Authority: Madras High Court

Order Date: 16 September 2026

Case Overview

  • Parties: petitioner – M/s Sopan Restaurant, a partnership firm operating five static refreshment units at Erode, Chennai‑Egmore, Salem, Thrissur and Tirunelveli; respondent – Indian Railway Catering and Tourism Corporation Ltd (IRCTC).
  • Background: Under the Indian Railways Catering Policy 2017, licences for static units are awarded through tender. The petitioner was awarded licences on 20 September 2019 with the following quoted licence fees:
  • Erode (ED): Rs 45,11,800
  • Chennai‑Egmore (MS): Rs 1,05,10,800
  • Salem (SA): Rs 45,11,800
  • Thrissur (TCR): Rs 49,49,800
  • Tirunelveli (TEN): Rs 40,11,800
  • Subsequent Developments: IRCTC issued Commercial Circular No. 64 (12 Dec 2019) revising tariffs for standard meals and directing a sales‑assessment‑based licence‑fee revision. An order dated 12 Sep 2022 introduced a formula whereby the licence fee would be 12 % of assessed sales turnover or the quoted fee, whichever is higher. The petitioner alleged the formula was arbitrary and contrary to the 2017 Catering Policy.
  • Demand Notices: After the tariff hike, IRCTC demanded additional licence fees:
  • Chennai‑Egmore: Rs 1,29,181
  • Erode: Rs 27,20,282
  • Salem: Rs 6,06,740
  • Thrissur: Rs 12,46,556
  • Tirunelveli: Rs 11,21,141

A further demand of Rs 29,40,094 was raised on 19 Jul 2023 as outstanding balance.

  • Outstanding Balance Table (as per IRCTC):

| Unit | Period | Licence Fee & GST Claim | Realised | Outstanding |

| RR/MS (Chennai‑Egmore) | 28‑Oct‑2023 to 27‑Oct‑2024 | Rs 1,31,62,908 | Rs 63,95,314 | Rs 62,09,844 |

| RR/TCR (Thrissur) | 13‑Nov‑2023 to 12‑Nov‑2024 | Rs 61,98,747 | Rs 34,10,998 | Rs 27,87,749 |

| RR/ED (Erode) | 13‑Feb‑2023 to 12‑Feb‑2024 | Rs 29,26,418 | Rs 21,02,418 | Rs 8,24,000 |

| Total Outstanding | – | – | – | Rs 98,21,593 |

  • Petition Contentions: The petitioner argued that (i) Circular No. 64 (2019) violated the 2017 Catering Policy; (ii) the 12 Sep 2022 formula was irrational, lacked nexus, and resulted in licence fees exceeding the 12 % cap; (iii) the arbitration clause in the licence should render the writ non‑maintainable.
  • Respondent’s Position: IRCTC contended that the formula was scientific, based on a 61.29 % tariff hike for standard items weighted at 40 % of sales, yielding an interim 25.12 % licence‑fee increase, later adjusted; the arbitration clause did not bar the writ because the order was a statutory exercise; honourable exit options were offered; and the formula complied with Clause 2.1.9 of the tender.
  • Court’s Reasoning:

1. The petitioner abandoned the challenge to Circular No. 64 during arguments; only the 12 Sep 2022 order was considered.

2. The arbitration clause does not preclude judicial review where the order is an exercise of statutory power, not merely contractual enforcement.

3. Clause 2.1.9 (menu/tariff changes) permits licence‑fee revision on a pro‑rata basis; Clause 2.3.2 (sales‑turnover assessment) applies only to assessment‑based fees and does not limit the power under Clause 2.1.9.

4. In case of conflicting clauses, the earlier clause prevails; here, Clause 2.1.9 is earlier and governs the fee revision.

5. The formula, applied uniformly across zones, is not arbitrary; the petitioner was offered refunds of interim fees and an honourable exit, mitigating any prejudice.

  • Final Outcome: The writ petition (WP 33623 of 2023) and the connected miscellaneous petitions were dismissed. No costs were awarded.

Topics: License Fee Dispute, Railway Catering