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2026 DIGILAW 47 (TS)

Shaik Khadar Basha v. Union Of India, Rep. BY THE Chief Executive Officer-Cum-Chairman

2026-01-08

NAGESH BHEEMAPAKA

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ORDER : NAGESH BHEEMAPAKA, J. 1. Petitioner states that he has been earning his livelihood solely through railway catering licences. He previously held platform stalls at various railway stations and was awarded a Special Minor Unit Tea Stall No. SMU/018 on Platforms 4 and 5 at Kacheguda Railway Station with effect from 10.09.2016. He was also awarded a General Minor Unit licence at Guntakal Railway Station with effect from 19.07.2018. It is stated, notifications issued under Catering Policy, 2010 were challenged by the SCR Caterers, Dry Fruits, Fruit Juice Stalls Welfare Association and others in Writ Petition Nos. 14577, 14888 and 15072 of 2013. By order dated 16.08.2013, this Court held that existing licensees were entitled to consideration for renewal subject to policy conditions, which order was confirmed by the Division Bench on 12.09.2013 in Writ Appeal Nos. 1573, 1574 and 1575 of 2013. 1.1. The Hon’ble Supreme Court in Civil Appeal Nos. 618–620 of 2016 arising out of SLP (C) Nos. 9921–9923 of 2014, by judgment dated 29.01.2016, held that denial of renewal was arbitrary and it affected the right to livelihood of licensees solely dependent on such units. The Court clarified that renewal would be available only to those holding a single unit and declaring the same on affidavit. It is stated further, subsequently, the Ministry of Railways issued Catering Policy, 2017 vide Commercial Circular No. 20 of 2017 dated 27.02.2017, revising the tenure of units to five years without renewal. In compliance with the Supreme Court judgment, Commercial Circular No. 22 of 2017 dated 15.03.2017 was issued, permitting renewal of a single retained minor unit after surrender of other units, subject to conditions specified therein. 1.2. At the time of issuance of Commercial Circular No. 22 of 2017, petitioner held the Tea Stall licence at Kacheguda Railway Station and a GMU licence at Guntakal Railway Station. The Tea Stall licence was awarded vide Letter of Award dated 28.07.2016 under Special Minor Units – Minorities quota, commenced on 10.09.2016 and was initially valid till 09.09.2021. Due to Covid-19, a dies-non period of 323 days was granted and the licence was extended up to 29.07.2022. The Tea Stall licence was awarded vide Letter of Award dated 28.07.2016 under Special Minor Units – Minorities quota, commenced on 10.09.2016 and was initially valid till 09.09.2021. Due to Covid-19, a dies-non period of 323 days was granted and the licence was extended up to 29.07.2022. To comply with Commercial Circular No. 22 of 2017, petitioner surrendered the GMU licence at Guntakal Railway Station, which was valid from 19.10.2018 to 18.10.2023 and the said surrender was accepted by the Senior Divisional Commercial Manager, Guntakal Division, and the GMU licence was surrendered with effect from 18.02.2022. After submission of required documents pursuant to letter dated 10.03.2022, the Tea Stall licence at Kacheguda was renewed for three years from 30.07.2022 to 29.07.2025, and an agreement dated 18.11.2022 was executed specifically referring to Railway Board letter dated 15.03.2017, Commercial Circular No. 22 of 2017. 1.3. Before expiry of the renewed period, petitioner applied for further renewal for three years vide letter dated 13.12.2024 and again on 08.05.2025 due to no response. He was permitted to continue operating the Tea Stall beyond 29.07.2025, creating a legitimate expectation of renewal in terms of policy. However, it is stated, he received a Show Cause Notice dated 29.09.2025, served on 03.10.2025, invoking Para 17 of Catering Policy, 2010, alleging unsatisfactory performance due to penalties imposed on more than five occasions. Petitioner replied on 09.10.2025 stating that he retained only one stall under Commercial Circular No. 22 of 2017, depended solely on it for livelihood; complaints regarding overcharging of packaged drinking water were vague and did not identify vendors, and that penalties were paid to avoid disputes. 1.4. By letter dated 21.11.2025, the 3 rd respondent rejected the request for renewal under Para 17.1 of Catering Policy, 2010, terminated the contract with immediate effect and directed closure of the Tea Stall. Petitioner states that no Show Cause Notice was issued during the subsisting licence period and that termination occurred after the renewal period had commenced. He had continued employing 12 vendors in anticipation of renewal, and termination of the sole licence has caused severe financial hardship to him and loss of livelihood to those vendors. It is stated, Kacheguda Railway Station has 19 stalls operated by 19 licensees with about 200 vendors selling eatables and packaged drinking water. He had continued employing 12 vendors in anticipation of renewal, and termination of the sole licence has caused severe financial hardship to him and loss of livelihood to those vendors. It is stated, Kacheguda Railway Station has 19 stalls operated by 19 licensees with about 200 vendors selling eatables and packaged drinking water. In penalty letters issued to petitioner, no specific vendor details were mentioned, therefore irregularities could not be attributed to his stall without proper investigation. The allegations are stated to be vague and insufficient to deny renewal. 1.5. Petitioner also contends that reliance on Catering Policy, 2010 in the impugned letter dated 21.11.2025 is illegal, as his licence was renewed earlier strictly under Commercial Circular No. 22 of 2017 issued pursuant to the judgment of the Hon’ble Supreme Court. It is stated, Article 2.2 of the Master Licence Agreement required the Railways to notify parameters for determining satisfactory performance, which was never done after execution of the agreement dated 18.11.2022. Letters dated 25.10.2022, 03.05.2024, 01.07.2024 and 03.07.2024 did not specify that they would be relied upon for denial of renewal, and no Show Cause Notices were issued at the relevant time. Issuing a Show Cause Notice after commencement of renewed period is stated to be violative of principles of natural justice and it would defeat legitimate expectation. 1.6. Petitioner relies on the judgment of the Hon’ble Supreme Court in Senior Divisional Commercial Manager v. SCR Caterers, Dry Fruits, Fruit Juice Stalls Welfare Association (2016) 3 SCC 582 , holding that denial of renewal to persons solely dependent on such units is unfair and arbitrary and affects the right to livelihood. It is stated that Commercial Circular No. 22 of 2017 does not contemplate coercive termination of the nature adopted in the petitioner’s case. Petitioner alleges that Show Cause Notice and termination letter dated 21.11.2025 contain identical reasoning, showing non-consideration of reply and lack of an independent decision. The impugned order is stated to be non-speaking, unsupported by evidence of unsatisfactory performance, and passed despite absence of dues or court cases. The action is alleged to be arbitrary, irrational, illegal, vitiated by malice in law and violative of Articles 19(1)(g), 39 and 21 of the Constitution of India. 2. Heard Sri K.R.K.V. Prasad, learned counsel for petitioner. 3. The impugned order is stated to be non-speaking, unsupported by evidence of unsatisfactory performance, and passed despite absence of dues or court cases. The action is alleged to be arbitrary, irrational, illegal, vitiated by malice in law and violative of Articles 19(1)(g), 39 and 21 of the Constitution of India. 2. Heard Sri K.R.K.V. Prasad, learned counsel for petitioner. 3. Sri N. Bhujanga Rao, learned Deputy Solicitor General, based on the written instructions submitted by the Assistant Commercial Manager, submits that Tea Stall was awarded pursuant to Tender Notice dated 30.11.2015 strictly under the Catering Policy-2010 for five years from 10.09.2016 to 09.09.2021, petitioner is governed by the said Policy and the Master Licence Agreement, along with subsequent circulars issued from time to time. It is submitted, due to COVID-19 pandemic, a dies-non period of 323 days was granted, extending the licence up to 29.07.2022, and thereafter, upon submission of an affidavit under Commercial Circular No. 22 of 2017, licence was renewed for a further three years from 30.07.2022 to 29.07.2025. According to the learned Deputy Solicitor General, renewal 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 is strictly subject to satisfactory performance of the licensee during the tenure of the contract. As per Article 2 of the Master License Agreement, particularly Clause 2.2 relating to renewal, renewal of the agreement is not a matter of right of the licensee and is subject to satisfactory performance during the tenure of the agreement. Satisfactory performance is assessed through various parameters including customer feedback as defined under Clause 6.4 of the agreement, and the Railways are entitled to obtain independent customer feedback to assess passenger satisfaction. During the renewal period from 30.07.2022 to 29.07.2025, penalties were imposed on petitioner on six occasions for deficiencies including overcharging and deviation from service standards. 3.1. Relying on Article 2.2(b) of the Master Licence Agreement, which mandates timely payment of licence fee and all applicable charges including fines and submission of No Dues Certificate at the time of renewal, it is submitted that in several instances, petitioner delayed payment of penalties, thereby committing breach of contractual obligations. 3.1. Relying on Article 2.2(b) of the Master Licence Agreement, which mandates timely payment of licence fee and all applicable charges including fines and submission of No Dues Certificate at the time of renewal, it is submitted that in several instances, petitioner delayed payment of penalties, thereby committing breach of contractual obligations. In view of repeated violations and delayed payments, Show Cause Notice dated 29.09.2025 was issued to petitioner, to which explanation dated 09.10.2025 was submitted which was found unsatisfactory, as it failed to justify repeated non-compliance and unsatisfactory operational performance. Consequently, the competent authority terminated the contract vide Letter dated 21.11.2025 under Para 17.1 of the Catering Policy-2010. 3.2. Learned Deputy Solicitor General also placed reliance on inspection reports and public complaints and submits that Commercial Inspectors conducted inquiries on complaints of overcharging packaged drinking water, during which vendors admitted to overcharging and were found irregular in paying penalties within stipulated time. During inspection by the Senior Divisional Commercial Manager on 15.02.2025, it was observed that a vendor overcharged a water bottle by Rs.5/-, indicating a recurring practice. It is submitted that the Railway Administration never directed petitioner to surrender the contract nor restrained him from participating in any other tenders. Petitioner remains free to participate in catering tenders across Indian Railways. 3.3. It is further submitted that petitioner’s contention that Tea Stall was awarded pursuant to Commercial Circular No. 22 of 2017 dated 15.03.2017 is incorrect. The stall was originally awarded under Catering Policy-2010 pursuant to Tender Notice dated 30.11.2015, and therefore, petitioner is governed by Catering Policy-2010 along with subsequent circulars issued by the Railways from time to time. As per Article 13 of the Master License Agreement relating to Events of Default and Material Breach, failure to provide satisfactory services, breach of prescribed limits relating to fines and warnings, furnishing false information for renewal, or engagement in corrupt or fraudulent practices constitutes material breach, rendering the licensee liable for termination and other penal action. In the present case, petitioner was penalized on more than five occasions for violations including overcharging, thereby establishing non-compliance with the Catering Policy-2010 and the executed agreement, and making the petitioner liable for termination. 3.4. In the present case, petitioner was penalized on more than five occasions for violations including overcharging, thereby establishing non-compliance with the Catering Policy-2010 and the executed agreement, and making the petitioner liable for termination. 3.4. As per Article 15.3, the Railway Administration is empowered to terminate the contract by issuing a 15-day notice in the event of material breach or inability of the licensee to perform satisfactorily, and the decision of the Railways in this regard is final and binding. It is submitted that petitioner has not been blacklisted or debarred and continues to be eligible to participate in future catering tenders. In view of petitioner’s repeated violations, delayed payment of penalties, unsatisfactory performance and breach of contractual and policy conditions, rejection of renewal and termination of contract was effected to ensure accountability, maintain public confidence, and safeguard the interests of passengers using Railway premises. It is therefore, submitted that action of the Railway Administration is strictly in accordance with the Catering Policy-2010, the Master License Agreement, Commercial Circular No. 22 of 2017. 4. Upon perusal of the material on record and having heard learned counsel on either side, it is seen, petitioner’s contention that Catering Policy-2010 cannot be applied is without merit. The original allotment of Tea Stall was under Catering Policy-2010 pursuant to Tender Notice dated 30.11.2015. Commercial Circular No. 22 of 2017 does not supersede the Catering Policy-2010 but operates within its framework, permitting retention of a single unit subject to conditions. The Agreement dated 18.11.2022 also incorporates the Master Licence Agreement clauses, including provisions relating to satisfactory performance and termination. Further, the reliance placed by petitioner on the judgment of the Hon’ble Supreme Court in Civil Appeal Nos. 618–620 of 2016 does not advance his case. The said judgment itself clarifies that renewal is subject to compliance with policy conditions and is available only to eligible licensees fulfilling stipulated criteria. In the present case, petitioner has admittedly suffered penalties on more than five occasions, which, under Para 17.1 of the Catering Policy-2010, mandates rejection of renewal. 5. The plea of legitimate expectation also cannot be sustained. Mere continuation beyond the expiry date does not confer a legal right to renewal, particularly when the governing policy and agreement explicitly state that renewal is not a matter of right. 5. The plea of legitimate expectation also cannot be sustained. Mere continuation beyond the expiry date does not confer a legal right to renewal, particularly when the governing policy and agreement explicitly state that renewal is not a matter of right. Petitioner was put on notice through the Show Cause Notice dated 29.09.2025 and was afforded an opportunity to submit his explanation. 6. The contention that Show Cause Notice and termination order contain identical reasoning 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. Learned counsel for petitioner contended that no parameters were notified under Article 2.2 of the Master Licence Agreement, however, the said contention is untenable in view of Para 17.1 of the Catering Policy-2010, which clearly prescribes imposition of fines or warnings on more than five occasions as a disqualifying factor. 7. Respondents further clarified that petitioner has not been blacklisted or debarred and he remains eligible to participate in future tenders. Termination pertains only to the present licence and is based on documented unsatisfactory performance. In this connection, it is to be observed, the principle of social justice and right to livelihood, though significant, cannot be invoked to protect practices such as overcharging passengers or repeated violation of service standards, which adversely affect the travelling public and tarnish the image of Indian Railways. 8. This Court therefore, is of the opinion that 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. No arbitrariness, mala fides or violation of Articles 19(1)(g), 21 or 39 of the Constitution is made out by petitioner. The Writ Petition is therefore, devoid of merits and the same is liable to be dismissed. 9. The Writ Petition is accordingly, dismissed. No costs. 10. Consequently, the miscellaneous Applications, if any shall stand closed.