M/S Asha Construction vs. State Of West Bengal And Ors.

Facts

The petitioner, M/s Asha Construction, was the L1 bidder in a tender process. An acceptance order was issued on January 16, 2023, indicating a GST rate of 12%. Subsequently, a government notification dated July 13, 2022, enhanced the GST rate from 12% to 18%. The petitioner requested the respondent authorities to incorporate this 6% enhancement into their quoted rates. The petitioner relied on a West Bengal Finance Department Memorandum dated November 22, 2022, which allowed for an enhancement of tendered value by up to 6% for unbilled works or tenders under process where the GST rate was indicated as 12%. The respondent authorities refused to grant the work order and forfeited the petitioner's Earnest Money Deposit (EMD), insisting on the original acceptance order terms.

Held

The Court held that the writ petition was maintainable. It found that the respondent authorities acted arbitrarily and discriminatorily by refusing to apply the provisions of their own Memorandum dated November 22, 2022. The Court reasoned that the acceptance order dated January 16, 2023, was issued subsequent to the Memorandum and was therefore subject to its operation. The Memorandum clearly provided for an enhancement of 6% on account of GST, even in cases where the tender was under process and indicated a 12% GST rate. The Court found that the petitioner's request for incorporating the 6% GST enhancement was squarely covered by the Memorandum. The Court also held that Clauses 19 and 21 of the tender document did not automatically permit cancellation or termination in the present circumstances, and the petitioner's communication requesting termination was made under duress. Consequently, the refusal to issue the work order and the forfeiture of the EMD were set aside. The Court directed the respondents to issue the work order to the petitioner by permitting the incorporation of the 6% GST enhancement, or alternatively, to refund the EMD with interest.

Key Issues

1. Whether the writ petition is maintainable in a dispute pertaining to a commercial contract, and if allowing the petitioner's prayer would amount to modification of tender terms, as argued by the State. The State contended that tender terms are akin to a contract, citing Rajasthan State Industrial Development and Investment Corporation Vs. Diamond and Gem Development Corporation Limited and (2019) 4 SCC 401, and that judicial review is limited unless palpable arbitrariness, discrimination, unreasonableness, or malice is established. The petitioner argued that the respondent authorities acted arbitrarily and illegally by refusing to apply their own Memorandum dated November 22, 2022, which provided for GST enhancement. 2. Whether the respondent authorities were justified in refusing to grant the work order and forfeiting the EMD, considering Clauses 19 and 21 of the tender document and a communication from the petitioner dated May 10, 2023, requesting "honorary termination" of its bid. The State argued that the petitioner's communication indicated a desire for termination. The petitioner countered that this communication was a consequence of the authorities' refusal to honour the Memorandum and was made under coercion.