SCA/11966/2008 1/8 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 11966 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE M.R. SHAH ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge? ========================================================= POSITIVE POINT GRAPHIC PROCESS LTD - Petitioner(s) Versus BHARAT SANCHAR NIGAM LIMITED - Respondent(s) ========================================================= Appearance : MR YF MEHTA for Petitioner(s) : 1, MR PRAFUL J BHATT for Respondent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE M.R. SHAH Date : 26/12/2008 ORAL JUDGMENT 1. Rule. Mr.Praful Bhatt, learned Advocate waives service of rule on behalf of the respondent. With the consent of the learned Advocates appearing on behalf of the respective parties, the petition is taken up for final hearing today. SCA/11966/2008 2/8 JUDGMENT 2. By way of this petition under Article 227 of the Constitution of India, the petitioner – original plaintiff has prayed for an appropriate Writ, direction and /or order quashing and setting aside the impugned order dated 24.07.2008 passed by the learned Auxi. Chamber Judge, City Civil Court, Ahmedabad below Exh.9 – Summons for Judgment in Summary Suit No.2339 of 2007 by which the learned Chamber Judge has granted unconditional leave to defend the suit to the respondent herein – original defendant. The petitioner – original Company had instituted Summary Suit No.2339 of 2007 to recover the amount of Rs.23,85,394/- being the amount due under the contract, for octroi, VAT, TDS and LD Charges together with interest @ 12% per annum as per the terms and conditions of the contract and custom and usage prevailing in the market. As per the petitioner – plaintiff is carrying out business in the name and style of M/s.Positive Point Graphic Process Ltd, Ahmedabad in the business of graphic process, sign graphics, glow sign board etc. That the defendant had given public advertisement in the local newspaper on 15.02.2006 for glow sign board and in response to the said advertisement, the plaintiff had applied for the same and defendant's Chief General Manager invited the plaintiff for discussion and negotiations were held in the meeting on 05.05.2006, thereafter, the offer of the petitioner came to be accepted and contract between the plaintiff and the defendant through its Chief General Manager had concluded on 05.05.2006. A purchase order came to be SCA/11966/2008 3/8 JUDGMENT issued in favour of the petitioner-plaintiff on 31.07.2006. As per the said purchase order, the plaintiff started to supply 10,000 Nos. of Glow Sign Board. The petitioner – plaintiff completed the work and send three bills on 14.10.2006 Invoice No.12134 of Rs.38,67,765/-; dated 11.11.2006 Invoice No.13362 of Rs.34,87,103 and dated 11.12.2006 Invoice No.15102 of Rs.74,90,344/-, total amount of Rs.1,48,45,212/-. Against which the defendant has paid Rs.1,24,59,818/- on 05.02.2007 and remaining amount of Rs.23,85,394/- is due and payable by the defendant to the plaintiff. It appears that aforesaid amount has been deducted by the defendant towards VAT, Octori etc. For claiming aforesaid amount of Rs.23,85,394/- with interest which comes to Rs.28,64,110/-, the plaintiff had instituted aforesaid Summary Suit under Order XXXVII of the Code of Civil Procedure. In the said suit, the petitioner – plaintiff took out Summons for Judgment and having served with the summons, respondent – BSNL submitted application for leave to defend and on interpretation of the tender condition that price quoted by the plaintiff is inclusive of all taxes and the learned Chamber Judge considered that there are serious triable issues and therefore, granted unconditional leave to defend. Being aggrieved and dissatisfied with the same, the petitioner – plaintiff has preferred present Special Civil Application under Article 227 of the Constitution of India. 3. Mr.Y.F.Mehta, learned Advocate for the SCA/11966/2008 4/8 JUDGMENT petitioner has vehemently submitted that in the purchase order dated 31.07.2006 condition no.1 is very clear that offer of bidder is inclusive of all levies and taxes i.e. service tax, sales tax & excise, packing, forwarding, freight and insurance etc. but excluding Octrio / Entry tax / VAT which will be paid extra as per actual, wherever applicable on production of documentary evidence as per tender condition. It is further submitted that even at the relevant time when tenders were invited, VAT was not introduced at all and therefore, VAT was not payable which came to be introduced subsequently after tenders were invited, the petitioner – plaintiff and others submitted their objection, and therefore, it is submitted that conscious decision was taken by the defendant that offer of the bidder is excluding Octori, Entry Tax / VAT. Therefore, it is submitted that the defendant were not justified in deducting the amount from the amount due and payable to the petitioner under the aforesaid contract. It is submitted that the learned Chamber Judge has committed an error in not properly appreciating above terms and conditions and relying upon the general terms and conditions. Therefore, it is requested to allow present Special Civil Application. 4. Petition is opposed by Mr.Bhatt, learned Advocate for the respondent – BSNL. It is submitted that general terms and conditions of the tender agreement are very clear and offer and the price quoted by the petitioner – plaintiff and others are SCA/11966/2008 5/8 JUDGMENT inclusive of all taxes and therefore, even VAT was required to be paid by the petitioner. Therefore, the respondent – BSNL is justified in deducting the same and paying to the authority. It is submitted that in any case aforesaid is serious triable issue and therefore, the learned Chamber Judge has rightly granted unconditional leave to the respondent – defendant, which is not required to be interfered with by this Court in exercise of powers under Article 227 of the Constitution of India. 5. Heard the learned Advocates appearing on behalf of the respective parties. 6. At the outset it is required to be noted that tenders were invited by the respondent – BSNL on 15.02.2006. It is to be noted that at the time when the petitioner – plaintiff and others submitted their offer, VAT was not in existence. VAT came to be introduced in April, 2006. It is also required to be noted that purchase order came to be issued by the respondent – defendant in favour of the petitioner – plaintiff on 31.07.2006. Condition No.1 of the said purchase order is as under: The Bidder shall give the total composite price inclusive of all levies & taxes i.e. service tax, sales tax and excise, packing, forwarding, freight and insurance etc. but excluding Octroi / Entry Tax / VAT which will be paid extra as per actual, wherever applicable on production of documentary evidence as per tender condition. SCA/11966/2008 6/8 JUDGMENT 7. Now as per the instructions to the Bidders, 'purchase order' means the order placed by the purchaser on the supplier signed by the purchaser including all attachments and appendices thereto and all the documents incorporated by the reference therein. The purchase order shall be deemed as the “Contract” appearing in the document. Thus, prima- facie, it appears that purchase order is contract. Now as stated in the aforesaid condition No.1, bid submitted by the bidder is composite price, inclusive of all levies & taxes i.e. service tax, sales tax and excise, packing, forwarding, freight and insurance etc. but excluding Octroi / Entry Tax / VAT which will be paid extra as per actual, wherever applicable on production of documentary evidence as per tender condition. Therefore, it prima-facie appears that bid submitted by the petitioner – plaintiff was excluding Octroi / Entry Tax / VAT and same is to be paid extra as per actual. The learned Chamber Judge has relied upon the general terms and conditions that offer of the bidder is inclusive of all taxes. It is to be noted that at the relevant time when bids were invited VAT was not in existence at all therefore, it is to be construed that whatever taxes were leviable at the time when bids were invited, same can be considered. It appears that having considered the same that VAT came to be introduced subsequently, in the purchase order dated 31.07.2006 aforesaid condition is incorporated, that the offer is excluding Octori / Entry Tax / Vat. Mr.Bhatt, learned SCA/11966/2008 7/8 JUDGMENT Advocate for the respondent – defendant has submitted that it appears that said condition is by mistake, same prima-facie cannot be accepted at this stage. In any way considering above, it appears that the learned Chamber Judge has committed error in granting unconditional leave to defendant to defend the aforesaid suit. That the respondent – defendant is not justified in deducting aforesaid amount towards VAT on the ground that same is payable by the petitioner. Under the circumstances, it appears to the Court that considering aforesaid defence and aforesaid aspect, learned Chamber Judge ought to have directed the respondent – defendant to deposit atleast 50% of the claim amount and ought to have granted conditional leave on such deposit. Under the circumstances, the impugned order passed by the learned Chamber Judge granting unconditional leave requires to be quashed and set aside and/or modified to the extend directing the respondent – defendant to deposit 50% of the suit claim and conditional leave is to be granted to the respondent – defendant accordingly. 8. For the reasons stated above, the petition succeeds. The impugned order dated 24.07.2008 passed by the learned Auxi. Chamber Judge, City Civil Court, Ahmedabad below Exh.9 – Summons for Judgment in Summary Suit No.2339 of 2007 is quashed and set aside and/or modified to the extent that the respondent – defendant is granted conditional leave to defend aforesaid suit on deposit of 50% of Rs.23 lacs, to be SCA/11966/2008 8/8 JUDGMENT deposited within a period of 6 (six) weeks. On such deposit, the respondent – defendant be directed to file written statement and matter shall be transferred to the list of long causes suits. Rule is made absolute to the aforesaid extent. No order as to costs. [M.R.Shah,J.] satish