# I S.C.R. 44 7 SENIOR DIVISIONAL COMMERCIAL MANAGER & ORS v. S.C.R. CArERERS, DRY FRUITS, FRUIT JUICE STALLS WELFARE ASSOCIATION & ANR - **Citation:** [2016] 1 S.C.R. 447 - **Court:** Supreme Court of India - **Decided:** 2016-01-29 - **Case number:** Civil Appeal Nos. 618-620of2016 - **Bench:** V. Go Pala Gowda, Amitava Roy - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/i-s-c-r-44-7-senior-divisional-commercial-manager-ors-v-s-c-r-carerers-dry-31009 - **Pages:** 21 ## Headnote Licence - Renewal of- Under Catering Policy, 2010 of Indian Railways - To the pre-exisling licencees - Permissihilily - Held: The provi.i·ions of the 2010 Policy are ~1pplicahle 10 !he pre-exisling licences ~Denial of rene11 1al ara 2?1 [467-Al 8. However, it is clarified that only those licensees may be eligible for renewal of their licenses who can declare on affidavit that they do not h.ave the license of more than one shop or kiosk in their name or benr1111i license at the railway stations with periodical reasonable increase of license fee. [Para 28] [467-9-C] Lala Ram v. Union of India (2015) 5 SCC 813:2013 (1) SCR 577; Ra111 & Shyam Company v. State of Haryana (1985) 3 SCC 267:1985 (1) Suppl. SCR 541; Jivan Das v. Life Insurance Corporation oflndia & Anr. 1994 Supp (3) SCC 694; Bank of India & Ors. v. K. Mohandas & Ors. (2009) 5 SCC 313: 2009 (5) SCR 118; Chant Khurana v. Union of India (2015) 1 SCC 192; LIC v. DJ Bahadur (1981} 1 SCC 315: 1981 (1) SCR 1083 - referred to. A B c D E F G H 450 A B c D E F G H SUPREME COURT REPORTS [2016] I S.C.R. Case Law Reference 2013 (1) SCR 577 referred to. Para 7 1985 (1) Suppl. SCR 541 referred to. Paras 1994 sui>P (3) sec 694 referred to. Para 12 2009 (5) SCR 118 referred to. Para 15 (2015) 1 sec 192 referred to. Para 17 1981 (1) SCR 1083 referred to. Para 18 1979 (3) SCR 1014 relied on. Para 20 1985 (2) Suppl. SCR 51 followed. Para 22 1983 ft) SCR 456 relied on. Para 22 1995 (I) SCR 626 relied on. Para 25 1984 (3) SCR 582 relied on. Para 25 1981 (2) SCR 516 relied on. Para 26 CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 618620 of2016 From the Judgment and Order dated 12.09.2013 of the High Court of Judicature of Andhra Pradesh at Hyderabad in Writ Appeal No. 1573 to 1575of2013 N. K. Kaul, ASG, Shilpa Nair, R. M. Bajaj, S. N. Bhat, Shreekant N. Terdal for the Appellants. P. K. Goswami, Raju Ramachandran, V. K. Shukla, Ms. Anchal Mehrotra, Dr. Rajeev Shanna. (For Intervenor), Venkatcswara Rao Anumolu, Goli Rama Krishna, Shashwat Goel. Arunabh Chaudhary. Parthiv K. Goswami, Kaustav Talukdar, Yashraj Singh Bundela, Ms. Diksha Rai, Ms. Ranjceta Rohtagi, Myth iii Vijay KumarT., Vikram Aditya Narayan for the Respondents. The Judgment of the Court was delivered by V. GOPALA GOWDA, J. I. Applications for intervention are allowed. 2. Leave granted. SR. DIV. COMMERCIAL MANAGER v. S.C.R. CATERERS. DRY FRUITS. 45 I FRUIT JUICE STALLS WELFARE ASSN. [V. GOPALAGOWDA, J.] 3. The present appeals arise out of the impugned judgment and order dated I 2.09.20 I 3 passed by the High Court of Judicature of Andhra Pradesh at Hyderabad in W.A. Nos. 1573-1575 of2013, whereby the ·Division Bench of the High Court upheld the order of the learned single ·Judge, wherein it was held that the respondents are entitled to get their licenses renewed_ under the Catering Policy, 20 I 0. 4. The relevant facts which are required for us to appreciate the rival legal contentions advanced on behalf of the parties are stated in brief hereunder: Respondents before us are the South Central Railway Caterers, Dry Fruits, Fruit Juice Stalls Welfare Association, (hereinafter referred to as "the Welfare Association''). The members of the Welfare Association were granted licenses for running General Minor Units or Special Minor Units in Categories "A", "B" and "C" Railway Stations. These licenses were granted in favour of the members of the respondents prior to the creation of the Indian Railways Catering and Tourism Corporation Limited (hereinafter referred to as "IRCTC") under the Catering Policy, 2005. In terms of the said Policy, the contracts under Categories "A", "B" and "C" Railway Stations were transferred to the IRCTC while the contracts granted under Categories "D" to "F" Railway Stations were continued under the control of the South Central Rai !ways till t11e IRCTC was equipped to take over these units. The contracts held by the members of the Welfare Association were renewed during the subsistence of the Catering Policy, 2005. The said policy was replaced by the Catering Policy, 20 I 0. Under the new Policy, the contracts ofall the existing major and minor catering units were to be awarded and managed by the Zonal Railways. lhe IRCTC was l.eTfwith the running of the Food Plaza, Food Courts and Fast Food Units only. Pursuant to the Catering Policy, 20 I O,the Soul!) Central Railway granted renewal of licenses in favour of the licensees for a period of three years with effect from 21.07:2010, the date on which the Catering Policy, 2010 was made effective in respect of the General Minor Units (GM Us) and Special Minor Units (SMUs) taken over from the IRCTC, subjectto the conditions ·stipulated in paras 16.1.3 and 16.2. 1 of the Catering Policy, 20 I 0. The rene)¥ed licenses were to expire on 20.07.2013. On 26.04.2013, the Senior Divisional Commercial Manager, Vijayawada, issued a p_idmotice inviting sealed bids on the Single Stage Two-Packet System from food and catering service ·providers for provision of catering ser•ices at the A B c D E F G H 452 SuPREME COURT REPORTS [2016] I S.C .R. A various GM!Js of Categories ·'A'' and "B" Railways Stations in the Vijayawada Division. A simi Jar notification dated 03.05.2013 was issued for establishment of catering stalls/fruits and fruit ju ice stalls in SM Us in ·'Al". "A" and "B" Category Railway Stations. Aggrieved. the respondent-Association, the members of which had existing licenses, 8 filed a Writ Petition before the single Judge of the High Court of Judicature of Andhra Pradesh at Hyderabad. The respondent-Association urged that the said action of inviting fresh bids is discriminatory and also contrary to the provisions of the Catering Policy, 20 I 0. The main plea of the respondent-Association was that in terms of the Catering Policy, 2010, the existing licensees were entitled for renewal of their licenses C for a period of three years, subject to their satisfactory performance, payment of all dues and arrears and withdrawal of court cases, if any. They prayed that the appellant be directed to renew the licenses of the existing license holders of the canteens and fruits and fruit juice stalls. Vide judgment and order dated 16.08.2013, the learned single Judge D came to the conclusion that the Catering Policy, 20 I 0 did not differentiate among the licensees based on the number of.years for which they have been carrying on their business. It was further held that under the Catering Policy, 20 I 0, the license fee is liable to be revised based on the potentiality of each Railway Station and the turnover of the licensees during the previous years. Since the license fee is subject to continuous E revision and does not remain stagnant, the question of the Railways suffering any loss due to renewals would not arise. The learned single Judge held that the members of the Welfare Association are entitled for renewal of the licenses of the members subject to their satisfying the conditions stipulated in paras 16. 1.3 and 16.2.1 of the Catering Policy, F 2010. On appeal filed by the appellants, the judgment and order of the . learned single Judge was upheld by the Division Bench of the High Court in the Writ Appeals vide its judgment and order dated 12.09.2013. Hence, the present appeals are filed by the appellants. G H 5. We have heard the learned senior counsel for both the parties. On the basis of the pleadings and evidence on record produced_ before us, the circumstances of the case and also in the light of the rival legal contentions urged by the learned senior counsel for both the parties, the main question that arises for our consideration is whether the members of the respondents before us are entitled to have their licenses renewed in terms of the Catering Policy, 20 I 0. SR. DIV. COMMERCIAL MANAGER v. S.C.R. CATERERS. DRY FRUITS. 453 FRUIT JUICE STALLS WELFARE ASSN. [V. GOPALA GOWDA. J.] 6. Mr. N.K. Kaul, the learned Additional Solicitor General A appearing on behalf of the appellants drew our attention to the important provisions of the Catering Policy, 20 I 0. The objective of the Policy reads as under: "1.1 To provide hygienic, good quality affordable food to the travelling public by adopting best trade and hospitality practices. B 1.2 The policy will have an inclusive approach where from the least advantaged passenger to the relatively affluent will be provided catering services in a socially responsible manner. 1.3 It should meet all the social objectives of the Government, including provision ofreservations as per Government Directives issued from time to time." 7. The learned ASG contends that the terms of the Catering Policy, 2010 are absolutely clear. The larger issue here is the right to livelihood of the licensees who are members of the respondents. The welfare of the people is the prime concern of any responsible government under the provisions of the Constitution. The learned ASG places reliance on the case of Lalli Ram v. U11io11 of J1ulill 1, wherein the concept of a welfare state has been discussed as under: "A welfare state denotes a concept of government, in which the State plays a key role in the protection and promotion of the economic and social well-being of all of its citizens, which may include equitable distribution of wealth and equal opportunities and public responsibilities for all those, who are unable to avail for themselves, minimal provisions for a decent life. It refers to "Greatest good of greatest number and the benefit of all and the happiness ofall". It is important that public weal bethe commitment of the State, where the state is a welfare state. A welfare state is under an obligation to prepare plans and devise beneficial schemes for the good of the common people. Thus, the fundamental feature of a Welfare state is social insurance. Anti-poverty programmes and a system of personal taxation are examples of certain aspects of a Welfare state. A Welfare state provides State sponsored aid for individuals from the cradle to the grave. However, a welfare state faces basic problems as regards what should be the desirable '(2015) 5 sec s13 c D E F G H 454 A B c D F G H SUPREME COURT REPORTS [2016] I S.C.R. level of provision of such welfare services by the state, for the reason that equitable provision of resources to finance services over and above the contributions of direct beneficiaries would cause difficultie.s • ..A welfare state is one, which seeks to ensure maximum happiness of maximum number of people living within its territory. A welfare state must attempt to provide all facilities for decent living, particularly to the poor, the weak, the old and the disabled i.e. to all those, who admittedly belong to the weaker sections of society. Articles 38 and 39 of the Constitution oflndia provide that the State must strive to promote the welfare of the people of the state by protecting all their econqmic. social and political rights. These rights may cover. means oflivelihood. health and the general well-being of all sections of people in society, specially those of the young. the old, the women and the relatively weaker sections of the societv. These groups generally require special protection measures in almost every set up. The happiness of the people is the ultimate aim ofa welfare state, and a welfare state would not qualify as one, unless it strives to achieve the same." (emphasis laid by this Court) 8. The learned ASG further places reliance on the case of R11m & Sfly11m Comp11ny v. $t11te of ll11ry11n11', relevant paragraph of which is quoted. hereunder: • "12. Let us put into focus the clearly demarcated approach that distinguishes the use and disposal of private property and socialist ·property. Owner of private property may deal with it in any manner he likes without causing injury to anyone else. But the socialist or ifthat word is jarring to some, the community or further the public property has to be dealt with for public purpose and in public interest. The marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose ofhis property for a song. On the other hand, disposal of public property partakes the character ofa trust in that in its disposal there should be nothing hanky panky and that it must be doQe at the best price so that larger revenue coming into the coffers of the State administration would serve public '(1985) 3 sec 267 SR. DIV. COMMERCIAL MANAGER v. S.C.R. CATERERS, DRY FRUITS, 455 FRUIT JUICE STALLS WELFARE ASSN. [V. GOPALAGOWDA, J.] purpose viz. the welfare State may be able to expand its beneficent activities by the availability of larger funds. This is subject to one important limitation that socialist property may be disposed at a price lower than the market price or even for a token price to achieve some defined constitutionally recognised public purpose,·· one such being to achieve the goals set out in Part IV of the Constitution. But where disposal is for augmentation of revenue and nothing else, the State is under an obligation to secure the best market price available in a market economy An owner of private property need not auction it nor is he bound to dispose it of at a current market price. Factors such as personal attachment, or affinity, kinship, empathy, religious sentiment or limiting the choice to whom he may be willing to sell, may permit him to sell the property at a song and without demur. A welfare State as the owner of the public property has no such freedom while disposing of the public property. A welfare State exists for the large§-! good of the largest number more so when it proclaims to be a socialist State dedicated to eradication of poverty. All its attempt must be to obtain the best available price while disposing of its property because the greater'the revenue, the welfare activities willget a. fillip and shot in the arm. Financial constraint may weaken the tempo of activities. Such a1' approach serves the larger public purpose of expanding welfare activities primarily for which the Constitution envisages the setting up of a welfare State." (emphasis laid by this Court) 9. The interest of the passenger has rio correlation with social objectives. The main objective of the Catering Policy, 2010 is to provide food at an affordable price to the railway passengers. The learned ASG further contends that the State is entitled in law to frame a new policy in that respect. The learned ASG contends that the Policy contains detailed mechanisms and makes it very clear for whom it is meant. The learned ASG draws our attention to clause 3.3.1 of the Policy which reads as under: "3.3. I All existing major and minor catering units will be awarded and managed by the zonal railways, except Food Plaza, Food Courts, fast food units. All such contracts presently being managed by the IRCTC, on expiry of the contract period, will be awarded A B c D E F G H 456 SUPREME COURT REPORTS [2016] 1 S.C.R. A by the zonal railways. IRCTC will not renew any contract required to be handed over to zonal railways on expiry of the contract." B c D E F G H I 0. The learned ASG further draws our attention to clause 16.1.3 of the 20 I 0 Policy which reads as under: "16.1.3 Allotment of all General Minor Units at A,B & C category stations sh al I be awarded for a period of five years with a provision for renewal after every 3 years on satisfactory performance and payment of all dues and arrears and withdrawal of court cases, if any. Allotment of all General Minor Unis at D,E & F category stations will be for a period of5 years with a provision for renewal after every 5 years for a further period of 5 years on satisfactory performance and payment ofall dues and arrears and withdrawal of court cases, if any." The learned ASG contends that by vi1tue of clause 16. ! .3, the members of the respondents cannot claim renewal of their license as a matterofright. The learned ASG further placed reliance on clause 26.1. I of the 20 I 0 Policy which reads as under: "26.1.1 All existing operational catering licenses awarded by IRCTC and transferred to Zonal Railways will be governed by the existing Catering Policy 2005 upto the validity of their contractual period." Further, Clause 26.1.4 of the policy reads as under: "26.1.4 This policy will also apply in case of award of fresh licenses and licenses awarded in the event of termination, non-renewal. vacation etc. of the existing licenses." 11. The learned ASG ftuther contends that a welfare State has to generate more money to take care of the larger public interest. He further contends that the claim of the members of the respondents that they have a vested right to get the renewal of their license in the railway stations referred to supra and that the government cannot expand its competitors is completely unsuppo1ted in Jaw. 12. The learned ASG further contends that the entire pol icy is not under challenge. It is only the clause which confers the right of renewal of the license which has been challenged. The scope of the judicial review in such cases is limited. For the Cou1t t.o examine the validity of the same, the policy either needs to be arbitrary, or must suffer from some SR. DIV. COMMERCIAL MANAGER v. S.C.R. CATERERS. DRY FRUITS. 457 FRUIT JUICE STALLS WELFARE ASSN. [V. GOPALAGOWDA, J.] glaring error and must be perverse, or be contrary to constitutional provisions. The learnedASG, in support of his contentions, places reliance on the case of JiV<111 D<1s i: Life I11s11ra11ce Corpor<1tio11 of India & A111:3 to contend that the right to livelihood oflicensees cannot be extended to use public property to the best advantage as a commercial venture. It was held in that case as under: "An owner is entitled to deal with his property in his own way profitable in its use and occupation. A public authority is equally entitled to use the public property to the best advantage as a commercial venture. As an integral incidence of ejectment of a tenant/licensee is inevitable. So the doctrine oflivelihood cannot discriminately be extended to the area of commercial operation." 13. On the other hand, Mr. Prashanta K. Goswami. the learned senior counsel appearing on behalf of some of the respondents, draws our attention to the Catering Policy, 2010. He contends that revenue collection for the State cannot be a yardstick or consideration for deciding renewals of licenses of licensees. The learned senior counsel further submits that the licenses of these small shop/ kiosk owners have been renewed in some zones of the Railways, while in others not renewed, which action of the appellants is violative of Article 14 of the Constitution oflndia. 14. Mr. Raju Ramachandran. the learned senior counsel appearing on behalf of one of the respondent licensees contends that renewal of the licenses of the members is the norm under the Catering Policy, 20 I 0 and that the right to renewal must be read into the contracts of the existing licensees. The learned senior counsel further contends that the social objectives of the Central Government, which is running the railways across the country and which is the major transport industry catering to the need ofa large number of commuters, must necessarily include the protection of the right to livelihood of the members of the respondents, apart from the protection of Article 19( I )(g) of the Constitution oflndia. I 5. Mr. Ramachandran further contends that two views are legitimately possible to construe the renewal clause. One is that renewals of the licenses that can be done only through the tender route and the other is to renew the existing or pre-existing licenses. He contends that '1994 Supp (3) sec 694 A B c D E F G H 458 A B c D E F G SCPREME COURT REPORTS (2016] I S.C.R. the same can be resolved by applying the principle of ·contra proferentem', or interpretation against the draftsman. In this connection, reliance has been placed by the learned senior counsel upon the decision of this Court in Bank of !11dia & Ors. v. K. Molumdas & Ors.', wherein it has been held as under: "31. It is also a well-recognized principle of construction of a contract that it must be read as a whole in order to ascertain the true meaning of its several clauses and the words of each clause should be interpreted so as to bring them into harmony with the other provisions if that interpretation does no violence to the meaning of which they are naturally susceptible. [(The North Eastern Railway Company v. L. Hastings) 1900 AC 260]. 32. The fundamental position is that it is the banks who were responsible for formulation of the tem1s in the contractual Scheme that the optees of voluntary retirement under that Scheme will be eligible to pension under Pension Regulations, 1995, and, therefore, they bear the risk of lack of clarity, if any. It is a well-known principle of construction of contract that ifthe terms applied by one party are unclear, an interpretation against that party is preferred [Verba Chartanim Fortius Accipiuntur Contra Proferentum]." 16. The learned senior counsel further contends that the social objectives of the Policy are clearly meant to side step the profit making objective. He places reliance on a Constitution Bench decision of this Court in the case of Olga Tellis v. Bombay Municipal Corporation-', wherein it was held that the right to life includes the right to livelihood. In that case, the Court held as under: "32. As we have stated while summing up the petitioners' case, the main plank of their argument is that the right to life which is guaranteed by Article 2 I includes the right to livelihood and since, they will be deprived of their livelihood if they are evicted from their slum and pavement dwellings, their eviction is tantamount to deprivation of their life and is hence unconstitutional. For purposes ofargument, we will assume the factual correctness of the premise that if the petitioners are evicted from their dwellings. they will be '(2009)5SCC313 H 't I 985 > 3 sec 545 SR. DIV. COMMERCIAL MANAGER v. S.C.R. CATERERS. DRY FRUITS. 459 FRUIT JUICE STALLS WELFARE ASSN. (V. GOPALA GOWDA, J.] deprived of their livelihood. Upon that assumption, the question whicliw~~have to consider is whethertheright to life includes the rightto livelihood. We see only one answer to thatquesiion, namely, that it does. The sweep of the right to .J ife conferred by Article 21 is wide and far reaching. It does not mean merely that life cannot be extinguished or taken away as, for example, byrhe imposition and execution of the death sentence, except according to procedure established by law. That is but one aspect of the right to life. An equally important facet of that right is tbe right to livelihood because, rio person can live without the means of living, that is, the means oflivelihood. lfthe rightto livelihood is not treated as a part of the constitutional right to life, the easiest way of depriving a person his right to life would be to deprive him of his means oflivelihood to the point ofabrogation. Such deprivation would not only denude the life of its effective content and meaningfulness but it would make life impossible to live. And yet, such deprivation would not have to be ln accordance with the procedure established by law, ifthe rightto livelihood is not regarded as a part of the right to life. That, which alone makes it possible to live, leave aside what makes life livable. must be deemed to be an integral component of the right to life. Deprive a person of his right to livelihood and you shall have deprived him of his life. Indeed, that explains the massive migration of the rural population to big cities. They migrate because they have no means of livelihood in the villages: The motive force "'.hich people their desertion of their hearths and homes in the villages that struggle for survival, that is, the struggle for life. So unimpeachable is the evidence of the nexus between life and the means oflivelihood. They have to eat to live: Only a handful can afford the luxury of living to eat. That they can do, namely, eat. only if they have the means of livelihood. That is the context in which it was said by Douglas J. in Baksey that the right to work is the most precious liberty because, it sustains and enables a man to live and the right to life is a precious freedom. "Life", as observed by Field, J. in Munn v. lllinois (1877)94 U.S. 113, means something more than mere animal existence and the inhibition againstthe deprivation oflife extends to all those limits and faculties by which life is enjoyed. This observation was quoted with approval by this Court in Kharak Singh v. The State ofU.P. A B c D E F G H 460 A B c D E F G H SUPREME COURT REPORTS (2016] I S.C.R. 33. Article 39(a) of the Constitution, which is a Directive Principle of State Policy, provides that the State shall, in particular, direct its policy towards securing that the citizens, men and women equally, have the right to ~n adequate means of livelihood. Article 41, which is another Directive Principle, provides, inter alia, that the State shall, within the limits of its economic capacity and development, make effective provision for securing the right to work in cases of unemployment and of undeserved want. Article 3 7 provides that the Directive Principles, though not enforceable by any court, are nevertheless fundamental in the governance of the country. The Principles contained in Articles 39(a) and 41 111ust be regarded as equally fundamental in the understanding and interpretation of the meaning and content of fundamental rights. If there is an obligation upon the State to secure to the citizens an adequate means of livelihood and the right to work, it would be sheer pedantry to exclude the right to livelihood from the content of the right to life. The State may not, by affirmative action. be compel lab le to provide adequate means of livelihood or work to the citizens. But, any person. who is deprived of his right to livelihood except according to just and fair procedure established bv law. can challenge the deprivation as offending the right to life conferred by A1ticle 21.'' (emphasis laid by this Court) 17. The learned senior counsel further places reliance on a recent decision of this Court in Clwru Kl11m111111: Union of I11dill', wherein the above stated principle enunciated in Olga Tellis (supra) has been reiterated. 18. Before we advert to the contentions in detail, we quote Justice Krishna Iyer from the case of LIC i: D.J. B11/11ulur'. wherein the learned Judge has explained what should be the guiding force for judges when faced with matters pertaining to social justice, as under: "Law is no cold-blooded craft bound by traditional techniques and fonnal forceps handed down to us from the Indo-Anglian era but a warmblooded art, with a bleak from the past and a tryst with the present, deriving its soul force from the Constitution enacted by the People of India. Law, as Vice President G.S. Pathak used to emphasize in several lectures, is a tool to engineer a peaceful 'civil revolution' one of the "(201;11sec192 '(19811 I SCC315 SR DIV COMMERCIAL MANAGER v. S.C.R. CATERERS. DRY FRUITS. 461 FRUIT JUICE STALLS WELFARE ASSN. [V. GOPALAGOWDA, J.] components of which is a fair deal to the weaker human sector like the working class. The striking social justice values of the Constitution impact on the interpretation oflndian laws and to forget this essential postulate while relying on foreign erudition is to weaken the vital flame of the Democratic, Socialist Republic oflndia." 19. The case of the appellants, in nutshell, is that the railways had the right to enact the Catering Policy, 2010. In terms of the said Policy, only such licensees who were granted license under the 2010 Policy were entitled to get their contracts renewed and the same benefit could not be extended to those licensees who were granted license prior to the 2010 Policy. According to the Catering Policy 2010, no provision is made forthe renewal of the existing catering units on the expiry of the term of the licenses. The renewal of the licenses of the licensee under para 16 of the Policy would apply only to licensees allotted under the Catering Policy 2010. The appellants have fu11her submitted that the renewals of the licenses by the Zonal Railways upto 2013 was only meant to operate as a temporary arrangement till the bidding and allocation process was finally completed. 20. We are unable to agree with the contention advanced on behalf of the Appellants. The Railway Board issued Commercial Circular No. 37 dated 09.08.20 I 0, which contained the following instructions: "I . Transfer of License Un its: d. Zonal railways should renew all agreements which have expired or are due for expiry in the next 6 months by giving an extension, subject to a maximum extension of six months from the date of issue of Catering Policy; 201 O." This circular clarifies that the renewal of the license is required to be granted to all the existing licensees of the Minor Units as per clauses 16 ai;d 17 of the Catering Policy, 20 I 0. It also becomes clear that the existing licensees need not be included in the tender process. Circular dated 23.08.2011 issued by the Chief Commercial Manager of South Central Railway directed all the Divisional Commercial Managers and other subordinate officers of the South Central Railway to confirm that the tenure of all GM Us and SM Us at "A 1 ", "A" and "B" category stations shall be renewed after every 3 years on their satisfactory performance and payment ofall dues and arrears as per the 2010 Policy. In view of the said circular, catering licenses of all the members of the A B c D E F G H 462 SUPREME COURT REPORTS [2016] I S.C.R. A respondent Association were renewed till July 2013. On this aspect of the case, the learned single Judge of the High Court has held as under: B c D E , F "While the 2010 Policy proper has not envisaged renewal of the existing licenses for a period not exceeding six months, the Immediate Operative Instructions issued in commercial circular no. 37/2010 dated 09.08.2010 has directed the Zonal Railways to renew the licenses for a maximum period of six months from the date of issue of the 20 I 0 Policy. If the 20 I 0 Policy is understood as providing renewals only in respect of the licenses issued under the said Policy, there was no reason why the respondent No. 3 has not called for tenders on the expiry of six months period from the date of coming into force of the 20 I 0 Policy. Instead of calling for tenders, the respondent No.3 has renewed all the GMU and SMU licenses for a period of three years in tenns of paras 16.1.3 and 16.2.1 of the 20 I 0 Policy. This was done even before Para 16.3 was amended. Having understood the 2010 Policy in its true spirit even before the amendment of Para 16.3, it is incomprehensible that respondent no.3 projects the said policy in a different light by seeking to give it an interpretation which runs contrary to its plain language. Nowhere in the 20 I 0 Policy, the licensees are classified into two categories. namely, those who were granted licenses prior to the commencement of the 20 I 0 Policy and those who were granted licenses after the said Policy. On the contrary, all the GMUs and SMUs were treated under one category. Irrespective of whether the licenses were granted by the Railways prior to 2005 or by the IRCTC from 2005 and by the Indian Railways after 20 I 0. renewal of licenses is envisaged for all these categories of licensees subject to their fulfillment of the three requirements as referred to hereinbefore." (emphasis laid by this Court) The findings of the learned single Judge have been upheld by the Division Bench and we do find any reason to interfere with the same. G Article 14 of the Constitution of India mandates that state action must not be arbitrary and discriminatory. It must also not be guided by any extraneous considerations which are antithetical to equality. A three Judge Bench of this Court in the case of R.D. Sheffy v. International Airport Authority' held as under: H '( 1979) 3 sec 489 · SR. DIV. COMMERCIAL MANAGER v. S.C.R. CATERERS, DRY FRUITS, 463 FRUIT JUICE STALLS WELFARE ASSN. [V.GOPALAGOWDA, J.] "21 ..... .It must, therefore follow as a necessary corollary from ·the principle of equality enshrined in Article 14 that though the ·State is entitled to refuse to enter into relationship with any one, yet ifit does so, it cannot arbitrarily choose any person it likes for entering into such relationship and discriminate between persons similarly circumstanced, but it must act in conformity with some ·standard or principle which meets the. test of reasonableness and · non,discrimination and any d¢oarture from such standard or principle would be invalid unless it can be supported or justified on· some rational and non-discriminatory ground." (emphasis laid by this Court) 21. India is a welfare State. Article 38 of the C_onstitution oflndia, which is a Directive Principle of State Policy, reads as under: "38. State to secure a social order for the promotion of welfare of the people.-( 1) The State shall strive to promote A B c the welfare of the people by securing and protecting as effectively D as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life. (2) The State shall, in particular, strive to minimise the inequalities in income, and endeavour to eliminate ine~ualities in status, facilities and opportu1,1ities, not only amongst indi~iduals but also amongst E groups of people residing in different areas or engaged in different vocations." 22.'It is the duty ofe\