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Judgment
S. Rajeswaran, J.—The case of the petitioner is as follows:
The petitioner was the successful bidder for the supply of 110 MV 1 x 630 XLPE Aluminium Cable, 1 x 240 sq.mm XLPE Copper cable and
Accessories and installation of Joints and Termination, final testing and commissioning vide Tender Specification No. T-1458. Since the price of
the petitioner was the lowest, the petitioner was awarded with Letter of Indent dated 7.5.2008, by the second respondent for the supply of the
said items. As per the Letter of Indent dated 7.5.2008 prices are firm for the entire duration of the contract, inclusive of freight, Insurance, Sales
Tax, Excise duty and Customs Duty for delivery for destination. As per the tender specification, the prices remain same irrespective of Duty
structure. However, any increase or decrease in the rate of VAT and Service Tax will be added to the respondent''s account. Pursuant to the
Contract Agreement dated 23.7.2008 entered into between the petitioner and the respondent Board, the petitioner started supplying the above
materials and during the course of supply there was some variation in the duty structure of customs wherein the Customs duty and the CVD was
reduced. On 11.11.2008, the respondents informed the petitioner that for the supply of cables and accessories payment will be made only on the
submission of the Bill of Entry and the payment will be made as per the actual duty made by the petitioner. In effect, the respondents wanted to
make payment on the basis of the existing duty structure prevailing at the time of making payment in respect of customs and CVD. By letter
dt.12.11.2008 the petitioner replied to the respondent that the demand of the respondent was pursuant to a Writ petition filed by one of the
competitors M/s. Universal Cables, on a wrong interpretation of the contractual terms alleging that in view of the reduction of the customs duty and
CVD, the respondent Board is sustaining loss. According to the petitioner, since there was no loss to the respondent Board as it is a Fixed Price
Contract, the demand made by the respondent from the petitioner is not sustainable. Hence, the above writ petition for the aforesaid relief.
I have heard Mr. Alagirisamy the learned Senior Counsel appearing for Mr. S. Elambarathi, the learned Counsel for the petitioner, Mr. P.S.
Raman, learned Additional Advocate General appearing for Mr. A. Selvendran, the learned Counsel appearing for the respondent Board.
Pursuant to the filing of this Writ petition, M.P. No. 2 of 2009 and another application (which is not posted today), have also been filed by one
M/s. N. Sankara Sabari and M/s. Universal Cables to implead them as respondents in the writ petition.
I have also heard Mr. Jeevarathinam learned Senior Counsel appearing for the petitioner/proposed third respondent in M.P. No. 2 of 2009 and
Mr. S.R. Rajagopal, learned Counsel appearing for the petitioner/proposed third respondent viz., M/s. Universal Cables.
At the outset, I have to consider the admissibility of these two impleading petitions on the issue involved in this Writ petition. With regard to M/s.
Universal Cables, the writ petition filed by them earlier in W.P. No. 26197 of 2008 wherein they have challenged the Contract dated 23.7.2008
given in favour of the writ petitioner herein, has been withdrawn at the instance of the learned Senior Counsel for the petitioner on 9.1.2009 on the
endorsement made in the writ petition. Secondly, according to the learned Additional Advocate General, M/s. Universal Cables was one of the
tenderers of the respondent Board, in respect of the Tender Specification in question and the tender submitted by M/s. Universal Cables was not
considered as the said company was blacklisted in respect of some other matters.
Considering the fact that the writ petition filed by M/s. Universal Cables in W.P. No. 26197 of 2008 has been withdrawn at the instance of the
learned Senior Counsel for the petitioner on 9.1.2009 without liberty and in view of the submission made by the learned Additional Advocate
General appearing for the respondent Board, M/s. Universal Cables is not a necessary party to be impleaded in this writ petition. Accordingly, the
impleading petition filed by M/s. Universal Cables is dismissed as devoid of merits.
With regard to M.P. No. 2 of 2009 filed by one M/s. N. Sankara Sabari on the ground that they only brought the issue of loss being sustained
by the respondent board by filing a Public Interest Litigation before this Court. The First Bench of this Court passed the order dated 28.5.2009
after hearing both sides, directing the petitioner to make a representation to the respondent Board regarding the loss that may be caused to the
respondent Board in view of the Contract dated 23.7.2008 given in favour of the writ petitioner herein.
I am unable to accept the submission made by the learned Senior Counsel Mr. Jeevarathinam appearing for the petitioner in M.P. No. 2 of
2009 viz., M/s. N. Sankara Sabari.
The issue involved in the writ petition is pertaining to the Contract given in favour of the writ petitioner. Admittedly, the Contract was given on
7.5.2008 and the petitioner herein is supplying the materials to the respondent board. According to the learned Additional Advocate General, there
was some variations in duty structure resulting in the reduction of the customs duty after the Contract was given to the petitioner and on account of
which the Board is justified in stating that the payment would be made on the basis of the existing duty structure prevailing at the time of making the
payments.
Admittedly, there has been some loss on account of the reduction in the customs duty. However, according to the learned Additional
Advocate General, this would be taken care by the Board itself and not for this impleading party to get impleaded in the writ petition.
I am in agreement with the submission made by the learned Additional Advocate General. Admittedly, the proposed party in M.P. No. 2 of
2009 filed W.P. No. 1476 of 2009 in the interest of public on the ground that there would be a loss to the Board because of the contract given to
the petitioner herein. The Division Bench by order dt.28.01.2009 gave liberty to the writ petitioner to approach the Board by sending a
representation and the Board may proceed in accordance with law and pass appropriate orders. Therefore, it is not for N. Sankara Sabari to
agitate the matter again before this Court in a writ petition filed by the Contractor. Hence, M.P. No. 2 of 2009 is also dismissed.
Coming to the issue involved in this writ petition, as against the terms of the price agreed to between the petitioner and the respondent Board,
the learned Senior Counsel appearing for the writ petitioner, brought to my notice the condition vide 13.1.1 of the Tender Specification, according
to which the bidder shall quote a lump sum price valid for the entire duration of the contract. Thereafter, the learned Senior Counsel also brought to
my notice that as per the General condition of the contract in 3.24, ''Contract Price'' shall mean the lumpsum price quoted by the Contractor in his
Bid with additions and deletions as may be agreed and incorporated in the Letter of Indent, for the entire scope of the works."" Further, the learned
Senior Counsel referred to the letter written by the petitioner dated 19.9.2007 to the Chief Engineer Transmission, regarding tender specification
reiterating the fact that tender price based on the following assumption:
Our offer is on a domestic sale basis in Indian Rupees FORD TNEB Stores.
All breakups shown are indicative and are for information purposes only. The Final price indicated FORD Stores against each item is binding.
Any increase or decrease in Customs duty, CVD, SAD is to our account only.
Further, the learned Senior Counsel referred to the Letter of Indent dated 7.5.2008 wherein while accepting the tender, the board reiterated that
the prices of the materials as per Clause 2.0 of the letter of indent. For better appreciation Clause 1.0 in the letter of indent dt.7.5.2008 is
extracted below:
1.0. Acceptance:
With reference to your offer and other correspondences cited, I acting for and on behalf and by the order and direction of the TNEB accept your
offer for the Design, detailed engineering, manufacture, supply of (i) 110 KV, 1 x 630 sq.mm Aluminium Conductor, Lead sheathed XLPE Cable
with accessories, (ii) 110KV, 1 x 240 sq. mm Copper Conductor, Lead sheathed XLPE Cable with accessories, supervision of Transport and
Cable laying, Erection of joints and Terminations, final testing and Commissioning as per the specification No. T.1458 and its amendments. The
schedule of materials and prices are as per Clause 2.0 of this letter of Indent (LOI).
In respect of the price, the learned Counsel appearing for the petitioner drew my attention to Clause 3.0 in the letter of indent wherein it is
stated as follows:
3.0 Price:
Prices are firm for the entire duration of the contract. The prices above are inclusive of freight, insurance, sales tax, excise duty and customs duty
for delivery for destination at Ambattur Stores of Chennai Development Circle, Chennai 58/GCC Stores at Madurai. The prices are inclusive of
Customs duty @ 7.5%, CVD @ 16%, Edu. Cess @ 2%, Higher edu. cess @ 1%, SAD @ 4% all totalling 31.011% and VAT 4% for the
supply of materials and inclusive of Service tax @ 12.36% including cess for the erection of Joints and terminations. The price will remain the same
irrespective of the duty structure. However, any increase or decrease in the rate of VAT and Service tax will be to the Board''s account.
According to the learned Senior Counsel having accepted the firm price for the entire duration of the contract, the demand made by the
respondent Board in letter dated 11.11.2008 directing the petitioner that the payment for the supply of cables and accessories, will be made only
on submission of ""Bill of Entry"" documents as per the Tender Specification No. T-1458 is not sustainable and contrary to the agreed contract
terms. But, the second respondent by letter dated 12.3.2009, reiterating the same points called upon the petitioner to furnish the details of Bill of
entry. A representation was made by the petitioner to the respondent explaining the fact that it may not be possible for the petitioner to furnish such
details as that would be contrary to the conditions agreed to between the petitioner and the respondent board. The learned Senior Counsel further
contended that having accepted the Contract which is a Fixed Price contract, the respondent is estopped from demanding otherwise. Further, the
demand of the respondent that payment will be made as per actuals paid for customs duty and CVD is certainly against the terms of the contract
and it cannot be sustainable in law. The learned Senior Counsel further adds that payment for the supply made has been withheld by the
respondent board and therefore, he submits that the demand made by the respondent Board is unreasonable and the writ of Mandamus is to be
issued as prayed for.
Mr. P.S. Raman, the learned Additional Advocate General, fairly agreed with the fact that the prices quoted and accepted are ''Firm'' for the
entire duration of the contract.
The main issue that arises for consideration in the writ petition is whether the Board can insist that the payment for the supply would be made
only on submission of Bill of entry documents and customs duty would be reimbursed at actuals.
It is useful to refer to Clause 13.1.1 of the relevant Tender Specification. According to the said Clause 13.1.1 the bidders shall quote a lump
sum price for the scope of supplying the cables/executing works as per the price schedule enclosed with the specifications. The bidder shall quote
firm price valid for the entire duration of the contract.
(emphasis supplied).
Clause 3.24 of the General conditions of Contract defines Contract price, according to which, ''Contract Price'' shall mean the lump sum price
quoted by the Contractor in his bid with additions and deletions as may be agreed and incorporated in the letter of indent for the entire scope of
the works.
(emphasis supplied).
A reading of the letter of indent dt.7.5.2008 would make it very clear that the Board accepted the petitioner''s offer and as per Clause 3.0 of
the letter of indent, prices are firm for the entire duration of the Contract. (emphasis supplied). The prices quoted above are inclusive of freight,
insurance, sales tax, excise duty and customs duty. It is further reiterated that the prices would remain the same irrespective of the duty structure.
From the above, it is very clear that the Board cannot go beyond the terms of the contract and insist that payment for the supply would be
made only on submission of Bill of Entry document and customs duty would be reimbursed at actuals. The demand of the Board is totally contrary
to the terms of the Contract.
Consequently, the respondents are directed not to insist or demand Bill of Entry for making payment to the petitioner for the supply made and
in respect of the supply that would be made in future in respect of tender specification No. T-1458 as per letter of Indent in LR.No.CE
TR/SE/TR.II/EE400KV/A3/F.T.1458/LOI/1885/D.45/08dt 7.5.2008.
In the result, the writ petition is allowed as prayed for. No cost. M.P. No. 1 of 2009 is closed and both the impleading petitions are dismissed.