M/S Ramniwas Poddar vs. Muncipal Corporation Chirmiri

Held

The Court held that the impugned order (Annexure-P/1) passed by the Municipal Corporation, Chirmiri, is quashed. This decision was based on the fact that the Municipal Corporation itself, through its report submitted to the Court, agreed to withdraw the impugned order. The Court noted that the order had been rendered ineffective by the Municipal Corporation's subsequent decision. The Court also expressed an expectation that the petitioner would now proceed to execute the contract for public welfare on an emergent basis, with the required cooperation from the Municipal Corporation. The reasoning is that since the Corporation agreed to withdraw its order, there was no longer a basis for the order to stand. The ratio decidendi is that if a party to a dispute, especially a public authority, agrees to withdraw an impugned action before the High Court, the Court will give effect to that agreement and quash the action.

Facts

The petitioner, M/s Ramniwas Poddar, was awarded a contract by the Municipal Corporation, Chirmiri, for road construction. At the time of contract execution, the service rendered was exempted from Service Tax. However, with the introduction of GST in July 2017, no exemption was available. Fearing business loss due to the GST liability, the petitioner did not execute the contract. Consequently, the Municipal Corporation issued an order (Annexure-P/1) terminating the contract, blacklisting the petitioner, and forfeiting the earnest money. The High Court initially stayed the impugned order and later directed a personal hearing for the petitioner. Following this, the Corporation agreed to withdraw the impugned order and refund any GST paid by the petitioner, subject to proof of payment.

Key Issues

1. Whether the Municipal Corporation's order (Annexure-P/1) terminating the contract, blacklisting the petitioner, and forfeiting earnest money is legally sustainable, considering the change in tax regime from Service Tax to GST and the subsequent agreement by the Corporation to withdraw the order. This issue turns on the principles of natural justice and the Corporation's power to unilaterally alter its contractual stance based on a change in tax law and subsequent negotiations. Contentions: Petitioner: Argued that the impugned order was passed without considering the change in tax law and the subsequent willingness of the Corporation to resolve the matter. The petitioner relied on the Corporation's own report submitted to the Court agreeing to withdraw the order. Revenue/State: The judgment records no specific arguments from the Revenue/State regarding the sustainability of the order, but the Municipal Corporation, as Respondent No. 1, agreed to withdraw the impugned order.