Municipal Corporation vs. M/S Bsbk Private Limited 4Th Floor

Facts

The Municipal Corporation, Bilaspur, and the Chief Executive Officer, State Urban Development Agency (SUDA), filed appeals challenging a Single Judge's order. The Single Judge had quashed a State Government order dated 08.09.2023 concerning M/s BSBK Private Limited. The Single Judge held that the petitioner was entitled to price escalation and directed that no coercive steps be taken against them for 120 days. The appeals also sought directions for the petitioner to extend bank guarantees and continue stalled work. The petitioner, M/s BSBK Private Limited, was awarded contracts for the Pradhan Mantri Awas Yojana. The dispute arose over price escalation and GST refund claims, particularly concerning sites handed over in 2022 and thereafter.

Held

The High Court held that the petitioner, M/s BSBK Private Limited, is entitled to price escalation for sites handed over in 2022 and thereafter. The Court reasoned that while Clause 3.26 mentions no claims for escalation, Note-2 and Note-3 of Form 'F' indicate that rates are indicative and actual rates are determined on execution. The Court found that the delay in handing over sites was attributable to the respondents, justifying price escalation, citing precedents like Assam State Electricity Board and NTPC Limited. The Court also held that the petitioner is entitled to a GST refund as per Clause 3.27 of the agreement, due to the increase in GST rate from 12% to 18%. The impugned order dated 08.09.2023 passed by the State Government was quashed. The Secretary, Department of Urban Administration and Development, was directed to examine the matter critically, prepare a report within sixty days regarding site allotment, afford a hearing to all concerned, and pass an appropriate order on price escalation, particularly for sites handed over in 2022 and thereafter, within a further sixty days. No coercive steps were to be taken against the petitioner for 120 days. The petitioner agreed to extend bank guarantees for six months.

Key Issues

1. Whether the petitioner, M/s BSBK Private Limited, is entitled to price escalation for sites handed over in 2022 and thereafter, considering the contract terms and the delay in handing over sites, as per Clause 3.26 and Note-3 of the contract, and the principles laid down in Assam State Electricity Board (supra) and NTPC Limited (supra)? 2. Whether the petitioner is entitled to a GST refund, specifically concerning the increase in GST rate from 12% to 18% as per Notification No. 3/22 dated 13.07.2022, in accordance with Clause 3.27 of the Agreement? Contentions of the Appellants (Municipal Corporation and SUDA): The appellants argued that the petitioner was not entitled to price escalation, citing Clause 3.26 which states no claims for escalation are admissible and that time is the essence of the contract. They also sought directions for the petitioner to extend bank guarantees and resume work. They challenged the Single Judge's findings on price escalation and the quashing of the State Government's order. Contentions of the Respondent (M/s BSBK Private Limited): The respondent argued that despite the contract terms, they were entitled to price escalation due to delays attributable to the authorities in handing over sites. They relied on contractual notes indicating rates were indicative and actual rates would be determined on execution. They also claimed entitlement to GST refund as per Clause 3.27 due to the rate increase. They were willing to extend bank guarantees and resume work.