Supreme Court Limits Interference Under Sections 34 & 37—Arbitrator’s Interpretation of Catering Contract Restored Except on Interest

Case Name: Indian Railway Catering and Tourism Corporation Ltd. v. M/s Brandavan Food Products Pvt. Ltd.
Citation: Civil Appeal No. 7202 of 2025; 2025 INSC 1296
Date of Judgment/Order: 07 November 2025
Bench: Hon’ble Mr. Justice B.R. Gavai & Hon’ble Mr. Justice K.V. Viswanathan

Held: The Supreme Court held that the High Court erred in interfering with the arbitral award under Section 34/37 by re-appreciating evidence and substituting its own interpretation of the catering contract. The arbitrator had taken a plausible, contractual, and evidence-based view in holding that IRCTC was liable to reimburse the caterer for expenses incurred in serving a second regular meal (Veg. Standard Meal) due to IRCTC’s own Combo Meal policy anomalies. The Court reiterated that where two views are possible on contractual interpretation, the arbitrator’s view must prevail. However, the arbitrator’s award of 12% interest was modified, and interest was made payable only in accordance with Clause 18(v) of the License Agreement.

Summary: The dispute arose from IRCTC’s 2019 circular prescribing a single Combo Meal rate of ₹50/₹80 for on-board catering, but certain passenger segments—particularly onboard suburban/long-distance combinations—continued demanding a second Veg. Standard Meal (VSM). Brandavan Food Products, a licensee operating a pantry car, served the additional VSM at its own cost and sought reimbursement under Clause 18(v) relating to “charges for food provided on demand.” The arbitrator found that the Combo Meal circular created operational inconsistency, forcing the caterer to supply additional meals without compensation, and therefore ordered IRCTC to reimburse the differential. IRCTC challenged the award under Section 34 and succeeded before the High Court, which held that the VSM service was voluntary and outside contractual obligation. The Supreme Court, reviewing the scope of interference under McDermott International, Associate Builders, MMTC v. Vedanta, and UHL Power, held that the High Court’s intervention amounted to re-evaluation of facts and contractual terms, which is impermissible. The Court agreed with the arbitrator’s reasoning that IRCTC’s own policy created a mismatch requiring the caterer to supply a second meal, and therefore a reimbursable liability arose. However, it modified the interest component, holding that the arbitrator’s 12% interest was not contractually permissible.

Decision: The Supreme Court allowed the appeal in part, set aside the High Court’s order, and restored the arbitrator’s award relating to reimbursement of the cost for the second Veg. Standard Meal. However, the award was modified to restrict interest strictly as per Clause 18(v) of the License Agreement rather than the 12% awarded. The Court directed IRCTC to compute and pay the principal amount along with interest in accordance with the contractual rate within the stipulated period, thereby reiterating the narrow limits of judicial interference in arbitral awards under Sections 34 and 37.