all trains of cluster which shall be
pre-notified with the bid.

… … …

3.4 Model of Operation and setting up of Base Kitchens

3.4.1 It shall be ensured that meals of the trains are
picked up only from the designated Base Kitchens
under direct supervision of IRCTC and no meal is
sourced from any other Kitchens.

3.4.2 Locations and specifications for setting up of Base
Kitchens shall be pre-notified in the tender
document. Location of Base Kitchen shall be
decided keeping in view the transit time and
delivery to the station so that there is no impact on
food quality.

3.4.3 To meet the quality and hygiene in production as per laid
down standards, the Service provider shall be responsible
for setting up Base Kitchens at all the designated
locations (as per route & requirement of trains) before
commencement of contract. The Service Provider shall
bear the entire investment and make their own
arrangements in land/building/space having easy road
access.

… … …

3.5. Eligibility Criteria
3.5.1 Annual Turnover from Food & Beverages Business:

(Food & beverages means production, sale/service
of cooked food which is to be verified through GSTR
(9/9C) and duly certified by approved CAs with
UDIN number). During the consideration of 3 FYs,
there should not be NIL turnover in any of the years
under consideration.

21

a) Rs 25 Cr (for Cluster A) average per year in
any of the three years (during the last 6
preceding years).

b) Rs 10 Cr (For Cluster B) average per year in
any of the three years (during the last 6
preceding years).

For avoidance of doubt, an example is given below:

(Preceding 6 FYs are 2017-18, 2018-19, 2019-20,
2020-21, 2021-22 & 2022-23. If the applicant is
submitting certified turnover for FYs 2018-19,
2021-22 & 2022-23, the total turnover must not be
less than 75 Cr for Cluster A and 30 Cr for Cluster B.
Besides above, there should not be NIL turnover
during any FYs 2018-19, 2021-22 & 2022-23).

… … …

Applicability of this Policy

This policy supersedes Para 3 of Catering Policy 2017 and
related instructions except the provision for sharing of
license fee/revenue between IR and IRCTC as referred in
Para 3.1.2 of this policy. This policy shall be applicable
with immediate effect i.e., from the date of issue.

This issues with concurrence of Finance Commercial
Directorate of the Ministry of Railways and approval of
the Board.”

(Emphasis added)

A slight deviation is made in the earlier existing policy with regard

to base kitchen infrastructure and service infrastructure. Why is it

made forms part of the statement of objections. Paragraphs 8 to
22

15 of the statement of objections are necessary to be noticed in this

regard and they read as follows:

“8. Under the Catering Policy 2017, para 3.7.1,
3.7.2 and 3.8.4 envisaged that IRCTC was to set up a
grid of Kitchens for supply of meals to all trains, which
would be catered by licensees. However, due to logistical
and operational challenges including disruption due to
COVID-19 pandemic, it was experienced in some cases
that production of meals had been devolved to one
licensee (either from Railway-owned kitchen or from
licensee-owned kitchen) and catering/service of food
was through another licensee, which caused
accountability issues. In the meantime, passenger
complaints regarding the quality and hygiene of meals
and catering of trains kept increasing. It was felt that
the expected objectives of the Catering Policy 2017 were
not getting achieved in letter and spirit.

9. Accordingly, the Ministry of Railways (Railway Board)
by order dated 18-07-2023 decided to constitute a
Committee comprising five Joint Secretary, Government
of India level officers of the Railway Board, Zonal
Railways and IRCTC to review the modalities for
operation of mobile units and to suggest required
changes. The copy of the Order dated 18-07-2023 is herewith
produced as Annexure-R1.

10. The Committee undertook a comprehensive
exercise, including studying the best practices of the
hospitality industry engaged in the catering business and,
including engaging with various stakeholders such as
caterers. Basis this, it issued the Committee Report dated
15-09-2023 where it made several recommendations, including

(a) Review of eligibility criteria with more emphasis on technical
parameters so that only capable and experienced professionals
(minimum qualification of staff provided) in the catering field
are engaged in mobile catering of Railways; (b) Licensees
should be mandated with setting up standardized, organized,
state-of-art kitchens (Modem, Mechanized & ISO certified with
23

minimum approved specifications) and meals would be picked
up only from such designated kitchens; (c) Each identified
Kitchens should be equipped with CCTV monitoring (as per
enclosed Schedule -2), QR code stickers, insulated food vans;

(d) End to end accountability of one licensee whereby a single
service provider/licensee was vested with responsibility and
accountability of both production of meals in designated
Kitchens and service onboard trains; (e) Development of Base
Kitchen and logistic infrastructure to be made mandatory before
commencement of contract so that bidders are committed and
inclined to make investment in required infrastructure and their
stakes are high in case of poor service; (f) Due to substantial
investment involved in setting up such kitchens and for
achieving economies of scale, licensees were to be incentivized
by awarding licenses for train clusters where trains may be
mapped with service locations and Base Kitchens for preparing
route-wise clusters of trains; (g) Financial eligibility to be fixed
in accordance with sound financial, infrastructural and
manpower capabilities to successfully manage the services to
passengers in such clusters; (h) Licensees would also be
responsible for statutory compliances such as FSSAI, tax laws
and various labour laws.

11. The Railway Board deliberated on the
committee Report in various meetings, where some
further suggestions were made and incorporated.

Thereafter, the matter was approved by the Members of
the Railway Board and finally by the Hon’ble Railway
Minister on 10-11-2023.

12. Pursuant thereto, the Commercial Circular
24/2023 dated 14-11-2023 was issued by the Railway
Board as an Addendum to Para 1 and 3 of the Catering
Policy 2017. IRCTC issued the subject Tenders thereafter
on the basis of the Commercial Circular 24/2023.

13. It is notable that the changes mooted under the
Commercial Circular 24/2023 are in public interest and
for the welfare of railway passengers as well as beneficial
for licensees, illustratively in the following ways:

a. Improvement in the quality and hygiene of meals
and catering;

24

b. Enabling continuous supervision of the kitchen;
c. Ensuring timely service since Kitchens are to be
located at more locations along the route;
d. Ridding the dependence on third party suppliers;
e. Assurance of cleanliness, hygiene and raw material
in preparation of food;

f. Specifications of the equipment and other items to
be used in Kitchens;

g. CCTV access through QR code will enable live
streaming of Kitchen where food was prepared and
build confidence in the eyes of the passengers;
h. Maintaining the pricing by eliminating an
intermediary and thus ensure that the licensees are
able to have reasonable margin even in the rising
inflation era;

i. Strict compliant management system incorporated
in the new contracts as a part of the tender
document;

j. Classified item wise complaint to enable passengers
to pinpoint deficiencies;

k. New conditions for timely commencement of license
contracts.

14. It is also notably that the fruits of the
Commercial Circular 24/2023 will also result in long term
benefits to the nation as well as the catering sector, as:

a. encourages and enables establishment of long-

term infrastructure in catering;

b. encourages competition and innovation by the
entrance of new players in the business of mobile
catering on trains;

c. pins responsibility and accountability on one
service provider/licensee for food preparation and
catering on trains;

d. unlocks greater commercial value for licensees by
enabling achieving economies of scale;
e. Licensees would not be limited to supplying meals only to
trains, and the same Kitchen infrastructure could be
utilized for other markets as well.

25

15. No subsisting catering contracts have been
disturbed on account of implementation of the
Commercial Circular 24/2023.”

(Emphasis added)

12. The learned Solicitor General places emphasis upon what

is quoted hereinabove, a part of the statement of objections. It is

clearly indicated that new policy is brought in, as it would ensure

end to end accountability, quality and hygiene and all other aspects

of food that is served in the Indian trains. Therefore, there is clear

justification as to why the Railways had to bring in this addendum

to the Circular. If hygiene, quality of food and accountability is to

be brought in, it cannot be said that such policy is illegal and

contrary to public interest. Catering contractors are seeking to

project their interest over and above what is aforesaid, which is in

the realm of public interest. Therefore, the submission of the

learned senior counsel Sri Jayakumar S.Patil, that Commercial

Circular 24 of 2023 does not serve the purpose, as was necessary

in Catering Policy of 20 of 2017, is unacceptable.

13. The petitioners want this Court, to enter into the arena of

food preparation and monitoring as to where the base kitchen
26

should be; who should distribute food and who should be

accountable for such distribution. If all these submissions are

accepted, it would amount to this Court monitoring preparation of

food and distribution of food in the trains, which is purely the

dominion of Railways. The petition seeks this Court to enter into

such area, which this Court, in exercise of its jurisdiction under

Article 226 of the Constitution of India would be ‘loathe to even

peep into’. It is for the Railways to bring in such policy which

would advance the cause of public interest, travelers in trains qua

hygiene and quality of food, and what is now sought to be done by

the Railways is exactly what the learned Solicitor General has

projected. The projection by the learned Solicitor General is

threadbare, as to why this had to come about, with which this Court

is in complete agreement. No right of the petitioner is taken away,

as it is the averment in the statement of objections that the existing

tenderers or contractors will not suffer any prejudice qua the new

policy, as at paragraph 15 of the statement of objections, the

statement made is that the catering contracts which have already

been granted will not be disturbed. Therefore, if any interference

would be made by this Court, on the contentions advanced by the
27

petitioner, it would run foul of the settled principle of law. It,

therefore, becomes appropriate to refer to certain judgments of the

Apex Court qua interference in contractual and commercial matters,

in exercise of jurisdiction of this Court under Article 226 of the

Constitution of India.

14. A three Judge Bench of the Apex Court in the case of

TATA CELLULAR v. UNION OF INDIA1 has held as follows:

“94. The principles deducible from the above are:

(1) The modern trend points to judicial restraint in
administrative action.

(2) The court does not sit as a court of appeal but
merely reviews the manner in which the decision
was made.

(3) The court does not have the expertise to correct the
administrative decision. If a review of the
administrative decision is permitted it will be
substituting its own decision, without the necessary
expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot be open to
judicial scrutiny because the invitation to tender is in the
realm of contract. Normally speaking, the decision to
accept the tender or award the contract is reached by
process of negotiations through several tiers. More often
than not, such decisions are made qualitatively by
experts.

1

(1994) 6 SCC 651
28

(5) The Government must have freedom of contract. In other
words, a fair play in the joints is a necessary concomitant
for an administrative body functioning in an
administrative sphere or quasi-administrative sphere.

However, the decision must not only be tested by the
application of Wednesbury principle of reasonableness
(including its other facts pointed out above) but must be
free from arbitrariness not affected by bias or actuated by
mala fides.

(6) Quashing decisions may impose heavy administrative
burden on the administration and lead to increased and
unbudgeted expenditure.

Based on these principles we will examine the facts of this case
since they commend to us as the correct principles.

(Emphasis supplied)

In a subsequent judgment, the Apex court in the case of

MICHIGAN RUBBER v. STATE OF KARNATAKA2 has held as

follows:

“23. From the above decisions, the following principles
emerge:

(a) The basic requirement of Article 14 is fairness in action by
the State, and non-arbitrariness in essence and substance
is the heartbeat of fair play. These actions are amenable
to the judicial review only to the extent that the State
must act validly for a discernible reason and not
whimsically for any ulterior purpose. If the State acts
within the bounds of reasonableness, it would be
legitimate to take into consideration the national
priorities;

2

(2012) 8 SCC 216
29

(b) Fixation of a value of the tender is entirely within the
purview of the executive and the courts hardly have any
role to play in this process except for striking down such
action of the executive as is proved to be arbitrary or
unreasonable. If the Government acts in conformity with
certain healthy standards and norms such as awarding of
contracts by inviting tenders, in those circumstances, the
interference by courts is very limited;

(c) In the matter of formulating conditions of a tender
document and awarding a contract, greater latitude
is required to be conceded to the State authorities
unless the action of the tendering authority is found
to be malicious and a misuse of its statutory
powers, interference by courts is not warranted;

(d) Certain preconditions or qualifications for tenders have to
be laid down to ensure that the contractor has the
capacity and the resources to successfully execute the
work; and

(e) If the State or its instrumentalities act reasonably,
fairly and in public interest in awarding contract,
here again, interference by court is very restrictive
since no person can claim a fundamental right to
carry on business with the Government.

24. Therefore, a court before interfering in tender or
contractual matters, in exercise of power of judicial review,
should pose to itself the following questions:

(i) Whether the process adopted or decision made by
the authority is mala fide or intended to favour
someone; or whether the process adopted or
decision made is so arbitrary and irrational that the
court can say: “the decision is such that no
responsible authority acting reasonably and in
accordance with relevant law could have reached”?

and

(ii) Whether the public interest is affected?
30

If the answers to the above questions are in the negative, then
there should be no interference under Article 226.”

(Emphasis supplied)

Both the aforesaid judgments of the Apex Court lay down the

parameters of interference in contractual and commercial activities

of the State. The Apex Court, in TATA CELLULAR holds that it is

only in the circumstances, as obtaining in the aforesaid paragraphs,

remains the domain of judicial review on administrative action qua

contract or commercial wisdom. The Apex Court holds that the

Court does not have the expertise to correct any administrative

decision, unless it is suffering from the vice of arbitrariness, bias or

action that is mala fide. The Apex Court in the case of MICHIGAN

RUBBER reiterated those principles in the afore-quoted paragraphs

of the said judgment. The Apex Court holds that fixation value,

commercial decisions pre-conditions or qualification for tenderers

should not be interfered with unless it is palpably or demonstrably

arbitrary. The principles laid down in the aforesaid judgments are

again reiterated by the Apex Court, in two of its later judgments.

The Apex Court in TATA MOTORS LIMITED v. BRIHAN MUMBAI
31

ELECTRIC SUPPLY AND TRANSPORT UNDERTAKING3 has held

as follows:

“48. This Court being the guardian of fundamental
rights is duty-bound to interfere when there is
arbitrariness, irrationality, mala fides and bias. However,
this Court has cautioned time and again that courts
should exercise a lot of restraint while exercising their
powers of judicial review in contractual or commercial
matters. This Court is normally loathe to interfere in
contractual matters unless a clear-cut case of
arbitrariness or mala fides or bias or irrationality is made
out. One must remember that today many public sector
undertakings compete with the private industry. The
contracts entered into between private parties are not
subject to scrutiny under writ jurisdiction. No doubt, the
bodies which are State within the meaning of
Article 12 of the Constitution are bound to act fairly and
are amenable to the writ jurisdiction of superior courts
but this discretionary power must be exercised with a
great deal of restraint and caution. The courts must
realise their limitations and the havoc which needless
interference in commercial matters can cause. In
contracts involving technical issues the courts should be
even more reluctant because most of us in Judges’ robes
do not have the necessary expertise to adjudicate upon
technical issues beyond our domain. The courts should
not use a magnifying glass while scanning the tenders
and make every small mistake appear like a big blunder.
In fact, the courts must give “fair play in the joints” to
the government and public sector undertakings in
matters of contract. Courts must also not interfere where
such interference will cause unnecessary loss to the
public exchequer. (See : Silppi Constructions
Contractors v. Union of India, (2020) 16 SCC 489)

49. It is not in dispute that the first and the foremost
requirement of the Tender was the prescribed operating range

3
2023 SCC OnLine SC 671
32

of the single decker buses which would operate for around and
average of 200 Kms in a single charge in “actual conditions”

with 80% SoC without any interruption. Then materials on
record would indicate that the TATA Motors in its bid deviated
from this requirement and had informed BEST that it could carry
the operating range in the “standard test conditions” which was
not in accordance with the Tender conditions. The High Court
has rightly observed in its impugned judgment that the bid of
the TATA Motors failed to comply with the said clause. TATA
Motors deviated from the material and the essential term of the
Tender. It may not be out of place to state at this stage that it is
only TATA Motors who deviated from the condition referred to
above. However, we are of the view that the High Court having
once declared TATA Motors as “non-responsive” and having
stood disqualified from the Tender process should not have
entered into the fray of investigating into the decision of BEST
to declare EVEY as the eligible bidder. We are saying so because
the High Court was not exercising its writ jurisdiction in public
interest. The High Court looked into a petition filed by a party
trying to assert its own rights.
As held by this Court in Raunaq
International Ltd. (supra), that grant of judicial relief at the
instance of a party which does not fulfil the requisite criteria is
something which could be termed as misplaced.
In Raunaq
International Ltd. (supra), this Court observed as under:

“27. In the present case, however, the relaxation
was permissible under the terms of the tender. The
relaxation which the Board has granted to M/s. Raunaq
International Ltd. is on valid principles looking to the
expertise of the tenderer and his past experience
although it does not exactly tally with the prescribed
criteria. What is more relevant, M/s. I.V.R.
Construction Ltd. who have challenged this award
of tender themselves do not fulfil the requisite
criteria. They do not possess the prescribed
experience qualification. Therefore, any judicial
relief at the instance of a party which does not fulfil
the requisite criteria seems to be misplaced. Even if
the criteria can be relaxed both for M/s. Raunaq
International Ltd. and M/s. I.V.R. Construction Ltd., it is
clear that the offer of M/s. Raunaq International Ltd. is
lower and it is on this ground that the Board has accepted
the offer of M/s. Raunaq International Ltd. We fail to see
33

how the award of tender can be stayed at the instance of
a party which does not fulfil the requisite criteria itself
and whose offer is higher than the offer which has been
accepted. It is also obvious that by stopping the
performance of the contract so awarded, there is a major
detriment to the public because the construction of two
thermal power units, each of 210 MW, is held up on
account of this dispute. Shortages of power have become
notorious. They also seriously affect industrial
development and the resulting job opportunities for a
large number of people. In the present case, there is no
overwhelming public interest in stopping the project.
There is no allegation whatsoever of any mala fides or
collateral reasons for granting the contract to M/s.
Raunaq International Ltd.”

(Emphasis supplied)

50. We take notice of the fact that Annexure Y was originally
required to be submitted by the “Successful Bidder” after the
evaluation of the bid and the same did not figure in the list of
documents and annexures to be included in the technical
submissions, as provided under Clause 5.1.1 of Schedule II of the
Tender. Further the format provided for Annexure Y in the Tender
documents in its heading states that the “Successful Bidders shall
upload a Letter of Undertaking on their letter head as below”.
Therefore, we are of the view that the restriction on revision of
documents under Clause 16 of Schedule I, which states, “No
addition/correction, submission of documents will be allowed after
opening of technical bid,” is only limited to the documents
necessary to be included in the technical bid and would not be
applicable to any such document which does not form a part of the
technical bid.

51. We are of the view that the High Court should have been
a bit slow and circumspect in reversing the action of BEST
permitting EVEY to submit a revised Annexure Y. We are of the
view that the BEST committed no error or cannot be held guilty of
favoritism, etc. in allowing EVEY to submit a revised Annexure Y as
the earlier one was incorrect on account of a clerical error. This
exercise itself was not sufficient to declare the entire bid offered by
EVEY as unlawful or illegal.

34

52. Ordinarily, a writ court should refrain itself from
imposing its decision over the decision of the employer as to
whether or not to accept the bid of a tenderer unless
something very gross or palpable is pointed out. The court
ordinarily should not interfere in matters relating to tender
or contract. To set at naught the entire tender process at the
stage when the contract is well underway, would not be in
public interest. Initiating a fresh tender process at this stage
may consume lot of time and also loss to the public
exchequer to the tune of crores of rupees. The financial
burden/implications on the public exchequer that the State
may have to meet with if the Court directs issue of a fresh
tender notice, should be one of the guiding factors that the
Court should keep in mind. This is evident from a three-
Judge Bench decision of this Court in Association of
Registration Plates v. Union of India, reported in (2005) 1
SCC 679.

53. The law relating to award of contract by the State
and public sector corporations was reviewed in Air India
Ltd. v. Cochin International Airport Ltd., reported in (2000)
2 SCC 617 and it was held that the award of a contract,
whether by a private party or by a State, is essentially a
commercial transaction. It can choose its own method to
arrive at a decision and it is free to grant any relaxation
for bona fide reasons, if the tender conditions permit such a
relaxation. It was further held that the State, its
corporations, instrumentalities and agencies have the public
duty to be fair to all concerned. Even when some defect is
found in the decision-making process, the court must
exercise its discretionary powers under Article 226 with
great caution and should exercise it only in furtherance of
public interest and not merely on the making out of a legal
point. The court should always keep the larger public
interest in mind in order to decide whether its intervention
is called for or not. Only when it comes to a conclusion that
overwhelming public interest requires interference, the
court should interfere.

54. As observed by this Court in Jagdish
Mandal v. State of Orissa, reported in (2007) 14 SCC 517,
that while invoking power of judicial review in matters as to
tenders or award of contracts, certain special features
35

should be borne in mind that evaluations of tenders and
awarding of contracts are essentially commercial functions
and principles of equity and natural justice stay at a
distance in such matters. If the decision relating to award of
contract is bona fide and is in public interest, courts will not
interfere by exercising powers of judicial review even if a
procedural aberration or error in assessment or prejudice to
a tenderer, is made out. Power of judicial review will not be
invoked to protect private interest at the cost of public
interest, or to decide contractual disputes.”

(Emphasis supplied)

Subsequent to the said judgment, the Apex Court in JAIPUR

VIDYUT VITRAN NIGAM LIMITED v. M.B.POWER (MADHYA

PRADESH) LIMITED4 has held as follows:

“144. In any case, we find that the High Court was not
justified in issuing the mandamus in the nature which it has
issued. This Court in the case of Air India Ltd. v. Cochin
International Airport Ltd. has observed thus:

“7. The law relating to award of a contract by the
State, its corporations and bodies acting as
instrumentalities and agencies of the Government has
been settled by the decision of this Court in Ramana
Dayaram Shetty v. International Airport Authority of
India [(1979) 3 SCC 489], Fertilizer Corpn. Kamgar Union
(Regd.) v. Union of India [(1981) 1 SCC
568], CCE v. Dunlop India Ltd. [(1985) 1 SCC 260 : 1985
SCC (Tax) 75], Tata Cellular v. Union of India [(1994) 6
SCC 651], Ramniklal N. Bhutta v. State of
Maharashtra [(1997) 1 SCC 134] and Raunaq
International Ltd. v. I.V.R. Construction Ltd. [(1999) 1
SCC 492] The award of a contract, whether it is by a
private party or by a public body or the State, is

4
2024 SCC OnLine SC 26
36

essentially a commercial transaction. In arriving at
a commercial decision considerations which are
paramount are commercial considerations. The
State can choose its own method to arrive at a
decision. It can fix its own terms of invitation to
tender and that is not open to judicial scrutiny. It
can enter into negotiations before finally deciding
to accept one of the offers made to it. Price need
not always be the sole criterion for awarding a
contract. It is free to grant any relaxation, for bona
fide reasons, if the tender conditions permit such a
relaxation. It may not accept the offer even though
it happens to be the highest or the lowest. But the
State, its corporations, instrumentalities and
agencies are bound to adhere to the norms,
standards and procedures laid down by them and
cannot depart from them arbitrarily. Though that
decision is not amenable to judicial review, the
court can examine the decision-making process and
interfere if it is found vitiated by mala fides,
unreasonableness and arbitrariness. The State, its
corporations, instrumentalities and agencies have
the public duty to be fair to all concerned. Even
when some defect is found in the decision-making
process the court must exercise its discretionary
power under Article 226 with great caution and
should exercise it only in furtherance of public
interest and not merely on the making out of a legal
point. The court should always keep the larger
public interest in mind in order to decide whether
its intervention is called for or not. Only when it
comes to a conclusion that overwhelming public
interest requires interference, the court should
intervene.”

145. It could thus be seen that this Court has held that
the award of a contract, whether it is by a private party or by a
public body or the State, is essentially a commercial transaction.
In arriving at a commercial decision, considerations
which are paramount are commercial considerations. It
has been held that the State can choose its own method
to arrive at a decision. It can fix its own terms of
invitation to tender and that is not open to judicial
37

scrutiny. It has further been held that the State can enter into
negotiations before finally deciding to accept one of the offers
made to it. It has further been held that, price need not always
be the sole criterion for awarding a contract. It has been held
that the State may not accept the offer even though it happens
to be the highest or the lowest. However, the State, its
corporations, instrumentalities and agencies are bound to
adhere to the norms, standards and procedures laid down by
them and cannot depart from them arbitrarily. Though that
decision is not amenable to judicial review, the court can
examine the decision-making process and interfere if it is found
vitiated by mala fides, unreasonableness and arbitrariness. It
has further been held that even when some defect has been
found in the decision-making process, the court must exercise
its discretionary power under Article 226 with great caution and
should exercise it only in furtherance of public interest and not
merely on the making out of a legal point. The court should
always keep the larger public interest in mind in order to decide
whether its intervention is called for or not. Only when it comes
to a conclusion that overwhelming public interest requires
interference, the court should intervene.

146. As has been held by this Court in the case of Tata
Cellular (supra), the Court is not only concerned with the merits
of the decision but also with the decision-making process.
Unless the Court finds that the decision-making process is
vitiated by arbitrariness, mala fides, irrationality, it will not be
permissible for the Court to interfere with the same.

147. In the present case, the decision-making process,
as adopted by the BEC was totally in conformity with the
principles laid down by this Court from time to time. The BEC
after considering the competitive rates offered in the bidding
process in various States came to a conclusion that the rates
quoted by SKS Power (L-5 bidder) were not market aligned. The
said decision has been approved by the State Commission.
Since the decision-making process adopted by the BEC, which
has been approved by the State Commission, was in accordance
with the law laid down by this Court, the same ought not to
have been interfered with by the learned APTEL.

148. In any case, the High Court, by the impugned
judgment and order, could not have issued a mandamus to the
38

instrumentalities of the State to enter into a contract, which was
totally harmful to the public interest. Inasmuch as, if the
power/electricity is to be procured by the procurers at the rates
quoted by the respondent No. 1-MB Power, which is even higher
than the rates quoted by the SKS Power (L-5 bidder), then the
State would have been required to bear financial burden in
thousands of crore rupees, which would have, in turn, passed on
to the consumers. As such, we are of the considered view
that the mandamus issued by the Court is issued by
failing to take into consideration the larger consumers’
interest and the consequential public interest. We are,
therefore, of the view that the impugned judgment and
order passed by the High Court is not sustainable in law
and deserves to be quashed and set aside.”

(Emphasis supplied)

What would unmistakably emerge from the judgments rendered by

the Apex Court (supra) is that this Court would not sit in the arm

chair of experts to scrutinize or monitor commercial decisions of the

State, in the case at hand, the Railways. Preparation of food,

distribution of food, quality of such preparation and efficiency of

such distribution are in the realm of commercial decisions in public

interest by the Railways. Therefore, I find no ground to interfere on

the submissions qua the distinction and differentiation between food

preparation and food distribution. It is for the respondents/Railways

to manage its house in the aforesaid circumstances.
39

15. The other two submissions of the learned senior counsel

for the petitioner are to be considered. The first is, that the budget

speech is a decision of the cabinet and Circular No.20 of 2017 was

notified in tune with the budget speech and therefore, it is a

decision of the cabinet. I decline to accept the submission, as in

the considered view of the Court, the submission is fundamentally

flawed. The budget speech, either by the Finance Minister or the

Railway Minister, as the case would be, is a vision document,

projected for the subsequent year. Vision document cannot be a

decision of the cabinet. The decision of the cabinet on the vision

document would come after the budget and those would be in the

respective departments. The submission is that the Railway budget

speech itself is a decision of the cabinet. This, on the face of it, is

untenable. Pursuant to the speech, the parts of speech form part of

the policy. This is a decision by the Minister for Railways.

Therefore, the decision qua the Catering Policy 20 of 2017 was a

decision by the Minister for Railways. Likewise, the addendum

through Commercial Circular No.24 of 2023, is again a decision by

the Minister for Railways. The Railways through, the Minister for

Railways, and the Railway Board, are the decision makers in the
40

respondents and no error can be found qua competence, in the

notification of Commercial Circular No. 24 of 2023.

16. The other submission of the learned senior counsel for the

petitioner is that, Circular No.24 of 2023 is vitiated on account of it

not being placed before the cabinet, for its approval prior to its

notification. This is again a submission that would not merit any

acceptance. As submitted by the learned Solicitor General of India,

the action of notification, can always be ratified by the cabinet, at a

subsequent date, as the decision makers in the Railways insofar as

notification of policies to run the Railways is, the Railway Minister or

the Railway Board, as the case would be. Mere non-placing the

circular before the cabinet prior to its notification would not render

the circular illegal, as it would be protected by the principle of post

facto ratification. The said submission of the learned Solicitor

General is in tune with the law laid down by the Apex Court in

plethora of judgments, where the Apex Court considers and

approves the principle of ratification, which would render an order,

even if it is illegal at the outset, to become valid in the eye of law

on such ratification. The Apex Court in the case of
41

NATIONAL INSTITUTE OF TECHNOLOGY v. PANNALAL

CHOUDHURY5 holds that a subsequent ratification of an act is

equivalent to a appropriate authority performing such act. The Apex

court considering the entire spectrum of law has held as follows:

“28. That apart, the issue in question could be examined
from yet another angle by applying the law relating to
“ratification” which was not taken note of by the High Court.

29. The expression “ratification” means “the
making valid of an act already done”. This principle is
derived from the Latin maxim “ratihabitio mandato
aequiparatur” meaning thereby “a subsequent ratification
of an act is equivalent to a prior authority to perform
such act”. It is for this reason, the ratification assumes
an invalid act which is retrospectively validated.

30. The expression “ratification” was succinctly
defined by the English Court in one old
case, Hartman v. Hornsby [Hartman v. Hornsby, 142 Mo
368 : 44 SW 242 at p. 244 (1897)] as under:

“‘Ratification’ is the approval by act, word, or
conduct, of that which was attempted (of
accomplishment), but which was improperly or
unauthorisedly performed in the first instance.”

31. The law of ratification was applied by this Court
in Parmeshwari Prasad Gupta v. Union of India
[Parmeshwari Prasad Gupta v. Union of India, (1973) 2
SCC 543]. In that case, the Chairman of the Board of
Directors had terminated the services of the General
Manager of a Company pursuant to a resolution taken by
the Board at a meeting. It was not in dispute that the
meeting had been improperly held and consequently the
resolution passed in the said meeting terminating the

5
(2015) 11 SCC 669
42

services of the General Manager was invalid. However,
the Board of Directors then convened subsequent
meeting and in this meeting affirmed the earlier
resolution, which had been passed in improper meeting.
On these facts, the Court held: (SCC pp. 546-47, para 14)

“14. … Even if it be assumed that the
telegram and the letter terminating the services of
the appellant by the Chairman was in pursuance of
the invalid resolution of the Board of Directors
passed on 16-12-1953 to terminate his services, it
would not follow that the action of the Chairman
could not be ratified in a regularly convened
meeting of the Board of Directors. The point is that
even assuming that the Chairman was not legally
authorised to terminate the services of the
appellant, he was acting on behalf of the Company
in doing so, because, he purported to act in
pursuance of the invalid resolution. Therefore, it
was open to a regularly constituted meeting of the
Board of Directors to ratify that action which,
though unauthorised, was done on behalf of the
Company. Ratification would always relate back to
the date of the act ratified and so it must be held
that the services of the appellant were validly
terminated on 17-12-1953.”

This view was approved by this Court in High Court of Judicature
of Rajasthan v. P.P. Singh [High Court of Judicature of
Rajasthan v. P.P. Singh, (2003) 4 SCC 239: 2003 SCC (L&S)
424].

32. The aforesaid principle of law of ratification was again
applied by this Court in Maharashtra State Mining
Corpn. v. Sunil [Maharashtra State Mining Corpn. v. Sunil,
(2006) 5 SCC 96 : 2006 SCC (L&S) 926] . In this case, the
respondent was an employee of the appellant Corporation.
Consequent to a departmental enquiry, he was dismissed by the
Managing Director of the appellant. The respondent then filed a
writ petition before the High Court. During the pendency of the
writ petition, the Board of Directors of the appellant Corporation
passed a resolution ratifying the impugned action of the
Managing Director and also empowering him to take decision in
43

respect of the officers and staff in the grade of pay the
maximum of which did not exceed Rs 4700 p.m. Earlier, the
Managing Director had powers only in respect of those posts
where the maximum pay did not exceed Rs 1900 p.m. The
respondent at the relevant time was drawing more than Rs 1800
p.m. Therefore, at the relevant time, the Managing Director was
incompetent to dismiss the respondent. Accordingly, the High
Court held [Sunil v. Maharashtra State Mining Corpn., 2005 SCC
OnLine Bom 758: (2006) 1 Mah LJ 495] the order of dismissal to
be invalid. The High Court further held that the said defect could
not be rectified subsequently by the resolution of the Board of
Directors. The High Court set aside the dismissal order and
granted consequential relief. The appellant then filed the appeal
in this Court by special leave.
Ruma Pal, J. speaking for the
three-Judge Bench, while allowing the appeal and setting aside
the order of the High Court held as under: (Sunil
case [Maharashtra State Mining Corpn. v. Sunil, (2006) 5 SCC
96 : 2006 SCC (L&S) 926] , SCC pp. 96g-h & 97a-b)

“The High Court rightly held that an act by a legally
incompetent authority is invalid. But it was entirely wrong
in holding that such an invalid act could not be
subsequently ‘rectified’ by ratification of the competent
authority. Ratification by definition means the making
valid of an act already done. The principle is derived from
the Latin maxim ratihabitio mandato aequiparatur,
namely, ‘a subsequent ratification of an act is equivalent
to a prior authority to perform such act’. Therefore,
ratification assumes an invalid act which is retrospectively
validated.

***
In the present case, the Managing Director’s order
dismissing the respondent from the service was
admittedly ratified by the Board of Directors
unquestionably had the power to terminate the services
of the respondent. Since the order of the Managing
Director had been ratified by the Board of Directors such
ratification related back to the date of the order and
validated it.”

(Emphasis supplied)
44

The Apex Court was following a three Judge Bench decision in the

case of MAHARASHTRA STATE MINING CORPORATION v.

SUNIL6 wherein it is held as follows:

“5. The High Court allowed the writ petition holding that
the Managing Director was not competent to terminate the
respondent’s services as on the date of the passing of the order
of termination and therefore the order of dismissal was invalid.
The High Court was also of the view that this defect could not be
rectified subsequently by the resolution of the Board of
Directors. The High Court accordingly set aside the order of
termination. Since the respondent had already retired from
service, the appellant was directed to reinstate the respondent
notionally with effect from the date of termination in the same
post and pay salaries up to the date of superannuation and to
pay all retiral benefits after the date of superannuation.

6. Before us learned counsel appearing on behalf of
the appellant has submitted that the High Court’s
decision was contrary to the decisions of this Court
in Parmeshwari Prasad Gupta v. Union of India [(1973) 2
SCC 543] and High Court of Judicature for
Rajasthan v. P.P. Singh [(2003) 4 SCC 239 : 2003 SCC
(L&S) 424] . The respondent on the other hand submitted
that the resolution of the Board was subsequent to the
order of dismissal and, therefore, could not operate
retrospectively.
The respondent relied upon the decision
in Krishna Kumar v. Divisional Asstt. Electrical
Engineer [(1979) 4 SCC 289 : 1980 SCC (L&S) 1] in
support of this contention.

7. The High Court was right when it held that an act
by a legally incompetent authority is invalid. But it was
entirely wrong in holding that such an invalid act cannot
be subsequently “rectified” by ratification of the
competent authority. Ratification by definition means the
making valid of an act already done. The principle is
derived from the Latin maxim ratihabitio mandato

6
(2006)5 SCC 96
45

aequiparatur, namely, “a subsequent ratification of an act
is equivalent to a prior authority to perform such act”.

Therefore ratification assumes an invalid act which is
retrospectively validated. [ See P. Ramanatha
Aiyar’s Advanced Law Lexicon, (2005) Vol. 4, p. 3939 et
seq.]

8. In Parmeshwari Prasad Gupta [(1973) 2 SCC
543] the services of the General Manager of a company
had been terminated by the Chairman of the Board of
Directors pursuant to a resolution taken by the Board at a
meeting. It was not disputed that that meeting had been
improperly held and consequently the resolution passed
terminating the services of the General Manager was
invalid. However, a subsequent meeting had been held by
the Board of Directors affirming the earlier resolution.
The subsequent meeting had been properly convened.
The Court held: (SCC pp. 546-47, para 14)

“Even if it be assumed that the telegram and the
letter terminating the services of the appellant by the
Chairman was in pursuance of the invalid resolution of the
Board of Directors passed on 16-12-1953 to terminate his
services, it would not follow that the action of the
Chairman could not be ratified in a regularly convened
meeting of the Board of Directors. The point is that even
assuming that the Chairman was not legally authorised to
terminate the services of the appellant, he was acting on
behalf of the Company in doing so, because, he purported
to act in pursuance of the invalid resolution. Therefore, it
was open to a regularly constituted meeting of the Board
of Directors to ratify that action which, though
unauthorised, was done on behalf of the Company.
Ratification would always relate back to the date of the
act ratified and so it must be held that the services of the
appellant were validly terminated on 17-12-1953.”

The view expressed has been recently approved in High Court of
Judicature for Rajasthan v. P.P. Singh [(2003) 4 SCC 239: 2003
SCC (L&S) 424], [ See also Claude-Lila Parulekar v. Sakal
Papers (P) Ltd., (2005) 11 SCC 73.].

46

9. The same view has been expressed in several cases in
other jurisdictions. Thus in Hartman v. Hornsby [142 Mo 368,
44 SW 242, 244] it was said:

” ‘Ratification’ is the approval by act, word, or
conduct, of that which was attempted (of
accomplishment), but which was improperly or
unauthorisedly performed in the first instance.”

(Emphasis supplied)

In the light of the law laid down by the Apex Court in the afore-

quoted judgments, the submission of the learned Solicitor General

would merit acceptance, as the cabinet can always ratify the act of

the Minister for Railways/Railway Board in notifying the circular, if it

becomes necessary. None of the submissions of the learned senior

counsel for the petitioner would merit acceptance for this Court to

interfere with the policy making of the Railways, through the

impugned Commercial Circular.

17. Insofar as the companion petition in W.P.No.4296 of 2024

is concerned, which calls in question a tender notified subsequent to

initiation of the policy, an offshoot of the policy in Commercial

Circular No.24 of 2023, the petition also deserves rejection, as the
47

policy is upheld in the course of the order supra. Thus, the

companion petition in Writ Petition No.4296 of 2024 would also fail.

18. For the aforesaid reasons, the following:

ORDER

(i) Writ Petitions stand rejected.

(ii) The respondents/Railways are at liberty to take the

tender so notified to its logical conclusion.

Pending applications, if any, also stand disposed.

Sd/-

JUDGE

bkp
CT:MJ

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