Allowed¶29

M/S.Kalinga Combines Pvt. Ltd. v. Odisha Industrial Infrastructure Development Corp.(Idco)

Orissa HC15 Feb 2024WP(C)/33904/2021

Case brief

AI extract

What is this about?

Keywords: IDCO; GST; Clause-9; letter of acceptance dated 27.03.2018; office letter no.10371 dt. 18.05.2018; communication dated 06.09.2021; unilateral variation of contract terms after execution of work; wholly arbitrary and illegal; Construction of Driving Track at Keonjhar; Tender Call Notice 29.07.2017; Pre-GST rates; additional performance security; writ petition disposed; High Court of Orissa at Cuttack; W.P.(C) No. 33904 of 2021; Chakradhari Sharan Singh, Chief Justice; D. Dash, Judge.

What did the court decide?

Impugned communication dated 06.09.2021 set aside; all actions taken based upon it held illegal; Opposite Parties to proceed accordingly; writ petition disposed of with the aforesaid observations. ¶29

M/S.Kalinga Combines Pvt. Ltd. Vs Odisha Industrial Infrastructure Development Corp.(Idco) — Orissa HC (2024) — LawSathi Research

What the court decided

AI extract

Outcome

Impugned communication dated 06.09.2021 set aside; all actions taken based upon it held illegal; Opposite Parties to proceed accordingly; writ petition disposed of with the aforesaid observations.

¶29

Issue for consideration

Whether the Opposite Parties (IDCO) could, after the Petitioners had executed the work, unilaterally withdraw the substituted Clause-9 (as per letter dated 18.05.2018) through the communication dated 06.09.2021 and thereby vary the terms of the letter of acceptance, such variation being alleged to be wholly arbitrary and illegal.

¶28

Court's answer

After the work had already been executed by the Petitioners, the Opposite Parties could not have varied the terms contained in Clause-9 of the letter.

¶29

Ratio / Principle

The impugned communication dated 06.09.2021 cannot be sustained and is set aside; the consequences of its quashing shall follow.

¶29

Key takeaways

All actions taken based upon the communication dated 06.09.2021 are held illegal, and the Opposite Parties are required to proceed accordingly.ratio¶30

Detailed headnote1 paragraphs

High Court of Orissa at Cuttack, W.P.(C) No. 33904 of 2021 (order dated 15.02.2024; Bench: Chakradhari Sharan Singh, Chief Justice and D. Dash, Judge). M/s. Kalinga Combines Pvt. Ltd. executed the work of 'Construction of Driving Track at Keonjhar' under a letter of acceptance dated 27.03.2018 whose Clause-9 stipulated that the finalized rate was inclusive of GST; by office letter no.10371 dt. 18.05.2018 the Chief General Manager (Civil), IDCO directed that Clause-9 be read to mean the contractor bears all local taxes excluding GST and GST as applicable would be borne by IDCO. After completion of the work in March 2021, IDCO's communication dated 06.09.2021 withdrew those instructions and directed that payments be adjusted on a Pre-GST basis. Held: after execution of the work the Opposite Parties could not vary the terms of Clause-9; the communication dated 06.09.2021 was unsustainable and was set aside; all actions taken based upon it were held illegal; the writ petition stands disposed of accordingly.

¶1

IN THE HIGH COURT OF ORISSA AT CUTTACK

¶2

W.P.(C) No. 33904 of 2021

¶3

M/s. Kalinga Combines Pvt. Ltd. and another

¶4

…. Petitioners

¶5

Mr. Gouri Mohan Rath, Advocate -versus-

¶6

Odisha Industrial Infrastructure Development Corporation (IDCO) and others

¶7

…. Opposite Parties

¶8

Mr. Pronoy Mohanty, Advocate

¶9

CORAM:

¶10

THE CHIEF JUSTICE

¶11

MR. JUSTICE D. DASH

Order No.

ORDER 15.02.2024

This matter is taken up through Hybrid mode.

¶16

Heard Mr. Gouri Mohan Rath, learned counsel appearing on behalf of the Petitioners and Mr. Pronoy Mohanty, learned counsel appearing on behalf of the Opposite Parties.

¶17

The facts of the case are not at all in dispute. The Petitioner No.1

¶18

is the Company engaged in the business of execution of the works contract, whereas Petitioner No.2 is the Managing Director of Petitioner No.1 and a shareholder of the said company.

¶19

Pursuant to the Tender Call Notice dated 29.07.2017 inviting bids for execution of the work of “Construction of Driving Track at Keonjhar”, the Petitioner had submitted his bid and was successful. The letter of acceptance was issued by Opposite Party No.2 on 27.03.2018 whereupon the Petitioner had submitted the requisite

¶20

Page 1 of 3

¶21

security deposit and had also deposited the additional performance security. Clause-9 of the said letter of acceptance dated 27.03.2018 and the agreement clearly stipulated that the finalized rate was inclusive of GST.

¶22

It is pertinent to note that on 18.05.2018, the Chief General Manager (Civil), I/c in his communication to the Divisional Head, IDCO, Jajpur Road Division, Jajpur with reference to Clause-9 of the said letter of acceptance had clearly mentioned that it shall be read as under:

¶23

“Sl. No.9- The contractor is to bear all local taxes, Cess, ferry, tollage charges, royalties and any other charges but excluding GST. GST as applicable will be borne by IDCO.

¶24

It is also an admitted position that the Petitioner had successfully completed execution of the work in March, 2021. After completion of the work by the Petitioner, the Chief General Manager (Civil), in its communication dated 06.09.2021 addressed to the Divisional Head, IDCO, Jajpur Road Division, Jajpur regarding the same contract noted as under:

¶25

“The Technical Sanction to the estimate for the work noted above was accorded based on Pre GST rates and tender was also approved accordingly. You are therefore requested to follow the guide lines issued vide the Finance Dept. office memorandum referred above (copy enclosed) for implementation of GST for the works.

¶26

The instructions issued on payment of GST vide this office letter no.10371 dt. 18.05.2018 is withdrawn. Payments made to the executing agencies may be adjusted accordingly.”

¶27

Page 2 of 3

¶28

The Petitioners have questioned the subsequent decision of the Opposite Parties as contained in the said communication dated 06.09.2021 on the ground that the concerned Opposite Parties after execution of the work have unilaterally withdrawn the substituted Clause-9 as per letter dated 18.05.2018 and thereby varied the term of the letter of acceptance which is wholly arbitrary and illegal.

¶29

After having heard learned counsel appearing on behalf of the Petitioners and learned counsel for the Opposite Parties, we are of the considered view that the Opposite Parties after the work having already been executed by the Petitioners could not have varied the terms contained in Clause-9 of the letter. The impugned communication dated 06.09.2021 cannot be sustained and is accordingly set aside. The consequences of the quashing of the said communication shall follow.

¶30

All actions taken based upon the said communication dated 06.09.2021 are held illegal.

¶31

The Opposite Parties shall be required to proceed accordingly.

¶32

With the aforesaid observations, the writ petition stands disposed of.

¶33

(Chakradhari Sharan Singh)

Chief Justice

(D. Dash)

Judge

S. Behera

Signature Not Verified

¶39

Page 3 of 3

¶40

Digitally Signed Signed by: SUMANTA BEHERA Designation: Senior Stenographer Reason: Authentication Location: High Court of Orissa, Cuttack Date: 16-Feb-2024 12:11:20

M/S.Kalinga Combines Pvt. Ltd. v. Odisha Industrial Infrastructure Development Corp.(Idco)

Case brief

What is this about?

What did the court decide?

M/S.Kalinga Combines Pvt. Ltd. v. Odisha Industrial Infrastructure Development Corp.(Idco)

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Procedural history

Parties & counsel

Coram

Case details

Similar cases

Suresh Kumar Agrawal Vs State of Odisha

Santosh Kumar Vs State of Odisha

M/S. Sai Om Agency, Koraput Vs State of Odisha