‘Right to earn’ can’t shield poor service: Telangana HC rejects railway caterer’s plea against tea stall licence termination

Repeated non-compliance

Deputy Solicitor General N Bhujanga Rao, representing the Centre as well as the South Central Railway, contended that renewal of licence is not a matter of right either under Article 2.2 of the Master Licence Agreement or under Point No. 17 of the Catering Policy-2010, and it was strictly subject to satisfactory performance of the licensee during the tenure of the contract.

Further, he submitted that during the licence period between July 2022 and July 2025, penalties were imposed on the petitioner on six occasions for deficiencies, including overcharging and deviation from service standards. He submitted that in several instances the petitioner delayed payment of penalties, thereby committing breach of contractual obligations.

Rao argued that the petitioner’s explanation to the show-cause notice issued to him was unsatisfactory, as it failed to justify repeated non-compliance and unsatisfactory operational performance. Consequently, the contract was terminated by the competent authority on November 21, 2025, as per paragraph 17.1 of the Catering Policy-2010.

He placed reliance on inspection reports and public complaints, and added that rejection of renewal and termination of contract was effected to ensure accountability, maintain public confidence, and safeguard the interests of passengers using railway premises. He also informed the court that the petitioner has not been blacklisted or debarred and continues to be eligible to participate in future catering tenders.

Plea ‘devoid of merits’

Justice Bheemapaka noted that the petitioner has admittedly suffered penalties on more than five occasions, which, under Para 17.1 of the Catering Policy-2010, mandates rejection of renewal. The court also dismissed the petitioner’s contention that the show-cause notice and termination order contain identical reasoning and observed that it does not vitiate the decision when the record discloses objective material, inspection reports, penalty records and contractual breaches. “The decision is traceable to statutory policy provisions and contractual clauses, and therefore cannot be termed arbitrary or non-speaking,” the court remarked.

While stressing that paragraph 17.1 of the Catering Policy-2010 clearly prescribes imposition of fines or warnings on more than five occasions as a disqualifying factor, the court pointed out that the termination pertains only to the present licence and is based on documented unsatisfactory performance. The petitioner has not been blacklisted or debarred and he remains eligible to participate in future tenders, the court recalled.

“The action of respondents is justified in the light of the Catering Policy-2010, Master Licence Agreement, Commercial Circular No. 22 of 2017, inspection records, penalty history and due process,” the judgment read. The court found no arbitrariness, mala fides or violation of Articles 19(1)(g), 21 or 39 of the Constitution and dismissed the petition as devoid of merits.