Avadh Behari Rohatgi, J.

( 1 ) THE appellant. All India Institute of Medical Sciences at New Delhi, invited tenders for "the supply and installation of air-conditioning plant, air handling units, whether makers, fan coil units, pipelines and other accessories in the main plant room, ward block, paying bed wards etc. " The respondent, M/s American Refrigeration Company Limited, submitted a tender. Their tender was accepted. On November 21, 1968, a formal agreement was executed between the parties. In their letter dated April 24, 1967, M/s American Refrigeration Company (whom I shall call the contractor because in the agreement they are so described) had written to the Institute that

"our prices are exclusive of sales tax, octroi or any other tax which shall be charged extra as applicable at the time of the delivery. "

( 2 ) IT is not in dispute that this letter formed a part of the contract. The contractor indicated separately the sales tax payable by the Institute. It was also mentioned that the rate of sales tax applicable will be 10 per cent.

( 3 ) THE work of air-conditioning was completed sometimes in 1975. But in the course of the execution of the contract disputes arose betwee

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