Indian Railways Major and Minor Caterers Association vs Union of India (UOI) and Others

I.M. Quddusi, J.—Petitioner-Indian Major and Minor Caterers Association has filed this writ application, inter alia, seeking to quash the Catering Policy, 2005 as arbitrary, illegal, discriminatory and violative of Articles 14 and 19(1)(g) of the Constitution and consequentially to quash all the tender notices issued by the opposite parties for engagement of new caterers/contractors under the said Policy and to direct the opposite parties to frame a new policy in consultation with the public representatives and representatives of the registered caterers association considering the interest of Railways, public and caterers and pending finalization of such a new policy to allow the members of the Petitioners-association/the existing contractors/caterers to continue by way of renewal of their licenses.

We have heard learned Counsel for the parties.

Prior to enforcement of the Catering Policy, 1992, the catering/vending units were run under the departmental management. For the first time, the Railways decided to privatize the existing departmental units regarding catering/vending and framed the Catering Policy, 1992. The policy was published vide Govt. of India, Ministry of Railways order dated 6.1.1992. The main aim for privatization of the catering/vending units was to ensure qualify of food and service to the passengers. It was provided therein that the applications received in response to the advertisement would be scrutinized by a Screening Committee keeping in mind the following factors:

...reputation/business stinging of the applicant;

...turn over of the applicant''s business, if any;

...catering experience of the applicant;

...financial standing of the applicant.

size of the establishment and staff required for the unit;

...Location of the unit/units; and

...any other factor considered relevant by the Screening.... Committee.

In the beginning, no reservation or preference for any category for award of contracts was provided. However, on 15.05.1997, the Minister of Railways announced in the Parliament that there would be reservation of 30% for Scheduled Castes and Scheduled Tribes (20% for SC and 10% for ST) in the award of licences for catering stalls and until those targets are achieved, Railways would provide reservation of 50%(33% for SC & 17% for ST) for those categories. Consequent upon this announcement, the Ministry of Railways (Railway Board) issued letters dated 24.6.97 and 2.7.97, wherein the following paragraphs were substituted in the Policy 1992:

2.1 (para-III-3)- Reservation: There will be reservation of 20% in favour of SC candidates and 10% in favour of ST candidates for award of catering/vending licenses including pantry cars and refreshment rooms.

Till the above targets are achieved the Railways will provide reservation of 33% for SC candidates and 17% for ST candidates on the Zonal Railways basis so as to make good the shortfall. In respect of pantry cars and refreshment rooms, the percentage of reservation will be determined on all India basis. Amongst the eligible applicants within each category, the basic criteria of evaluation, however, will remain the same, i.e., capability reputation, experience and track record of the party and the ability to give requisite standard of food and service to the passengers.

After the 1992 policy, a new catering policy was framed in 2000, vide Railway Board''s letter dated 20.10.2000. Amendments to the said policy were also made by letters dated 24.7.2001 and 22.10.2001 whereby right of renewal of licence after expiry of the licence period was prohibited. These two amendments were challenged in the High Court of Delhi by M/s Vardan Restaurant & Caterers and Satish Chandra Srivastava by filing Civil Writ Petition No. 496 of 2002 with the following prayer:

(A) Issue a writ, order or direction in the nature of certiorari calling for the records and to quash the letter dated 24.12.2001 (Annexure: 17 above) and letter dated 19.12.2001 (Annexure: 18 above);

(B) Issue a writ, order or directions in the nature of mandamus directing the Respondent No. 3 and 4 to renew the tenure of the Catering Contract dated 7.1.1997 for a period of five years i.e. up to 21.1.2007 and contract dated 5.2.1997 (Annexure: P-2(Colly) and P-3(Colly) above) for a period of five years i.e. upto 18.2.2007 under the 1992 Policy or upto 31.10.2005 under the Catering Policy 2000.

(C) Issue such other appropriate writ, order of direction, as his Hon''ble Court may deem fit and proper in the facts and circumstances of the case.

(D) Award costs in favour of the Petitioner and against the Respondents.

AND ALSO

Pass such other and further orders as Hon''ble Court deem fit and proper in the facts and circumstances of the case.

Though the amendment in the Policy made through the above two letters dated 24.7.2001 and dated 22.10.2001 were not quashed by the Delhi High Court, damages were awarded to the existing licensees, against which SLP was filed by the I.R.C.T.C. (opposite party No. 4 therein) which was converted to Civil Appeal No. 1327 of 2003. The said Civil Appeal and the connected appeals were decided by the Hon''ble Apex Court on 15.3.2005 and, with consent of the parties, the Apex Court set aside the judgment of the Delhi High Court. The Apex Court also permitted the Respondents to continue to operate upto 30th September 2005 and granted liberty to the General Manager, North-Eastern Railway to issue fresh permits with effect from Ist October, 2005 as per the policy that existed.

Certain clauses of Catering Policy, 2000 were also challenged before the High Court of Kerala by Sri N.B. Krishna Kurup, who was the licensee of Vegetarian Refreshment Room, Palakkad Railway Station. But the revised policy was upheld by the Kerala High Court and the writ petition was dismissed. The SLP filed against that judgment of the Kerala High Court before the Supreme Court was converted to Civil Appeal No. 4897/2002. The Hon''ble Apex Court while deciding the said Civil Appeal along with other Civil Appeals and S.L. Ps. filed against different orders of the Kerala High Court by its order dated 29.3.2005, categorized the existing licensees as under:

Category-I

All cases where licenses granted to erstwhile licensees have expired not been renewed after which fresh licenses have been granted by IRCTC through financial bidding process.

Erstwhile licensees do not/shall not have any right of renewal of licence.

Category-II

In cases where licenses granted have expired on or before 31.3.2005 but ad hoc extensions have been granted and process for grant of fresh licences has been initiated by IRCTC.

Such licences/licensees shall be permitted to continue in terms of their ad hoc extension already and in any event till 30.6.2005, which is later (subject to satisfactory performance)

Note: It is expected that the process of grant of fresh licence shall be completed by 30.6.2005 (A three month period from today).

Category-III

In cases where licenses granted have expired on or before 31.3.2005, but ad hoc extensions have been granted and process for grant of fresh licences has not been initiated by IRCTC.

Such licences/licensees shall be permitted to continue in terms of their ad hoc extension already granted and in any event till 30.6.2005, whichever is later(subject to satisfactory performance).

Category-IV

In cases where licences granted are to expire after 31.3.2005. Such licences/licensees shall be granted ad hoc extension at least up to 30.6.2005 and until such time that the process of grant of licence of fresh licensee is completed by IRCTC (subject to satisfactory performance).

Ultimately, the Hon''ble Apex Court held as follows:

Civil appeal Nos. 4899/2002, 4900/2002, 4901/2002 48/2005 and Special Leave Petition(C) No. 5353 of 2003 are disposed of sustaining the judgment of the High Court with a direction to the Indian Railways/IRCTC to Identify the caterers falling in either of the four categories and deal with them as per the above mentioned categories.

Nothing stated herein shall preclude the Indian Railway/IRCTC from granting ad hoc extensions in the interest of general public traveling in the trains. Such extension, however, shall not create any legal right in the licensee favour. The Appellant(s) shall deposit arrears of license, fee, if any, within a period of two months from today. In case the Appellant(s) fail to deposit the arrears, as directed, the Indian Railways/IRCTC would be at liberty to terminate the licenses forthwith and to make recovery of the arrears in accordance with law.

These appeals and SLP are disposed of in the above terms.

Now, the Petitioner has challenged the Catering Policy of 2005 by filing the instant Writ Petition.

Mr. J. Patnaik, learned Senior Advocate along with Mr. L. Pangari, learned Counsel for the Petitioner, has raised the following points to hit the Catering Policy of 2005:

(i) In respect of Clause-8 regarding imposition of ceiling limit, he has submitted that a Firm/Company or an individual can hold maximum 15% of each type of major catering units subject to maximum of 10% of total major units. If a single person/firm can hold 15% of each type of major catering units, all the units can be held by seven persons/firms. Though the Policy has purported been framed to avoid monopoly, as claimed by the opposite parties, it is totally false and incorrect to say that this clause has been introduced in the Police to avoid monopoly.

(ii) Further, though Clause 12.5 of the policy-2005 is having a single para for existing licensees, a separate provision has been made vide Para 14.6.3 to discriminate between licensees existing at the time of issuance of the Policy, i.e., on 16.3.2005, and the licensees under Policy-92. Opposite party Nos. 1, 2, and 4 in their Counter affidavit have stated that the Hon''ble Supreme Court of India in its order dated 29.3.05 has specifically created four categories of caterers, which has been followed and framed in the Policy of 2005. But, the Policy has been framed on 16.3.2005, i.e., earlier to the order passed by Hon''ble Supreme Court on 29.3.05. Thus, the opposite parties are linking the Hon''ble Supreme Court''s order with the 2005 Policy and confusing the whole issue raised by the Petitioner''s Association.

(iii) It is also submitted by the learned Counsel for the Petitioner that the IRCTC came into operation with effect from 12.4.2001 after signing the MOU with the Indian Railway as a corporation and it is an authorized institution to handle all the catering activities. In other words, it may be termed as the main licence to handle all catering activities. As per Clause 12.5, all existing contracts/agreements on Indian Railway will come under the purview of this policy on expiry of such contracts/agreements and as per Clause 12.6, there shall not be any limitation for the licence period. Therefore the expiry term of Agreement/Contract in light of IRCTC is endless and the IRCTC vide Para 12.6 of the Policy will be at liberty to handle the licences granted under the previous policy with regard to renewal and the sub-licensees appointed by them under Policy-2000.

(iv) It is also submitted that as per Clause 14.2, each catering unit will be treated as a separate unit and will have separate licensed stalls/trollies to be allotted to licensees separately and will not be attached with refreshment rooms/stalls. Clause 8 of Policy-92 provides that as far as possible, one licence will be given to one licensee for one station and the same was not prohibited in Policy-2000 and IRCTC granted number of licenses for many stations to one licensee. This clause has been specially created to pick and choose the privileges conferred in respective policies to the existing licensees.

(v) With regard to Clause 14.4, which relates to Eligibility Criteria, learned Counsel contended that opposite party Nos. 1 to 4 in paragraph-43 of their counter have averred that the turnover criteria of 5 crores and 3 crores has been examined by the committee and found to be justified. In this regard, the Petitioner has submitted that while the turnover in respect of Rajdhani & Satabdi trains is well known to the Railways due to inclusion of catering payment in the ticket, i.e., which trains give the turnover of more than 5 crores in a year, or less than 5 crores in the case of weekly Rajdhani trains. But the same criteria of 5 crores turnover is said to be justified for all the trains like Rajdhani & Satabdi Trains. Likewise, a weekly train running with Pantry Car for 52 days in a year shall have a turnover of much less than 3 crores. But the eligibility Criteria has been fixed at 3 crores, which, though found to be justified by the committee, is arbitrary.

(vi) In Clause 14.5(vi) B of the Catering Policy of 2005, it is provided assessment of sales turnover of 200 meals per time for super fast trains and 150 meals for other mail/express trains has been considered to be the criteria for fixation of licence fee, but not in case of eligibility, i.e., 5 crores & 3 crores for Rajdhani and Shatabdi and Mail/Express Trains respectively. In this way, it can be observed that in the policy, for the same purpose, i.e., assessment of sales turnover, dual standard of assessment has been introduced. Take for example a weekly Mail/Express Train running six days in a week leaving one day for mechanical service etc. If we calculate the sales turnover for license fee in a year for 52 lead, it will reach a figure upto 150 meals x 2 times a day x 6 days in a week x 52 weeks x Rs. 30 = Rs. 28.08,000/-. Likewise, the calculation for a long train having 5 rakes, running daily, keeping one day for mechanical maintenance can be read as Rs. 28.08,800 x 5 = Rs. 1,40,40,000/- This calculation/yardstick is estimated by the Railways on the basis of maximum sale per day and the same is the basis of fixing license fee per year. But for eligibility criteria, a turnover of 3 crores, as required in the policy, is contrary to its own Clause 14.5. (vi)-B. In this connection, it is important to mention here that the Railway itself is operating so many Pantry Cars departmentally, which have now been handed over to IRCTC. The turnover of such units, which were being operated by the Railway,must be well known to it.. Considering this, licence fees should have been fixed in the manner stated in the Policy. It is more important to understand the extent of arbitrariness by keeping 5 crores and 3 crores turnover criteria which itself is contradictory to the fixation of eligibility criteria for the same Mail/Express Trains, sale assessment of which is less than 3 crores. Thus, the criteria of fixing turnover is arbitrary and irrational and debars the applicants, who are now operating same type of units satisfactorily, from making applications and taking part in the bid.

(vii) It is further submitted by the learned Counsel that as per Clause 14.6.3., there would be no renewal or extension after expiry of contract. The said Clause in the policy-2005 is contrary to the previous policies-92 and 2000 and framed without any basis except to say to avoid monopoly whereas ceiling limit is 15% for each unit and purpose of Railway is to provide satisfactory services under limited scope of profit to the service provider. Thus the change of the ceiling of licensees upto 15% may lead to one person holding all the licenses as a partner of seven firms. In the process, small licensee are ousted from their business.

(viii) It is also stated that as per Clause 15.7. of Policy-2005, 15.7., 25% reservation of stalls/trolleys with refreshment rooms on ''A'' ''B'' and ''C'' category stations except refreshment rooms on ''A'' class Stations has been made. Similarly, vide Clause 16.2, 49.5% of licences in ''D'', ''E'' and ''F'' category stations have been kept reserved. The break up of 25% in Clause 15.7 is: SC 6%, ST 4%, below poverty line 3%, Freedom fisher/Women including war widows and widows of Railway employees 4%, OBC 3%, minorities 3% and Physically/mentally challenged persons 2%. Likewise, breakup of 49.50% in Clause 16.2 is: SC 12%, ST 8%, OBC 20% and Minorities 9.5%. Compared to the above, in the Policy, 2000, there was no reservation in major units, and as per Clause 15.2 of that policy, there was flat reservation of 25% in all small units. Earlier to that, in policy 1992, reservation was given in accordance with the letters dated 24.6.97 and 2.7.97. These letters refer to the speech of Hon''ble Minister of Railways before the Parliament on 15.5.97 announcing that there would be reservation upto 30% for SC/ST in ratio of 20 and 10 respectively, in case of all units, either major or small (vide Clause 2.1 Para (III) 3 reservation of the said letter).

(ix) It is also stated by the learned Counsel for the Petitioner that Clause 15 relates to system for awarding license in case of small units. This clause relates to ''A'', ''B'' and ''C'' category stations'' stall/trolley with refreshment room except refreshment room on ''A'' Class Station. In this clause, there is 25% reservation vide its Para 15.7 and the rest 75% is for General candidates. Vide its Para 15.6.1, tenure of such licenses is 3 years, where a the same is of 5 years in case of ''D'', ''E'' and ''F'' category of stations, as per Clause 16.3. Moreover, in Clause 15, the provision of renewal after three years is in case of reserved category (25%) only, and for the rest 75%, there is no scope for renewal. The awarding process is also different, that is, by calling applications in case of reserved category and through tender process for the general category (75%). Certainly, stalls/trolleys on the same station, footing and same status and norms are intended to be allotted on the basis of different license fees. In previous policies, i.e., 1992 and 2000, there was flat system of allotment for each category having a tenure of 5 years with renewal clause after satisfactory performance. This policy-2005 is also confusing and leading towards manipulation because of its Clause 15.2.1 denoting that each trolley/stall will be treated as a separate unit, which is contrary to the previous policies-1992 and 2000, in which unit meant a licensee having a group of stalls/trolleys with refreshment rooms awarded to it considering its feasibility and quantum of sale. Thus such criteria inserted in the policy 2005 irrational, arbitrary and it would lead towards manipulation during implementation.

(x) It is also submitted that as per Clause 15.2.1., each catering unit will be treated as a separate unit and stalls/trolleys will be allotted separately and will not be attached with refreshment rooms/stalls, etc.. These lines reveal that the existing licensees, who are having licenses as per the previous policies, will face difficulties due to split up of units as per policy 2005. The single license will, after split in shape of trolley, stalls and refreshment rooms, cause imbalance between the previous units and the units as per policy 2005. Especially, the effect of the existing reservation ratio will lead to pick and choose policy.

(xi) Learned Counsel for the Petitioner has further contended that in Clause 16.3 it is provided that renewal will be done for the existing license only on withdrawal of Court cases by the licensees against the railways and payment of all dues and arrears, which is contrary to law. In reply, Respondents 1,2 and 4 in their counter affidavit have stated that this clause has been inserted in the light of Hon''ble Supreme Court''s order dated 29.3.2005. This statement is quite surprising inasmuch as the date of judgment of the Hon''ble Apex Court is 29.3.05 which is 14 days after the policy 2005 came into effect, i.e., 16.3.2005. How could these Respondents be aware of Hon''ble Supreme Court''s judgment which was passed on 29.3.2005, and introduce this clause in the policy-2005? Further, the judgment of the Hon''ble Supreme Court was pertaining to license fee/arrear in the light of policy-1999, but the term "withdrawal of Court cases" cannot be linked with dues and arrears only. So, the averment made in the counter affidavit is totally false and incorrect. This clause intended to throttle the fundamental rights of the members of the Petitioner association and is violative of Article 14.

(xii) According to the learned Counsel for the Petitioner, clauses 15.2.1 and 16.4 of the policy provide for license fee at the rate of 12%, which was confirmed by Hon''ble Supreme Court in its order dated 29.3.05. Vide letter-dated 19.4.05 of the Railway Board contained in Annexure-11 to rejoinder affidavit, license fee for the milk stalls/parlours run by co-operatives has been fixed at 7%. According to him, since the co-operative operating milk parlours come under the purview of static units like others, all terms and conditions including license fee must be similar, which was confirmed by the Apex Court. As such, the special benefit to a particular class in a manner as provided vide letter dated 19.04.2005 is arbitrary. Further, special provision has been made allotment of the milk parlours at Mumbai, Delhi, Kolkata, Chennai and other cities, i.e., by calling applications. That too, the tenure has been fixed at five years with limitless renewal clause and the licence fee has been fixed at 7%. On the face of the same, small trolleys and stalls on smaller stations in ''F'' category would be allotted through tender process, and the licensees will have to pay 12% license fee. Likewise, license of trolleys at ''A'', ''B'' and ''C'' class stations allotted to General category will have 3 years'' tenure with no renewal clause. Thus, the above clauses of the policy and the letter in continuation are irrational, arbitrary and against Article 14 of the Constitution of India.

In reply, Mr. Sanjit Mohanty, learned Senior Advocate for the opposite parties, has submitted that catering policy, 1992 was superseded by the catering policy of 2000 and the catering policy, 2000 has been superseded by the catering policy, 2005. The policy making authority is competent to lay down as well as modify policies keeping in view the requirements thereof. There is no discrimination or mala fide intention in the policy as laid down by the Ministry of Railways. A licensee cannot lay a claim that his license agreement should be governed by a particular policy and even if the policy stands amended/modified the new policy would not apply to his license agreement. Hence, there is no discrimination or arbitrary action against the Petitioner. He further submitted that so far as eligibility criteria is concerned, the catering policy 2005 provides that the existing licensees, on completion of the tenure and satisfactory performance, can compete and bid for fresh tenure through tendering process even if they did not fulfil the eligibility criteria otherwise (in view Clause 14.4.) This relaxation has been given to existing licensees for units being run by them only and not for other units.

With regard to the requirement of having a minimum annual turnover of Rs. 5.00 crores and Rs. 3.00 crores, the same have been examined by a committee set up by the Ministry of Railways which gave its recommendation on 13.12.2004 and the same were approved by the Member (traffic), Railway Board and ex-officio Secretary to the Government of India on 17.12.2004 and finally approved by the Ministry of Railways on 1.2.2005.

In respect of the renewal of license he has submitted that the Petitioner does not have any vested right for renewal or extension beyond the tenure provided in the license agreement. The Hon''ble Supreme Court after taking into consideration the plea regarding renewal have extended uniformly the existing licenses up to 30.6.2005. The averments in the counter regarding acquiescence, participation in the tender under Catering Policy 2005 and finality of Court cases have not been denied by the Petitioner. Hence in such circumstances the plea of non-grant of renewal is untenable. The question of satisfaction or dissatisfaction in providing catering services is the only relevant factor under the catering policy 2005 as far as the technical eligibility criteria is concerned. His further submission is that by exclusion of renewal clause in the present policy, the Ministry of Railways has taken into consideration not only the provision for the better catering service by allowing competent caterers with sound financial and infrastructural standing to participate in the tender process but also the huge loss of earning that was being sustained earlier by allowing the existing caterers'' renewal as a matter of course. Thus, it is app that the caterers, with vested interest in their attempt to avoid competition and payment to the exchequer, have joined hands and have filed the Writ Petition in the guise of challenging the Policy, 2005 to serve their private interest. He has further contended that out of fourteen members, as mentioned in Annexure-2 to the writ petition, five, i.e. Serial Nos. 8, 9, 10, 13 and 14 were holding major units (pantry cars). Out of the mobile units/pantry cars held by Serial Nos. 8, 9, 10, 13 and 14, almost all were allotted to them under the Catering Policy, 1992. The amendment dated 24.7.2001 and 22.10.2001 effected on Policy 2000 curtailed the renewal clause. The same, though challenged, was also not interfered with by any Court. All the mobile units/pantry cars held by Serial Nos. 8, 9, 10, 13 and 14 under the Catering Policy 1992 were given ad hoc extension, as directed by Hon''ble Supreme Court in its order dtd. 29.3.2005. The Hon''ble Supreme Court, after taking into consideration the plea regarding renewal, have extended uniformly the existing licenses up to 30.6.2005.

It is further submitted by Sri Mohanty that the amendments dated 24.7.2001 and 22.10.2001 are not the subject-matter of challenge before this Court. The only challenge is non-inclusion of renewal clause. No reason has been given to show as to how the non-inclusion of renewal clause is arbitrary. The Petitioner does not have any vested right for renewal or extension beyond the tenure provided in the license agreement.

We regard to reservation, he has contended that the reservation in major units was not there in Catering Policy 2000. The reservation criteria for various projects was fixed by the Ministry of Railways. Reservation in the major units have not been provided in the Policy-2005 keeping in view better services. Moreover, reservations in these sectors in this form of trade is also not the mandate of the Constitution. Non-reservation in the major trains and on ''A'', ''B'', and ''C'' category stations is the conscious decision of the Railway Board in its wisdom as the policy maker and is in the general interest of the traveling public.

According to him, there is no cause of action arising within the territorial jurisdiction of this Court, particularly when the decision for awarding tender and issuance of notice inviting tender are undertaken by the IRCTC, which is the licensing authority and controlling authority and is based at Delhi. The policy-maker, i.e. the Railway Board, is also at Delhi. The caterers having vested interest to avoid open competition and payment of revenue to Government exchequer, in the guise of challenging the Policy of 2005 are trying to frustrate the notice inviting tenders already issued and to keep the competent bidders out of the fray and also to have a monopoly over the catering business. It is also relevant to mention that many tenders have been issued pursuant to 2005 Policy and some of them have already been finalized. Now, at this stage, to upset the process already initiated for improved catering services, as envisaged under 2005 Policy, will not only be against the general interest of the traveling public but also will sub-service the vested interest of some particular caterers, who want to have monopoly in this sector. The Petitioner association was created and registered on 23.9.2005, just before filing of the present writ petition, to maintain the writ petition with vested interest.

The caterers mentioned at Serial Nos. 8, 9, 10, 13 and 14 are all caterers providing service in the trains not even originating and/or terminating in the State of Orissa. The area of their operation is also outside the State of Orissa. In respect of the caterers mentioned in Serial Nos. 13 and 4, though an addresses have been given within the State of Orissa, their area of operation pertains to Western and Northern Railway. Further, the major caterers are yet to be the license-holders under the Catering Policy 2005. Therefore there is no cause of action for the aforementioned caterers.

He has further submitted that the amendments dtd. 24.7.2001 and 22.10.2001 effected on Policy 2000 curtained the renewal clause. The same was also not interfered with by any Court though challenged. It is crystal clear on a bare perusal of the Policy 2000 and the present Policy of 2005 that there is no major changes in respect of extension and reservation. Under the above circumstances the Policy of 2005 cannot be challenged as unconstitutional.

A number of decisions have been cited by the learned Counsel for the parties, which are to be discussed in the latter part of the judgment. It is not disputed that the Railway Catering Policy of 2005 was not challenged before any Court. It appears that a number of Writ Petitions challenging the Catering Policy of 2005 were filed in other High Courts, but the same were dismissed as withdrawn.

Now, we have to consider whether the Hon''ble Apex Court has considered the policies of 1992, 1999, 2000 and 2005 in its judgments referred to by the learned Counsel for the opposite parties. The SL Ps filed against the order of Delhi High Court granting compensation to the Petitioner before it, namely, M/s. Bharat Catering Corporation, which were converted to Civil Appeals, the leading one being No. 1327 of 2003 were decided by the Hon''ble Supreme Court by order dated 15.3.2005 when the parties consented to set aside of the judgment of the Delhi High Court. The Hon''ble Supreme Court directed that the Respondents be continued to operate up to 30.9.2005 as per the ad hoc renewed licence policy. The Appellants of the Civil Appeals were granted liberty to issue fresh policy with effect from 01.10.1995 as per the policy applicable and the Respondents would be at liberty to participate in the process of granting license. All this was due to the agreement of the parties to set aside the judgment of the Delhi High Court. Therefore, it cannot be said that validity of the Policy of 2005 or any other policy was considered by the Hon''ble Apex Court while passing the above order. Further, in Civil appeal No. 4899 of 2002 along with other Civil Appeals filed against the judgment of the Kerala High Court, the Hon''ble Apex Court has made observation to the effect that challenge to Catering Policy, 1999 and Catering Policy, 2000 was not seriously pressed. The relevant part of the judgment of the Hon''ble Apex Court is quoted hereunder:

During the course of argument challenge to the Catering Policy of 1999 and Catering Policy of 2000 was not seriously pressed. Because of the pendency of the appeal in this Court, the Indian Railways/IRCTC did not grant new licenses but renewed the license of the existing licensees on ad hoc basis the term of which has not expired. The only point which has been raised by the Counsel for the Appellants is that the Appellants may not be summarily asked to wind up their business thereby causing a considerable financial loss to them. Keeping in view the interest of the existing operators as well as the interest of general public so that no disruption is caused to the catering services, we asked the respective Counsel appearing for IRCTC and Indian Railways to continue with the existing licensees till alternate arrangements are made under the new policy and to give them sufficient time to wind up their business. In the meantime, the Indian Railways/IRCTC may make alternate arrangements by inviting fresh bids as per the existing policy.

In view of the above quoted order it is clear that the catering policy, 1999/2000 was not seriously pressed and therefore it cannot be said that this Court has no jurisdiction to consider the validity of new catering policy of 2005 because of the reason that the Hon''ble Apex Court has ordered that the Indian Railway/IRCTC make an ultimate arrangement by inviting fresh bids as per the existing policy.

It is always expected that the Indian Railways/IRCTC would frame a valid Catering Policy which would not be an arbitrary, discriminatory or beyond legitimate expectation.

In the case of Union of India and others Vs. Hindustan Development Corpn. and others, their Lordships of Supreme Court have taken into consideration the decision of the House of Lords in council of Civil Service Unions v. Minister of Civil Service reported in (1984) 3 All E.R. 935 in which it has been held that an aggrieved person was entitled to judicial review if he could show that a decision of the public authority has affected him some benefit of advantage which in the past he had been permitted to enjoy and which he legitimately expected to be permitted to continue to enjoy either until he was given reasons for withdrawal and the opportunity to comment on such reasons.

Further their Lordships have observed that the doctrine of legitimate expectation imposes in essence a duty on public authority to act fairly by taking into consideration all relevant factors relating to such ''legitimate expectation''.

It has also been held that within the conspectus of fair dealing ''legitimate expectation'' the reasonable opportunities to make representation by the parties likely to be affected by any change of consistent past policy come in.

In Halsbury''s Laws of England- Fourth Edition Volume 1(1) at page 151, a passage explaining the scope of legitimate expectation was mentioned by their Lordships as under:

The existence of ''legitimate expectation'' a person may have a legitimate expectation of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise either from a representation or promise made by the authority including and implied representation or from consistent past practice.

The existence of a legitimate expectation may have a number of different consequences; it may give locus standi to seek leave to apply for judicial review, it may mean that the authority ought not to act so as to defeat the expectation without some overriding reason of public policy to justify its doing so; or it may mean that, if the authority proposes to defeat a person''s legitimate expectation, it must afford him an opportunity to make representations on the matter. The Courts also distinguished for example in licensing cases, between original applications, applications to renew and revocations; a party who has been granted a license may have a legitimate expectation that it will be renewed unless there is some good reason not to do so and may therefore be entitled to greater procedural protection than a mere applicant for a grant. Their Lordship have also observed that administration action is object to control by judicial review under three heads: (1) illegality, where the decision-making authority has been guilty of an error of law, e.g. by purporting to exercise a power it does not possess; (2) irrationality, where the decision-making authority has acted so reasonably that no reasonable authority would have made the decision;(3) procedural impropriety, whether the decision-making authority has failed in its duty to act fairly.

In the case of Punjab Communications Ltd. Vs. Union of India and Others, , the Hon''ble Apex Court considered many questions, one of which was, if initially the Government decided to fund the proposed contract for Eastern U.P. from its own resources, whether it was permissible for the Government to change its policy into one for providing telephones for rural areas in the entire country and whether the "legitimate expectation" of the Appellant in regard to the earlier notification required the Supreme Court to direct that the notification for Eastern U.P. should be continued ? The Apex Court has held that the principle of "legitimate expectation" is still at a stage of evolution. The principle is at the root of the rule of law and requires regularity, predictability and certainty in the Government''s dealings with the public. The procedural part of it relates to a representation that a hearing or other appropriate procedure will be afforded before the decision is made. The substantive part of the principle is that if a representation is made that benefit of substantive nature may be granted or if the person is already in receipt of the benefit that it will be continued and not to be substantially varied, and the same should be enforced. The doctrine of legitimate expectation in the substantive sense has been accepted as part of our law. The decision-maker can normally be compelled to give effect to his representation in regard to the expectation based on previous practice or past conduct unless some overriding public interest comes in the way.

Every person has a right to approach appropriate forum in case of infringement of his fundamental rights or in case he is dealt with otherwise than in accordance with law. It is immaterial whether the association is an old association or has been formed for the purpose of finding out a way for redressal of its grievances.

There is the East Coast Railway, which is a part of Indian Railway, within the territory of Orissa. The Petitioner being an association having its office at Cuttack and the Catering Policy of 2005 being equally applicable to it within the territory of Orissa State, this Court has jurisdiction to consider the validity of the policy of 2005, which has not been considered by any Court so far.

Mr. Sanjit Mohanty, Learned Counsel for the opposite parties, has pointed out that some of the members of the association mentioned as per SI. Nos. 8, 9, 13 and 14 of the list have participated in the process of awarding contract for services in some trains and some of them have already been given contracts. As such, it is not open to them to challenge the validity of Catering Policy, 2005. In this regard, we may notice that the Petitioner has challenged so many clauses of Catering Policy of 2005, one of which is clause-8, which imposes ceiling limit of holding units. This clause provides that a Firm/Company or an individual can hold maximum 15% units of each type of major catering units subject to a maximum of 10% of the total major units. According to the Petitioner, if the said provision is followed, catering in all mobile units in the India Railways can be held by 7 persons/Firms. They are also deprived of holding more than 15% units. Therefore, if some members of the Petitioner have participated in the process of award of contract for a particular unit, they cannot be debarred to challenge the validity of Catering Policy of 2005. However, they cannot challenge the contract awarded in their favour in which they participated.

Although the contention of Mr. Mohanty, learned Counsel for the opposite parties, is sustainable in the eye of law, there are so many other contentions raised on behalf of the Petitioner related to the rights of citizen to carry on any profession, occupation, trade or business, the same being their fundamental right as enshrined in Article 19(1)(g) of the Constitution of India. No doubt, reasonable restrictions may be imposed in view of clause -2 of Article - 19 but it is for the Court to see the degree of reasonableness. Therefore, this Court has jurisdiction to see whether restrictions imposed on a person are reasonable or not.

A bunch of writ petitions was decided by this Court, the leading case of which was Jagadish Prasad Jaiswal v. State of Orissa and Ors. reported in 1993 (II) O.L.R. 478, in which it has been held that policy decision has to satisfy the test of reasonableness and must also appear to be a reasoned decision and advance public interest.

In the case of G.B. Mahajan and others Vs. The Jalgaon Municipal Council and others, , it has been held by the apex Court that in the arguments there is some general misapprehension of the scope of ''reasonableness'' test in administrative law. By whose standards of reasonableness a matter is to be decided ? Some phrases which pass from one branch of law to another as did the expressions ''void'' and ''voidable'' from private law areas to public law situations - carry over with them meanings that may be inapposite in the changed context Some such thing has happened to the words ''reasonable'', ''reasonableness'', etc.

Further the apex Court in that case has held that yet another area of reasonableness which must be distinguished in the constitution standards of "reasonableness" of the restrictions on the fundamental rights of which the Court of judicial review is the arbiter.

It has been further held that ''reasonableness'' in administrative law must, therefore, distinguish between proper use and improper abuse of power. Nor is the test the Court''s own standard of ''reasonableness'' as it might conceive it in a given situation.

In the case of State of Himachal Pradesh and Another Vs. Padam Devi and Others, , the apex Court held that the framing of administrative policy is within the exclusive realm of the executive and its freedom to do so is, as a general rule, not interfered with by Courts unless the policy decision is "demonstrably capricious or arbitrary and not informed by any reason whatsoever to it suffers from the vice of discrimination or infringes any statute or provisions of the Constitution.

Learned Counsel for the Petitioner has referred the case of Union of India and Ors. v. Dinesh Engineering Corporation and another, reported in (2001) 8 S.C. 491, in which the Hon''ble apex Court held in paragraphs 12 and 16 as under:

A perusal of the said letter shows that the board adopted this policy keeping in mind the need to assure reliability and quality performance of the governors and their spare parts in the context of sophistication complexity and high degree of precision associated with governors. It is in this background that in para (i) the letter states that the spares should be procured on proprietary basis from EDC. This policy proceeds on the hypothesis that there is no other supplier in the country who is competent enough to supply the spares required for the governors used by the Indian railways without taking into consideration the fact that the writ Petitioner has been supplying these spare parts for the last over 17 years to various divisions of the Indian Railways which fact has been established by the writ Petitioner from the material produced both before the High Court and this Court and which fact has been accepted by the High Court. This clearly establishes the fact that the decision of the Board as found in the letter dated 23.10.1992 suffers from the vice of non-application of mind. On behalf of the Appellants, it has been very seriously contended before us that the decision vide letter dated 23.10.1992 being in the nature of a policy decision, it is not open to Courts to interfere since policies are normally formulated by experts on the subjects and the Courts not being in a position to step into the shores of the experts, cannot interfere with such policy matters. There is no doubt that this Court has held in more than one case that where the decision of the authority is in regard to a policy matter, this Court will not ordinarily interfere since these policy matters are taken based on expert knowledge of the persons concerned and Courts are normally not equipped to question the correctness of a policy decision. But then this does not mean that the Courts have to abdicate their right to scrutinize whether the policy in question is formulated keeping in mind all the relevant facts and the said policy can be held to be beyond the pale of discrimination or unreasonableness, bearing in mind the material on record. It is with this limited object if we scrutinize the policy reflected in the letter dated 23.10.1992, it is seen that the Railways took the decision to create a monopoly on proprietary basis on EDC on the ground that the spares required by it for replacement in the governors used by the Railways required a high degree of sophistication, complexity and precision and in the background of the fact that there was no party other than EDC which could supply such spares. There can be no doubt that an equipment of the nature of a spare part of a governor which is used to control the speed in a diesel locomotive should be a quality product which can adhere to the strict scrutiny/standards of the Railways, but then the pertinent question is: has the Board taken into consideration the availability or non-availability of such characteristic in the spare parts supplied by the writ Petitioner or, for that matter, was the Board alive to the fact that like EDC the writ Petitioner was also supplying the spare parts as the replacement parts for the GE governors for the last over 17 years to the various divisions of the Railways? A perusal of the letter dated 23.10.1992 does not show that the Board was either aware of the existence of the writ Petitioner or its capacity or otherwise to supply the spare parts required by the Railways for replacement in the governors used by it, an ignorance which is fatal to its policy decision. Any decision, be it a simply administrative decision or a policy decision, it taken without considering the relevant facts, can only be termed as a arbitrary decision. If it is so, then be it a policy decision or otherwise, it will be violative of the mandate of Article 14 of the Constitution.

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But then as has been held by this Court in the very same judgment that a public authority even in contractual matters should not have unfettered discretion and in contracts having commercial element even though some extra discretion is to be conceded in such authorities, they are bound to follow the norms recognized by Courts while dealing with public property. This requirement is necessary to avoid unreasonable and arbitrary decision being taken by the public authorities whose actions are amenable to judicial review. Therefore, merely because the authority has certain elbow room available for use of discretion in accepting offer in contracts, the same will have to be done within the four corners of the requirements of law, especially Article 14 of the Constitution. In the instant case, we have noticed that apart from rejecting the offer of the writ Petitioner arbitrarily, the writ Petitioner has now been virtually debarred from competing with EDC in the supply of spare parts to be used in the governors by the Railways, ever since the year 1992, and during all this while, we are told the Railways are making purchases without any tender on a proprietary basis only from EDC which, in our opinion, is in flagrant violation of the constitution mandate of Article 14. We are also of the opinion that the so-called policy of the Board creating monopoly of EDC suffers from the vice of non-application of mind, hence, it has to be quashed as has been done by the High Court.

In the case of Union of India (UOI) and Another Vs. International Trading Co. and Another, it has been held by the Apex Court that Doctrines of promissory estoppel and legitimate expectation cannot come in the way of public interest, which has to be prevail over private interest.

It has further held that it is trite law that Article 14 of the Constitution applies also to matters of governmental policy and if the policy or any action of the Government, even in contractual matters, fails to satisfy the test of reasonableness, it would be unconstitutional. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities and adopt trade policies. The ultimate test is whether on the touchstone of reasonableness the policy decision comes out unscathed.

Learned Counsel for the Petitioner has placed reliance in the case of Bannari Amman Sugars Ltd. Vs. Commercial Tax Officer and Others, , wherein it has held that a person may have a "legitimate expectation" of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise either from a representation or promise made by the authority, including an implied representation or from consistent past practice. The doctrine of legitimate expectation has an important place in the developing law of judicial review.

Paragraph 9 of the said decision of the Apex Court is quoted as under:

While the discretion to change the policy in exercise of the executive power, when not trammelled by any statute or rule is wide enough, what is imperative and implicit in terms or Article 14 is that a change in policy must be made fairly and should not give the impression that it was so done arbitrary or by any ulterior criteria. The wide sweep of Article 14 and the requirement of every State action qualifying for its validity on this touchstone irrespective of the field of activity of the State is an accepted tenet. The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbear of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for discernible reasons not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualized than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasonableness.

In the case of State of M.P. and Others Vs. Nandlal Jaiswal and Others, , it was observed that the Court cannot strike down a policy decision taken by the State Government merely because it feels that another policy decision would have been fairer or wiser or more scientific or logical. The Court can interfere only if the policy decision is patently arbitrary, discriminatory or mala fide.

In the case of Peerless General Finance and Investment Co. Limited v. Reserve Bank of India, reported in AIR 1992 SCW 854, it was held that the function of the Court is to see that lawful authority is not abused but not to appropriate to itself the task entrusted to that authority. It is well settled that a public body invested with statutory powers must take care not to exceed or abuse its power. It must keep within the limits of the authority committed to it. It must act in good faith and it must act reasonably..... The avowed policy of the Government particularly from the point of view of public interest is to prohibit concentration of economic power and to control monopolies so that the ownership and control of the material resources of the community are so distributed as best to subserve the common good and to ensure that while promoting industrial growth there is reduction in concentration of wealth and that the economic power is brought about to secure social and economic justice.

In the case of Food Corporation of India v. Kamdhenu Cattle Feed Industries, reported in AIR 1993 SCW 1509, it was observed by the apex Court that in the contractual sphere, as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non-arbitrariness is a significant facet. There is no unfettered discretion in public law. A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure which is ''fair'' play in action''. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the State and its instrumentalities, with this element forming a necessary component of the decision-making process in all State actions. To satisfy this requirement of non-arbitrariness in a State action, it is, therefore, necessary to consider and give due weight to the reasonable or legitimate expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bona fides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power as it is unrealistic, but provides for control of its exercise by judicial review.

It has been further observed in the above case that the mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of a legitimate expectation form part of the principle of non-arbitrariness, a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision-making process. Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant''s perception but in large public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bona fide decision of the public authority reached in this manner would satisfy the requirement of non-arbitrariness and withstand judicial scrutiny. The doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this extent.

We have noticed Clause 14.4. of the catering policy 2005, in which the eligibility criteria has been given. In the eligibility criteria for different units, the minimum annual turnover of the applicant in the catering/hospitality and F.B. services related business has been mentioned. Therein it is prescribed Rs. 5 crores per annum for mobile catering on Rajdhani/Shatabdi Express Trains, Rs. 3 crore per annum for mobile catering on other mail/Express trains, Rs. 1 crore per annum for restaurants/refreshment rooms at class ''A'' stations, etc. For the existing licensees, it has been provided that they would be eligible to participate in tender in respect of the concerned units held by them even if they did not fulfil the prescribed turnover criteria for the said catering unit provided the concerned licensee would have rendered satisfactory catering services in Railways for at least five years, but they would not be allowed to participate in the tender other than the respective units held by them. Regarding Clause-8 of the Catering Policy of 2005, restriction has been imposed that a firm/company or an individual can hold maximum 15% unit of each type of major catering units subject to of 10% of total major units. This restriction has been imposed to avoid monopoly. We have already discussed above that reasonable restriction can be imposed and as the opposite parties have imposed such restriction to avoid monopoly, it cannot be said that the same is arbitrary, illegal or discriminatory.

Now, we may come to the reservation provided for Scheduled Castes and Scheduled Tribes partially in the catering policy of 2005. It is not disputed that in the Constitution of our country, there is no provision to compel the State to make reservation for the Scheduled Castes and Scheduled Tribes in the matters other than services/appointment But, in Clause (4) of Article 15, the State has been given liberty for making special provisions for advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and Scheduled Tribes. On one hand, Article 15 of the Constitution provides that the State shall not discriminate against any citizen on grounds only of religion, race, caste, sex and place of birth or any of them and that no citizen shall, on grounds of religion race, caste, sex, place of birth or any of them, be subject to any disability, liability, restriction or condition with regard to access to shops, public restaurants, hotels and places of public entertainment. On the other, it has also been provided therein that nothing in that article shall prevent the State from making any special provision for women and children or for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes. Therefore, if the State makes a provision for reservation for the Scheduled Castes and the Scheduled Tribes in any manner other than service matter also, that cannot be said to be discriminative. But, once the State has chosen to provide reservation for the Scheduled Castes and Scheduled Tribes under a policy, the same cannot be applicable partly. The reservation for Scheduled Castes and Scheduled Tribes is to be applicable uniformly in the policy. It would be discriminative if the Policy provides reservation for the Scheduled Castes and Scheduled Tribes partially, meaning thereby that while awarding contract or inviting bids under a Policy, a person belonging to the Scheduled Castes or Scheduled Tribes cannot be denied to participate in any part for non-applicability of the reservation clause to that part. Under the Catering Policy, 2005, reservation has been provided to a part only. According to Article-46 (directive principle of State policy), it is the obligation of the State to promote with special care the educational and economic interest of "the weaker Sections of the people", and in particular, "of the Scheduled Castes and Scheduled Tribes".

In the case of State of Uttar Pradesh Vs. Dr. Dina Nath Shukla and another, , it has been held by the apex Court that when there is a clash of interests and competing claims, there is a craving for equality of opportunity amongst the people and for emancipation from the pangs of absolute prohibition, Articles 15(2) to (4), 16(4) & (4-A) read with the Directive Principles, poured forth practical content, softened the rigour of legal equality and gave practical content of equality of opportunity resulting in distributive justice in favour of unequals to hold an office or post under the State in the democratic governance.

These articles give power to the State to make positive discrimination in favour of the disadvantaged, in particular the Dalits and Tribes. Socio-economic empowerment secures them dignity of person and equality of status.

The apex Court further held in that case that social equality gets realized through facilities and opportunities given to them to live with dignity and equal status in the society. Economic equality also gives socio-economic empowerment as a measure to improve excellence in every walk of life.

In the case of Ashok Kumar Gupta and Another Vs. State of U.P. and Others, , the apex Court held that the right to equality, dignity of person and equality of status and of opportunity are fundamental rights to bring the Dalits and the tribes into the mainstream of the national life.

In the case of Mrs. Valsamma Paul Vs. Cochin University and others, , the Hon''ble Supreme Court has observed that the meaning of social democracy is a way of life which recognizes liberty, equality and fraternity as principles of life. They are not separate items in a trinity but they form union of trinity. To diverse one from the other is to defeat the very purpose of democracy. Without equality, liberty would produce the supremacy of the few over the many. Equality without liberty would kill individual initiative. Without fraternity, liberty and equality could not become a natural course of things. Articles 15(4) and 16(4), therefore, intend to remove social and economic inequality to make equal opportunities available in reality. Social and economic justice is a right enshrined for the protection of society.

The right to social and economic justice envisaged in the Preamble and elongated in the Fundamental Rights and Directive Principles of the Constitution, in particular, Articles 14, 15, 16, 21, 38, 39, and 46 of the Constitution, are to make the quality of the life of the poor, disadvantageous and disabled citizens of the society, meaningful.

Learned Counsel for the Petitioner has also submitted that a Parliamentary Standing committee of the Railway, which has examined the catering policy of 2005, has presented a report in the House of Lok Sabha on 30th August 2005 and the said report of the standing committee has vindicated the stand of the Petitioner and has observed that certain clauses of the provisions of the policy are unreasonable, unfair, unjustified and against the public interest and need to be reviewed. The committee has further observed that some of the provisions of the catering policy of 2005 directly strike at the livelihood of small caterers vendors.

This Court is not concerned if the Parliamentary Standing Committee on Railways has made a report either in the Houses of Lok Sabha or in the house of Rajya Sabha. Therefore the same is not liable to be considered by this Court.

Considering the rival submissions of the parties and in view of the facts and circumstances discussed above, this writ petition is disposed of with the direction to the opposite parties to amend the relevant clauses of the catering policy of 2005 in respect of the reservation for the Scheduled Castes, Scheduled Tribes and the persons of other categories suitably, so that the reservation policy is applicable uniformly to all the units and thereafter to finalise the contract or handover the same under that policy. However, pending finalisation of the relevant clauses of catering policy of 2005, it will be the duty of the opposite parties to ensure that there may not be any inconvenience to the travelling public.

P. Mohanty, J.

I agree.