Calcutta High Court
M/S A B Enterprise vs Union Of India on 12 November, 2025
Author: Debangsu Basak
Bench: Debangsu Basak
OCD-6
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
AN APPEAL FROM ORDER PASSED IN ITS
ORIGINAL CIVIL JURISDICTION
COMMERCIAL DIVISION
AO-COM/5/2025
With
AP-COM/522/2024
M/S A B ENTERPRISE
-Vs-
UNION OF INDIA
BEFORE:
The Hon'ble JUSTICE DEBANGSU BASAK
-AND-
The Hon'ble JUSTICE MD. SHABBAR RASHIDI
For the Appellant : Mr. Debdutta Raha, Adv.
Mr. Arpayan Mukherjee, Adv.
Mr. Dyutiman Banerjee, Adv.
For the Respondent : Mr. Mohit Gupta, Adv.
Ms. Sarda Sha, Adv.
Ms. Suparna Das, Adv.
HEARD ON : 12.11.2025
DELIVERED ON : 12.11.2025
DEBANGSU BASAK, J.:-
1. The appeal under Section 37 of the Arbitration and Conciliation
Act, 1996 is directed against the judgment and order dated
October 7, 2024 passed by the learned Single Judge allowing an
application under Section 34 of the Act of 1996.
2. Learned Advocate appearing for the appellant submits that, the
appellant participated in the tender for supply of man power for
trains floated by the Indian Railways. He refers to the sequence of
events. He submits that, the tender was floated on April 14, 2015.
Bids were opened on May 27, 2015. The letter of acceptance was
issued by the Railway Authorities on June 25, 2015 and that
contract was entered into on September 26, 2015.
3. Learned Advocate appearing for the appellant refers to Clause 2.2
of the Contract between the parties. He submits that such clause
does not include service tax as a liability payable by the
appellant. He points out that, such clause was existing for a
considerable period of time and was not amended subsequent to
the introduction of the service tax regime.
4. Learned Advocate appearing for the appellant submits that, the
Railway Authorities prior to the tender being confirmed in favour
of the appellant undertook the exercise of estimating the unit
price for the supply of man power. He submits that, such
document was placed before the Arbitral Tribunal. Such estimate
does not include service tax.
5. Learned Advocate appearing for the appellant submits that, there
was a dispute as to whether, service tax at all was payable in
respect of contract in the nature as of the present one entered
into between the appellant and the Railway Authorities. He refers
to various circulars of the Indian Railways in this regard.
6. Respondent is represented.
7. We find from the records that, Railway Authority floated tender
for supply of man power on April 14, 2015. The appellant
participated in such tender process. Bids were opened in such
tender process on May 27, 2015. The appellant was found to be
the lowest bidder. Letter of acceptance was issued to the
appellant on June 25, 2015. Agreement was entered into between
the appellant and Railway Authorities on September 26, 2015.
8. So far as applicability of the service tax regime on a contract of
the nature as entered into between appellant and the respondent
is concerned, it cannot be disputed that, the same is applicable.
In other words, service tax is payable in respect of services
rendered under the contract.
9. Issue before us is whether the appellant is liable to pay service
tax or that such service tax is to be paid by the Railway
Authorities.
10. Clause 2.2 of the contract becomes relevant in this context.
Clause 2.2 is as follows:
"2.2 UNIT PRICES:
The rates quoted by the Tenderer and accepted by the
purchaser shall hold good till the completion of the work and no
additional individual claim will be admissible on account of
fluctuation in market rates etc.
The rate quoted by the Tenderer shall include all incidental
charge like, freight transport, loading/unloading handling of
material, lifting, descent, insurance overage of Bankers charges,
Indemnity Bond, VAT, Sale Tax, Excise Duty, Octroi and other
taxes and duties etc.
Tenderer should carefully read as clearly explained in the
explanatory schedule."
11. Clause 2.2 of the contract, as it stands, fastens the liability of
all taxes and duties on the appellant. The contention of the
appellant that, since sales tax is not mentioned by name, the
same is not included in clause 2.2 of the contract cannot be
accepted.
12. Clause 2.2 of the contract is sufficiently wide so as to include
service tax. In fact, it fastens liability of all taxes upon the
appellant before us.
13. The estimate that the learned Arbitral Tribunal considered while
granting award in favour of the appellant was considered by the
learned Single Judge. Learned Single Judge returned the finding
giving reasons as to why such estimates should not be construed
to be sacrosanct and determinative of the unit price.
14. We respectfully agree with the view taken by the learned Single
Judge in the impugned judgment and order in this regard.
15. Estimate is done by the tenderer for the purpose of assessing
the price range of unit. A tenderer cannot be held to such
estimate so as to determine the ultimate liability between the
parties. In the facts of the present case, since the appellant before
us participated in an open tender process and became the lowest
bidder to secure the contract, appellant cannot be heard to
contend that the appellant is entitled to a higher or better price
than it quoted.
16. In a given case, the estimate of a unit price may vary between
Rs.400/- to Rs.500/-. The successful bidder in such case may
obtain the contract by quoting a price of let's say Rs.120/-.
Subsequent to the execution of the contract, the lowest bidder
cannot be allowed to claim the highest price of Rs.500/- after
securing the contract by quoting the price of Rs.120/-.
17. Jurisdiction under Section 37 of the Act of 1996 is limited. A
Court exercising its jurisdiction under Section 37 of the Act of
1996 is concerned with the reasons resulting in the impugned
judgment and order. Court can intervene only if the order under
appeal is passed beyond the jurisdiction under Section 34 of the
Act of 1996 or the Court failed to exercise such jurisdiction. Such
is not the case here.
18. In such circumstances, we find no merits in the present appeal.
19. AO-COM/5/2025 along with connected applications are
dismissed without any order as to costs.
(DEBANGSU BASAK, J.)
20. I agree
(MD. SHABBAR RASHIDI, J.)
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