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2026 Supreme(Jhk) 703
IN THE HIGH COURT OF JHARKHAND AT RANCHI
ANANDA SEN, J.
M/s Jay Bee Enterprises – Petitioner
Versus
C.M.D. Jharkhand Urja Vikas Nigam Limited – Respondent
W.P.(C) No. 1697 of 2020
Decided On : 14-07-2026
Important Points
Subject
Contract Law - Government Tender and Procurement
Act Referred
Headnote
(B) Interpretation of Contracts - Principles of construction - Contract must be read as a whole to ascertain true meaning of several clauses - Every part should be brought into action in order to collect from the whole one uniform and consistent sense - Words of each clause should be interpreted to bring them into harmony with other provisions. (Paras 11, 12)
Facts of the case:
The petitioner, a firm awarded a work contract for renovation and augmentation of infrastructure, claimed a refund of money deducted by the employer due to a reduction in excise duty rates during the project execution. The petitioner contended that the contract price was 'firm' and no escalation or variation in price was permitted, implying the benefit of tax reduction belonged to the contractor. The respondent argued that statutory variation clauses in the tender documents allowed for actual reimbursement of taxes, and retaining the benefit of reduced tax liability would constitute unjust enrichment.
Findings of Court:
The court found that the contract documentation, including work orders and tender notices, must be read as a whole. Provisions stating that the price shall remain 'firm' must be reconciled with clauses allowing for 'statutory variation' in taxes and duties. Since the contract explicitly provided for the reimbursement of tax variations, it follows that such reimbursement applies to both upward and downward shifts.
Issues: Whether the deduction of money from the contractor's bills following a reduction in excise duty is illegal when the contract specifies a firm pricing structure, and whether the contractor is entitled to retain the financial benefit arising from such tax reduction.
Ratio Decidendi: The court held that where a contract contains clauses for the reimbursement of statutory tax variations, these clauses must be interpreted to cover both increases and decreases in tax liability. To allow a contractor to retain the financial benefit of reduced tax rates, while the employer bears the burden of increased rates, would be inequitable and result in unjust enrichment. Contractual terms must be interpreted harmoniously to ensure neither party gains an unfair advantage from statutory changes outside the scope of commercial price fluctuations.
Result: Writ petition dismissed.
For the Petitioner:Mr. Rajiv Kumar, Advocate
For the Respondent: Mr. Ashok Kumar Yadav, Sr. S.C-I, Mr. Shivam Kumar, AC to AG
| Table of Content |
|---|
| 1. dispute concerning tax variation recovery and contract price fixation. (Para 1 , 2 , 3 , 4) |
| 2. principles of reading contract clauses harmoniously as a whole. (Para 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13) |
| 3. mutual benefit from statutory variations prevents unjust enrichment. (Para 14 , 15 , 16 , 17 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26) |
JUDGMENT :
ANANDA SEN, J.
By way of filing this writ petition, the petitioner has sought for the following reliefs:-
i. For a declaration that the phrase "unless a different intention appears, from the terms of contract" occurring in Section 64A of Sales of Goods Act, the deduction from the admittedly payable bill for Katras 10th APDRP on the ground reduction of excise duty, was illegal and contrary to Hon'ble Apex Court decision reported in (2007) 8 SCC 466
ii. For quashing the order Memo No.14/CMD dated 24.01.2018 [Annexure-4] passed by Respondent No.1 on the ground of clauses of NIT without adverting to terms of clause 11 of the work order 19 & 20 dated 09.01.2009 as NIT is not an offer but invitation to offer and, without taking note of qualifying lines of 64A of Sales of Goods Act.
iii. For a consequential relief for refund of Rs.18,49,682/- which has been retained by the Respondent as unjust enrichment by misuse of authority.
2. The fact of the case is that the petitioner is a partnership firm which was awarded the work of renovation and augmentation etc of the Katras 10 th APDRP Projects after being declared the lowest bidder (L1) in the tender process. Work Orders No. 19 and 20 dated 09.01.2009 fixed the rates for supply of materials, and the rates were inclusive of excise duty and other taxes. The work orders clearly stated that the prices were firm and would not be changed during the contract period. During the execution of the work, the rate of excise duty was reduced from 8% to 6%. On this basis, the respondents deducted Rs.18,49,682/- from the petitioner’s bills while making payment. The petitioner repeatedly requested the respondents to refund the deducted amount, but no action was taken.
3. Learned counsel for the petitioner submitted that the Clause 11 of the Work Orders No.19 and 20 dated 9.01.2009 clearly stated that the contract prices were firm and fixed, and no escalation or variation in price would be allowed. He further submitted that the rates accepted by the respondents were inclusive and represented the final agreed consideration between the parties. He further submitted that the phrase "unless a different intention appears, from the terms of contract" occurring in Section 64A of Sales of Goods Act, the deduction from the admittedly payable bill for Katras 10th APDRP on the ground reduction of excise duty, was illegal and contrary to Hon'ble Supreme Court decision reported in Numaligarh Refinery Ltd. v. Daelim Industrial Co. Ltd. , (2007) 8 SCC 466 . The respondents after accepting a firm-price had no right to reduce it merely because the excise duty rate was reduced later hence, the deduction of Rs.18,49,682/- vide memo dated 24.01.2018 is illegal, contrary to the terms of the contract, and liable to be set aside. Thus, the petitioner is entitled to a refund of the deducted amount along with all consequential benefits and appropriate interest.
4. Learned counsel for respondents denied the petitioner's contentions and submitted that although Clause 11 of the Work Order provides that contract prices shall remain firm during the contractual period, the said Clause applies only to commercial price escalation arising from market fluctuations and does not exclude adjustments arising from statutory changes in taxes and duties. Such statutory variations are specifically governed by Clause 1.3.2(d) and Clause 1.3.15(a) of the NIT, which form an integral part of the contract and were expressly incorporated into the Work Orders and the Contract Agreement dated 20.01.2009. It is further contended that the petitioner has selectively relied upon the firm-price clause wh
