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Express Food Services vs. Indian Railway Catering and Tourism Corporation Limited

Arbitration Petition · 2026:DHC:7993Decided 17 Sept 2026New Delhi Bench
ARB.P. 1664/2026CNR: DLHC010440642026
Justice Sachin Datta

Background

A catering firm that had been awarded 11 railway catering contracts by IRCTC found itself facing termination of all contracts, forfeiture of its fees and deposits, and a three-year ban, after food safety certificates it had submitted (procured through an intermediary) were cancelled for lack of follow-up "surveillance." The firm disputed IRCTC's show-cause notice and, when disputes could not be resolved, sought to invoke arbitration under the contract's arbitration clause, but that clause required the arbitrator to be picked only from IRCTC's own pre-approved panel of arbitrators.

Decision Breakdown

The Court held that requiring one party (the private contractor) to select its arbitrator only from a panel curated unilaterally by the other party (a government body) violates the fundamental principle of equal treatment between parties in arbitration, per recent Supreme Court law (Central Organisation for Railway Electrification v. ECI SPIC SMO MCML). Even IRCTC's own counsel, the Solicitor General, agreed an independent arbitrator should be appointed instead of relying on the flawed panel clause. The Court therefore appointed a retired Delhi High Court judge as the sole, independent arbitrator to decide the dispute.

Lesson Learnt

An arbitration clause that forces one side to pick its arbitrator only from a list controlled entirely by the other party, common in government and PSU contracts, is now treated as legally invalid; parties facing such a clause can approach the High Court to get an independent arbitrator appointed instead.

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