M/S. My Estates Infrastructures vs. The Chief Engineer (R And D)

Facts

The petitioner, M/s. MY Estates Infrastructures, an 'A' class contractor with Military Engineer Services, was awarded a contract for special repairs to buildings in the DRDO Complex, Bengaluru, in 2017-18. The petitioner completed the work and received the final bill. Three years later, on June 9, 2021, the respondent No. 2 (Garrison Engineer) demanded Rs. 21,76,000, citing a reduction in GST for government work from 18% to 12% effective from September 29, 2017. The petitioner argued that their bid was submitted before this notification and that the demand was time-barred and violated special condition No. 23.2 of the contract. Representations made by the petitioner were not considered.

Held

The Court noted that the issue in the present case, concerning the reduction of GST rates in terms of Notification No. 20 of 2017, was similar to the issue decided in WP No. 13522 of 2017 by the Madras High Court. In that case, considering the arbitration clause in the contract, the parties were directed to pursue their remedies before the Arbitrator. Similarly, in the present case, the tender document (CA No. CERD/BAN/TOKEN/101 OF 2016-17) contained a clause (6.1(c)) and special condition No. 33, which stipulated that all disputes should be referred to a sole conciliator. Therefore, the Court directed the petitioner to approach the Conciliator as per the tender document to raise and settle the dispute. The interim protection granted was extended for 30 days from the date of receipt of the order.

Key Issues

1. Whether the demand for GST adjustment, raised three years after the final bill settlement and after the notification reducing the GST rate was issued, is barred by limitation under the contract terms, specifically special condition No. 23.2? (Question of law and fact, concerning contract provisions and limitation). 2. Whether the respondent No. 2's order demanding the GST adjustment is liable to be quashed for violating the contract provisions and the principles of natural justice, given the delay in raising the dispute? Petitioner's Arguments: The petitioner contended that the demand was raised after an unreasonable delay of three years from the final bill settlement, rendering it time-barred. They relied on special condition No. 23.2 of the contract, which they argued was violated. They also submitted that their bid was placed on June 19, 2017, prior to the notification dated September 29, 2017, reducing the GST rate, and that their representations were ignored. Respondents' Arguments: The learned Additional Solicitor General relied on the judgment of the High Court of Madras in P. Chirmasamy Vs. The Assistant Garrison Engineer (I), Coimbatore in WP No 13522 of 2021 dated 6-1-2022.