B4B It Solutions Private Limited vs. The State Of Ap And 4 Ors

Held

The Court acknowledged the submissions from both parties. It found that the instant writ petition could be disposed of by directing the respondents (State of AP and Ors.) to consider the representations made by the petitioner. Furthermore, the Court directed that the petitioner and respondent No. 5 should jointly address the difficulties faced by respondents No. 1 to 4 in complying with the agreement dated 25th February, 2022. Both parties are to take necessary steps within 30 days of receiving a certified copy of the order. The Court did not make a definitive finding on the legality of the initial deposit but focused on resolving the procedural and contractual issues going forward. The ratio decidendi is that parties to a contract, along with the contracting authority, should collaboratively resolve issues hindering contractual compliance, especially when procedural hurdles like GST registration are involved.

Facts

The petitioner, B4B IT Solutions Private Limited, and respondent No. 5, M/s Kenge Construction Co, entered into an agreement to operate a joint account for IT Software and Infrastructure products and services. They successfully bid for a tender dated 03.02.2022, awarded by the National Health Mission, Arunachal Pradesh, for implementing iHMIS. The agreement stipulated a 49% stake for the petitioner and 51% for respondent No. 5. The petitioner alleges that the Mission Director credited Rs. 60.14 crores into the account of respondent No. 5, contrary to the agreement that funds should be credited to a joint account. The petitioner has filed a money suit regarding this deposit. The petitioner apprehends future deposits of approximately Rs. 42 crores will also be misdirected.

Key Issues

1. Whether the respondents (State of AP and Ors.) were justified in depositing funds into the account of respondent No. 5 instead of the joint account of the petitioner and respondent No. 5, as per the agreement dated 25.02.2022? Petitioner's arguments: The petitioner contends that the agreement clearly stipulated funds should be credited to a joint account. The deposit into respondent No. 5's account is a breach of this agreement. They have made representations to the respondents highlighting this issue, but received no response, necessitating the writ petition. They also point to the ongoing money suit filed concerning the initial deposit. Revenue/State's arguments: The learned Standing counsel for respondents No. 1 to 4 submits that the deposit was made into respondent No. 5's account due to the absence of GST registration for the joint venture and a lack of a PAN card for the joint entity. This prevented processing bills into the joint account, leading to the deposit into the account of respondent No. 5, who is a partner.