2020 (4) TMI 63 - HC - Indian Laws

Court deems threats to withdraw bid, forfeit deposit, and blacklist as coercive. Upholds employer's GST liability.

M/s. Shanti Enggicon Private Limited Versus NTPC Limited, Additional General Manager (C&M) / Sr. Manager (C&M) Shared Service Centre, General Manager, NTPC Limited

The court found the respondents' actions of threatening the petitioner to withdraw his bid, forfeiting the Earnest Money Deposit, and blacklisting him for ... Withdrawal of Bid - forfeiture of Earnest Money Deposit (EMD) - blacklisting the Petitioner from participating in future Tenders for not having separately mentioned the GST rate in the tender - HELD THAT:- There is considerable force in the submissions made by the learned counsel for the Petitioner with reference to the materials brought on record. Insofar as there is no dispute that the GST rate originally notified as per Annexure P/3 came to be modified and segregated into two, vide Annexure P/4 dated 22.08.2017 (stipulating a lesser rate of 12% for construction of roads for public purpose (Section–B) and a higher rate of 18% for construction of roads for internal/private purpose (Section–C), it was obligatory for the Respondents to have provided separate columns in the Annexure P/2 tender issued on 09.09.2019 when Annexure P/4 notification was governing the field. That apart, by virtue of the clear stipulations under clause 12.4 of the ITB, read with Section 9 of the GST Act, payment of GST was to be the liability of the awarder and hence, mentioning or non-mentioning of the rate of GST was to be of no consequence as it is a 'constant figure' with regard to which no alteration can be thought about either by the bidder or by the awarder. Above all, if at all, there was any mistake or the bid was defective for not quoting the proper amount with reference to the duties/taxes payable, it was quite open for the Respondents to have 're-evaluated the bid' in terms of clause 23.3, read with clause 23.2.3 of the ITB to work out the actual quote and to identify the L-1 bidder. Obviously, it is without any regard to these vital aspects, that the proceedings were sought to be pursued hastily, by issuing Annexure P/8; virtually without considering the objection/ explanation raised by the Petitioner vide Annexure P/7 in response to Annexure P/5 - Annexure P/8 order/proceedings dated 09.01.2020 impugned in the writ petition is not liable to be sustained and hence, it is set aside. It is still open for the Respondents to re-evaluate the bid submitted by all the participants including the Petitioner and to work out the actual bid amount, if the GST was also to be considered as part of the bid and thus, adding it on, instead of deducting the GST from the bid quoted by the Petitioner or such other bidder - Since there cannot be any dispute with regard to the 'rate of tax' payable and as to the liability of the employer/awarder to satisfy the same, it is open for the Respondents to consider the quotes made by the bidders including the Petitioner (treating the same as excluding the GST) as nobody has claimed it to be inclusive of the GST and further when the tender conditions stipulate that it has to be excluding the GST. Petition allowed. Issues Involved:1. Arbitrary action by the Respondents.2. Evaluation of the bid and GST rate.3. Territorial jurisdiction of the High Court.4. Legal provisions and clauses in the tender.Detailed Analysis:1. Arbitrary Action by the Respondents:The petitioner challenged the respondents' arbitrary action of threatening and forcing him to withdraw his bid despite being rated as L-1. The respondents attempted to forfeit the Earnest Money Deposit (EMD) and blacklist the petitioner for not separately mentioning the GST rate in the tender, while treating other bidders differently. The court found this action to be coercive and unjustified, especially since the GST rate was to be the employer's liability as per the tender conditions.2. Evaluation of the Bid and GST Rate:The tender issued on 09.09.2019 for the Talaipalli Coal Mining Project required bidders to quote the bid amount excluding GST, which was to be mentioned separately. The petitioner left the GST column blank, leading the respondents to treat the bid amount as inclusive of GST and subsequently reduce the bid amount, branding it as 'Abnormally Low Rate.' The court observed that the modified GST rates (12% for public roads and 18% for private roads) were in force from 22.08.2017, and the tender conditions clearly stated that the GST liability was on the employer. The court held that the respondents should have re-evaluated the bid by adding the correct GST rate instead of reducing the bid amount, as per clauses 23.3 and 23.2.3 of the Instructions to Bidders (ITB).3. Territorial Jurisdiction of the High Court:The respondents argued that the writ petition was not maintainable due to lack of territorial jurisdiction, as the tender was issued from Ranchi, Jharkhand. The court rejected this argument, citing Article 226(2) of the Constitution of India, which allows the court to exercise jurisdiction if the cause of action arises wholly or in part within its territory. The court noted that the project was situated in Raigarh, Chhattisgarh, and the respondents had a project office there, thus conferring jurisdiction on the Chhattisgarh High Court. The court also referenced the Supreme Court's judgment in A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem, to support its decision.4. Legal Provisions and Clauses in the Tender:The court examined various clauses in the tender documents:- Clause 11.1.3.2 of the ITB required bidders to quote the base price excluding GST and mention the applicable GST separately.- Clause 12.4 of the ITB and Section 9 of the GST Act made the employer liable for GST payment.- Clause 23.3 of the ITB allowed re-evaluation of defective bids to identify the L-1 bidder.- Clause 26.2 of the General Conditions of Contract (GCC) reiterated the employer's duty to pay GST.The court found that the respondents failed to provide appropriate columns for different GST rates in the tender form, leading to confusion among bidders. The court held that the respondents' action of reducing the bid amount was incorrect and illegal. The court set aside the impugned order dated 09.01.2020 and directed the respondents to re-evaluate the bids by adding the correct GST rate or consider re-tendering with proper clarifications.Conclusion:The court allowed the writ petition, directing the respondents to re-evaluate the bids or go for re-tendering, ensuring proper columns for GST rates. The court emphasized the employer's liability to pay GST and found the respondents' actions to be arbitrary and unjustified.