M/S.Renaatus Projects PVT.LTD vs. The Chief Engineer

Facts

The petitioner, M/s. Renaatus Projects Pvt Ltd, participated in a tender conducted by the Central Public Works Department (CPWD) in 2017. The tender required bidders to include all taxes, including GST, in their quotes. Initially, the GST rate for works was 12%, and the petitioner quoted accordingly. However, the GST rate was revised to 18% before the financial bids were opened. The petitioner requested an increase in the GST component to 18% as per Clause 38 of the contract. The 2nd respondent, the Executive Engineer, rejected this request, cancelled the petitioner's tender, and forfeited 50% of the Earnest Money Deposit (EMD) amounting to Rs. 40,77,725/-. The petitioner was also debarred from bidding. The petitioner filed a writ petition in 2018 challenging this order.

Held

The Court allowed the writ petition on the sole ground of violation of the principles of natural justice. The Court noted that the impugned order passed by the 2nd respondent did not refer to any show cause notice or opportunity of hearing provided to the petitioner prior to its issuance. Furthermore, the averments made in the writ petition by the petitioner were not denied by the respondents, as they had not filed a counter affidavit. Consequently, the Court set aside the impugned order and remanded the matter back to the respondents for fresh consideration. The respondents were directed to consider the petitioner's case afresh after affording an opportunity of hearing to the petitioner. The Court did not decide on the merits of the petitioner's request regarding the GST rate revision or the forfeiture of the EMD.

Key Issues

1. Whether the impugned order passed by the 2nd respondent, rejecting the petitioner's request to revise the GST rate and forfeiting the EMD, is in contravention of tender conditions and principles of natural justice? (Mixed question of law and fact, turning on Clause 38 of the contract and principles of natural justice). Petitioner's contentions: The petitioner argued that as per the tender conditions, they deposited an EMD of Rs. 40,77,725/- and provided a bank guarantee. They contended that the GST rate was revised from 12% to 18% after the 20th GST Council Meeting on 05.08.2017 and revised again on 21.09.2017. The petitioner was prepared to pay the revised 18% GST as per Clause 38 of the contract. Crucially, the petitioner argued that the 2nd respondent passed the order rejecting the tender and forfeiting the EMD without providing any opportunity of hearing, thus violating the principles of natural justice. Respondents' contentions: The judgment records no specific contentions filed by the respondents in their counter affidavit.