In Brief
IRCTC contracted with caterers including Brandavan Food Products to provide catering on trains under Master Licence Agreements incorporating Railway Board policy. After policy circulars changed the menu and tariffs for meals, caterers claimed they should be paid at the higher 'regular meal' rate for second meals served, and reimbursed for welcome drinks. An arbitrator awarded them differential amounts plus interest. The Supreme Court held the award patently illegal and contrary to public policy. The award impermissibly rewrote the contract contrary to binding Railway Board policy directives that had not been invalidated by courts. Policy directives, which the contracts faithfully reflected, could not be disregarded through contract interpretation. The Court set aside the award entirely, emphasizing arbitrators must respect both contractual terms and statutory policy, and cannot grant relief on fairness grounds when explicit terms unambiguously reflect binding policy.
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