Court’s Decision
The Bombay High Court (Nagpur Bench) comprising Justice Anil S. Kilor and Justice Rajnish R. Vyas allowed a writ petition filed by a contractor challenging Western Coalfields Limited’s (WCL) interpretation of tender conditions regarding inclusion of GST in quoted rates.
The Court declared that the tender documents were “crystal clear” and that the price quoted by the petitioner was exclusive of GST, contrary to the respondent’s contention that it was inclusive.
Justice Rajnish R. Vyas, delivering the judgment, observed:
“The conditions are crystal clear that price quoted was exclusive of GST. The action of treating the quoted price as inclusive of GST is arbitrary and unsustainable in law.”
The Bench thus quashed WCL’s communication treating the bid as inclusive of GST and allowed the petition in terms of prayer clauses A and B, thereby directing WCL to treat the petitioner’s bid as exclusive of GST. A request for stay of the order by WCL was rejected.
Facts
Western Coalfields Limited (WCL) floated an E-Tender for “winning coal without blasting from combined seam section” on the Government E-Marketplace (GeM) portal. The petitioner participated in the bidding process along with four other bidders. After technical evaluation, the petitioner was declared L-1 (lowest bidder) on the basis of a quoted price of ₹5,32,17,00,000.
The petitioner contended that the quoted rate of ₹1,215 per tonne was exclusive of GST, as clearly indicated in the tender documents. However, WCL interpreted the rate as inclusive of GST, relying on clarifications from the GeM portal and subsequently issued a Letter of Acceptance treating the quoted price as inclusive of GST.
Aggrieved, the petitioner protested and requested that the dispute be referred to the Independent External Monitor, but no intervention was made. The contractor then approached the High Court contending that WCL’s interpretation was contrary to the tender’s express terms and arbitrary in nature.
Issues
- Whether the tender documents mandated bidders to quote rates inclusive or exclusive of GST.
- Whether WCL’s action of treating the bid as inclusive of GST was arbitrary and contrary to tender terms.
- Whether the presence of an arbitration clause ousted the High Court’s writ jurisdiction in this case.
Petitioner’s Arguments
Senior Advocate M.G. Bhangde contended that the tender conditions expressly required the quoted price to exclude GST, which would be payable separately by the service availing company (WCL). The Additional Terms and Conditions (ATC) and General Terms and Conditions (GTC) clearly stipulated that rates were to be inclusive of all taxes and levies except GST and GST Compensation Cess.
He pointed to specific clauses, particularly Clause 1.8(G), which explicitly stated that:
“The rate per tonne of coal production shall be inclusive of all taxes, duties, and levies but excluding GST and GST Compensation Cess, if applicable.”
He further relied on Clause 2.11.1, which reiterated that all duties and taxes except GST were included in the quoted rate.
The petitioner submitted that once the bid was found substantially responsive and declared L1, WCL could not alter the interpretation of its own tender terms post facto.
He also produced subsequent tenders issued by WCL where the condition was modified to explicitly state that bids were to be inclusive of GST, showing that WCL had recognized its earlier error in this tender.
Hence, the unilateral interpretation of an unambiguous clause amounted to arbitrariness and breach of the integrity of the tender process.
Respondents’ Arguments
Senior Advocate Anand Jaiswal, appearing for WCL, argued that the tender process was transparent and conducted via the GeM portal, which required bidders to enter rates inclusive of all taxes, including GST.
He referred to Clause 8 of the GeM General Terms and Conditions, which stated that offer prices shall be on an inclusive basis, covering all taxes, duties, levies, and transportation charges.
Mr. Jaiswal submitted that the petitioner entered the same rate (₹1,215 per tonne) both in the Excel sheet (which was meant to be exclusive of GST) and the GeM portal (which was inclusive), thereby creating confusion.
He also contended that since an arbitration clause existed in the tender documents, the Court should not exercise writ jurisdiction, as the dispute pertained to interpretation of contractual terms.
In addition, it was argued that other bidders had quoted rates inclusive of GST, and the petitioner could not now claim a contrary interpretation merely to gain advantage.
Analysis of the Law
The Court examined the tender documents in detail, particularly Clause 5 of the GeM General Terms and Conditions (GTC), which listed the hierarchy of contractual documents—ATC superseding GTC in case of conflict.
Applying this principle, the Court noted that Clause 1.8(G) of the ATC categorically excluded GST from the quoted rates. The notes appended to the financial table further reinforced this, showing bifurcations between value “excluding GST” and “including GST.”
Thus, the ATC being higher in contractual hierarchy prevailed over the GTC, and the rates quoted had to be treated as exclusive of GST.
The Bench further rejected WCL’s reliance on the GeM portal’s automation mechanism, holding that contractual interpretation cannot be overridden by a digital platform interface when tender terms are unambiguous.
Precedent Analysis
The Court referred to several precedents to explain the limits of judicial interference and arbitrariness in tender cases:
- M.P. Power Management Co. Ltd. v. Sky Power Southeast Solar India Pvt. Ltd. (2023) 2 SCC 703 — Defined arbitrariness as a decision without principle, capricious, or in bad faith. The Court applied this test to hold that WCL’s conduct was arbitrary.
- Tata Cellular v. Union of India (1994) 6 SCC 651 — Reaffirmed that judicial review is permissible in contractual matters if the process is irrational, arbitrary, or mala fide.
- Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. (2016) 16 SCC 818 — Cited to emphasize that tender interpretation must adhere strictly to stated conditions; post facto modification violates fairness.
The Court noted that while WCL relied on several decisions about contractual autonomy, none dealt with the inclusivity or exclusivity of GST in tenders, making them inapplicable.
Court’s Reasoning
Justice Rajnish R. Vyas held that the tender’s language left no ambiguity—the price quoted was exclusive of GST, as clearly stated in multiple clauses. The respondents’ subsequent interpretation contradicted their own documents and violated the principle of fair play.
The Bench also clarified that the existence of an arbitration clause does not oust writ jurisdiction when no concluded contract exists or when the issue pertains to arbitrariness in a public tender process.
Quoting the Supreme Court’s observations in M.P. Power Management Co. Ltd., the Court concluded that WCL’s approach was arbitrary, unreasonable, and contrary to tender integrity.
The Court further observed that WCL’s issuance of a new tender clarifying inclusion of GST confirmed that the earlier one had ambiguity and administrative misinterpretation.
Conclusion
The High Court allowed the writ petition, declaring that the price quoted by the petitioner was exclusive of GST and directing WCL to act accordingly.
The judgment concluded with the following declaration:
“Respondents having found petitioner L1, now cannot say that the price quoted was inclusive of GST. The conditions are crystal clear and do not admit any ambiguity.”
WCL’s request for a four-week stay was refused, as the Court found no grounds to delay the effect of its order.
Implications
This decision reaffirms critical principles governing public tenders:
- Tender documents are to be interpreted strictly as per their terms—administrative clarifications cannot override written clauses.
- Public authorities cannot rely on procedural ambiguities or platform defaults (like GeM automation) to alter contractual understanding.
- The ruling will influence future government tenders, ensuring clarity on tax inclusivity clauses and reducing GST-related bid disputes in public contracts.
It also reinforces the High Court’s power of judicial review in contractual matters where arbitrariness or procedural unfairness is evident, even if arbitration clauses exist.
