Gurgaon (Haryana) vs The State Of Jharkhand
2023 Latest Caselaw 1748 Jhar

                 IN THE HIGH COURT OF JHARKHAND AT RANCHI

                                W.P.(C) No. 81 of 2016

                South West Pinnacle Exploration Pvt. Limited having its registered
                office at Suite - 522, Galleria Towers, DLF Phase - IV, Gurgaon -
                122009 (Haryana) through its Managing Director, Vikash Jain, son of
                Shri Gajraj Jain, resident of Suite - 522, Galleria Towers, DLF Phase
                - IV, Gurgaon - 122009, P.O. Galleria, P.S. Sushant Lok, District
                Gurgaon (Haryana)                             ...      ...    Petitioner
                                            Versus
                1. The State of Jharkhand
                2. The Director, Geology, Department of Mines, Directorate of
                    Geology, Government of Jharkhand, Engineers Hostel, 2nd Floor,
                    Dhurwa, P.O. and P.S. Dhurwa, District Ranchi
                3. The Deputy The Director, Geology, Advance Planning and
                    Monitoring, Department of Mines, Directorate of Geology,
                    Government of Jharkhand, Engineers Hostel, 2nd Floor, Dhurwa,
                    P.O. and P.S. Dhurwa, District Ranchi
                4. The Jharkhand Urga Utpadan Nigan Limited through its Chairman
                    having its office at Engineers' Building, H.E.C., Dhurwa, P.O. and
                    P.S. Dhurwa, District Ranchi
                5. The Chief Engineer, (Banhardi Coal Block), Jharkhand Urga
                    Utpadan Nigan Limited through its Chairman having its office at
                    Engineers' Building, H.E.C., Dhurwa, P.O. and P.S. Dhurwa,
                    District Ranchi
                6. The Jharkhand State Electricity Board through its Chairman having
                    its office at Engineers' Building, H.E.C., Dhurwa, P.O. and P.S.
                    Dhurwa, District Ranchi The Deputy Commissioner, Jamtara,
                    P.O., P.S. and District Jamtara
                7. Accountant General, Jharkhand P.O. + P.S. - Doranda, District -
                    Ranchi                              ...       ...       Respondents
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CORAM :HON'BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY

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For the Petitioner : Mr. Anil Kumar Sinha, Sr. Advocate : Mr. Vikram Nath Shahdeo, Advocate For the Resp. Nos.4 to 6 : Mr. Mrinal Kanti Roy, Advocate For the Respondent : Mr. Rohit, Advocate For the Resp. No.7 : Mr. Sudarshan Shrivastava, Advocate For the State : Mr. Awanish Shekhar, A.C. to AAG I

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14/26.04.2023 Heard learned counsel for the parties.

2. This writ petition has been filed for the following reliefs:

"(i) For issuance of appropriate writ(s)/order(s)/and /or direction(s), particularly a writ in the nature of Mandamus commanding upon the respondents, particularly respondent no.4, to immediately and forthwith release and pay the admitted dues of the petitioner which comes to Rs.16,61,130.24;

(ii) For issuance of appropriate writ(s)/order(s)/and /or direction(s), particularly a writ in the nature of Mandamus

commanding upon the respondents, to forthwith release the Bank guarantee of Rs.80 lakh which is valid up to March 31, 2016, which was submitted by the petitioner;

(iii) For issuance of appropriate writ(s)/order(s)/and /or direction(s), particularly a writ in the nature of Mandamus restraining the respondents not to encash the Bank guarantee which was submitted by the petitioner;

(iv) For issuance of appropriate writ(s)/order(s)/and /or direction(s), particularly a writ in the nature of certiorari for quashing the letter no.203 dated 23.12.2015 issued by respondent no.5 as contained in Annexure - 11 by which the petitioner has been communicated that Rs.1,72,59,690/- is to be recovered from him on the ground of excess payment, which is illegal and arbitrary.

(v) For grant of any other appropriate relief(s) as Your Lordships may deem fit and proper in the facts and circumstances of the case."

3. The foundational facts of the present case are not in dispute which are as follows:

(i) The Government of Jharkhand had invited tender for drilling of different coal blocks and geophysical logging.

(ii) The petitioner had participated in the tender process, but initially the work involved in this case was not allocated to the petitioner .

(iii) However, respondent no.3 issued Letter No.2286 dated 08.03.2013 (Annexure - 2) seeking the consent of the petitioner as to whether the petitioner was ready to explore one Banhardi Coal Block under Jharkhand State Electricity Board and whether the petitioner was ready to complete the work at the old rate.

(iv) The petitioner responded vide letter dated 18.03.2013 mentioning that the petitioner was ready to accept the earlier agreed rate, but excluding service tax which was going to be only 12.36% as per current service tax rate.

(v) The respondent no.2 sent a letter to the Member, Generation, of the then Jharkhand State Electricity Board seeking acceptance/consent and vide Annexure- 5, the Jharkhand State

Electricity Board accepted the terms and conditions offered by the petitioner and placed before them through the State Government.

(vi) Consequently, the respondent no.2 issued work order to the petitioner dated 03.05.2013 (Annexure - 6) clearly mentioning that the unit rate was excluding service tax. The petitioner completed the work as per the terms of the work order and completion certificate was issued on 03.12.2014.

(vii) The petitioner raised a bill for an amount of Rs.16,61,130.24 vide letter dated 17.11.2014 (Annexure - 8) and again reminded for payment and also requested for release of the bank guarantee.

(viii) Ultimately, the respondent no.5 issued letter no.203 dated 23.12.2015 by which the petitioner was communicated that it has been decided to recover Rs.1,72,59,690/- which was alleged to have been paid in excess to the petitioner. The letter dated 23.12.2015 (Annexure - 11) is impugned in the present case.

Arguments of the counsel appearing for the petitioner

4. The learned counsel for the petitioner has submitted that as is apparent from Annexure - 11 dated 23.12.2015 and also the records of this case, the amount of Rs.1,43,30,321/- is said to be the extra payment made on account of service tax by stating that the service tax was not payable to the petitioner as the petitioner had accepted the L1 rate and the rate was valid for 3 years from the date of tender i.e., upto November, 2014 and the rate was inclusive of service tax and the said component of the service tax was sought to be realized with interest at the rate of 12% per annum and the mode for recovery of the amount was also mentioned in the impugned communication which included encashment of bank guarantee which was for an amount of Rs.80 lakhs.

5. The learned counsel for the petitioner has submitted that the petitioner had negotiated with respect to the rate and had clearly mentioned that the petitioner would execute the work at the old rate excluding service tax. He submits that his counter offer was duly accepted by the respondents and work order was also issued by the respondent no.2 excluding service tax and the terms and conditions were also accepted by the then Jharkhand State Electricity Board which is apparent from Annexure - 5. The learned counsel has

submitted that once the terms and conditions as offered by the petitioner was duly accepted and the petitioner had clearly indicated that service tax was to be charged extra, there was no question of non- payment of service tax by the respondents. He also submits that throughout the period of execution of work, the bills were paid and the service tax component was also paid, but when the petitioner started asking for the remaining amount after completion of the work , the impugned order dated 23.12.2015 has been passed by alleging that the service tax was not payable. He submits that it is not in dispute that the entire recovery sought to be done by the impugned order is on account of service tax component.

6. The learned counsel has relied upon a judgment passed by this Court in the case of M/s Setu Printers Vs. State of Jharkhand reported in 2011 (4) JCR 374 (Jhr) to submit that the action of the respondents is tainted with malafide and there is no justification for recovery sought to be made on account of service tax. He has also submitted that the entire case is based on admitted facts. He submits that neither the work order nor the correspondences exchanged amongst the parties are in dispute. The learned counsel submits that the respondents while passing the impugned order dated 23.12.2015 have failed to consider that the petitioner was not the successful bidder but upon being asked, the petitioner had negotiated and thereafter upon due acceptance of negotiated proposal of the petitioner, the work order was issued to the petitioner. He submits that after competition of work , the respondents cannot deny the legitimate dues of the petitioner and the action of the respondents is ex-facie arbitrary and violative of Article 14 of the Constitution of India. The impugned order be quashed and the admitted amount be directed to be released in favour of the petitioner.

Arguments of the counsel appearing for the Respondent no.4 to 6

7. Learned counsel appearing on behalf of the respondent nos.4 to 6, on the other hand, has referred to page 33 of the counter-affidavit to submit that the rates quoted by the successful bidder was valid for a period of 3 years and though the petitioner was not a successful bidder, but he was to execute the work, if at all, in the same rate as that of the L1 bidder. The validity period of the rate being for 3 years,

no further amount could have been paid to the petitioner. The rate quoted by L-1 bidder was inclusive of service tax and the petitioner was entitled to claim the same rate inclusive of service tax. The learned counsel has also submitted that there is no privity of contract between the petitioner and the respondent nos.4, 5 and 6.

8. However, during the course of arguments, the various communications which have been annexed by the petitioner in the writ petition are not in dispute. It is also not in dispute that throughout the bills were raised by the petitioner upon respondent nos.4, 5 and 6 and were being paid by the respondent nos.4, 5 and 6 and the impugned order of recovery on account of service tax component already paid to the petitioner has also been issued by respondent nos.4, 5 and 6. Arguments of the counsel appearing for the Accountant General

9. The learned counsel appearing on behalf of the Accountant General, who was impleaded by virtue of order passed by this Court has referred to para 4, 9, 10 and 12 of the counter-affidavit filed by them, to submit that as per the direction of this Court dated 05.04.2016, a meeting was held on 03.05.2016 with the competent authority of Mines & Geology Department, Government of Jharkhand and the electricity company. He submits that during the course of audit certain audit objections were raised and placed in audit report of the Comptroller and auditor general of India on Public sectors for the financial year 2014-15 and was laid in Jharkhand Vidhan Sabha on 15.03.2016. He has referred to para 10 to submit that though it has been mentioned in the affidavit filed by the parties that the impugned demand notice was issued by JUUVNL as there was an audit objection but the office of the Accountant General has never given such direction, moreover, the office of the Accountant General has no authority and sanction of law to issue such direction. The impugned demand notice was issued on their own and the office of the Accountant General has nothing to do with it. Once the audit report is prepared and laid before the House then the office of the Accountant General becomes functus officio. The learned counsel has also referred to para 12 of the counter-affidavit to submit that the subject matter of the present writ application is whether the service tax is recoverable by the Board even though it had given consent to the

terms and conditions of the petitioner as sought by the department. It is also to be considered whether such consent from a non-competent authority has any value to it, as the department was clearly responsible for NIT, award for the contract and supervision of work. He has also submitted that the payment made by Board were as per the division of responsibility resting in the minutes of meeting of the Chief Secretary. There is clarity in the inter- se roles of the two sets of respondents, however, one may have attempted to diffuse the responsibility of decision making by involving the other. It has also been stated that the responsibility of loss to the exchequer due to lack of adherence to tender procedure while awarding the contract to the writ petitioner in may 2013 lies upon the department which has entrusted the task to the petitioner.

Findings of this Court.

10. After hearing the learned counsel for the parties and considering the facts and circumstances of this case, it is not in dispute that initially the petitioner was never allocated the work involved in this case through the tender process though the petitioner had participated in the tender and was allocated different works. It further appears that later on the respondent no.2 had invited the petitioner vide letter dated 08.03.2013 for negotiation by asking the petitioner as to whether the petitioner was ready to explore one Banhardi coal block under Jharkhand State Electricity Board and whether the petitioner was ready to complete the said work on old rate.

11. In response to the letter dated 08.03.2013, the petitioner issued letter dated 18.03.2013 (Annexure - 3) stating that the petitioner was ready to do the work at the old rate provided the service tax shall be paid by the department . The said letter was forwarded by respondent no.2 to member generation, Jharkhand State Electricity Board for acceptance/consent to the offer of the petitioner which was ultimately accepted by Jharkhand State Electricity Board vide letter dated 18.04.2013 (Annexure - 5). Accordingly, the respondent no.2 after seeking consent from the Jharkhand State Electricity Board issued work order dated 03.05.2013 excluding service tax (Annexure - 6).

12. Admittedly, the petitioner has completed the work and completion certificate dated 03.12.2014 (annexure-7) was issued.

13. When the petitioner raised a bill of Rs.16,61,130.24 and gave repeated reminders for payment of bill, the impugned letter dated 23.12.2015 (Annexure-11) was issued asking the petitioner to refund the component of service tax paid to the petitioner by respondent nos.4 to 6 with interest @ 12%; total amounting to Rs.1,72,59,690/-.

14. This Court finds that the petitioner had negotiated with the respondents and had clearly stipulated that the petitioner was ready to do the work at the old rate, but excluding the service tax. The offer which was made by the petitioner vide letter dated 18.03.2013 was duly accepted and the work order was issued on 03.05.2013. Even the payments were made to the petitioner when the petitioner raised the bill on account of service tax also. It is also not in dispute that throughout the bills were raised by the petitioner upon respondent nos.4, 5 and 6 and were being paid by the respondent nos.4, 5 and 6 and the impugned order of recovery on account of service tax component already paid to the petitioner has also been issued by respondent nos.4, 5 and 6.

15. This Court finds that the respondents have taken work from the petitioner after the petitioner had negotiated. Upon negotiation and acceptance of the offer of the petitioner the work order involved in this case was issued in terms of the accepted offer of the petitioner.

16. This Court is of the considered view that after having accepted the terms that the rate for work to be executed by the petitioner would be old rate but excluding service tax followed by issuance of work order at old rate but excluding service tax and after completion of work by the petitioner in terms of the work order, it was not open to the respondents to say that the service tax component was wrongly paid to the petitioner and that the old rate was inclusive of service tax. deny payment in terms of the work order issued to the petitioner. Such act on the part of the respondents by issuance of the impugned order amounts to changing the terms of the work order pursuant to which the work involved in this case was executed by the petitioner. Such exercise of power is ex-facie arbitrary and is violative of article 14 of the constitution of India. Accordingly, the impugned letter dated 23.12.2015 seeking recovery of the service tax component paid to the petitioner is ex facie arbitrary and cannot be sustained in the eyes of

law, which is hereby set aside. The petitioner cannot be deprived of his legitimate and admissible dues in terms of the work order involved in the present case.

17. Consequently, the respondents are required to release the admissible amount to the petitioner prior to 31.05.2023. The respondents no.4 is directed to pay the amount of Rs.16,61,130.24 prior to 31.05.2023, which is said to be dues payable to the petitioner on account of the work completed by the petitioner, subject to verification and if there is no other legal impediment. Upon settlement of accounts, the bank guarantee furnished by the petitioner be also released.

18. This writ petition is accordingly disposed of.

19. Pending interlocutory application, if any, stands closed.

(Anubha Rawat Choudhary, J.) Saurav/