Authority: High Court of Jharkhand at Ranchi

Order Date: 14 July 2026 (CAVON: 23 June 2026)

Case Overview

  • Petitioner: M/s Jay Bee Enterprises (partnership) represented by partner Jay Ram Sharan Singh, seeking relief against C.M.D. Jharkhand Urja Vikas Nigam Ltd, M.D. Jharkhand Bijli Vitran Nigam Ltd and Chief Engineer APDRP JBVNL.
  • Reliefs Sought: (i) Declaration that the phrase “unless a different intention appears, from the terms of contract” in Section 64A of the Sale of Goods Act makes the deduction illegal; (ii) Quashing of Memo No.14/CMD dated 24‑01‑2018 issued by Respondent No.1; (iii) Refund of Rs 18,49,682 allegedly retained as unjust enrichment.
  • Background: The partnership was awarded the renovation and augmentation work of Katras 10th APDRP project as the lowest bidder. Work Orders No. 19 and 20 dated 09‑01‑2009 fixed unit prices inclusive of all taxes and duties and stated that prices were firm and not subject to escalation. Excise duty was later reduced from 8 % to 6 %, after which Respondents deducted Rs 18,49,682 from the petitioner’s bills. Repeated requests for refund were ignored.
  • Petitioner’s Arguments: Cited Clause 11 of the Work Orders (firm price), Section 64A of the Sale of Goods Act, and Supreme Court decision in Numaligarh Refinery Ltd. v. Daelim Industrial Co. Ltd. (2007 8 SCC 466) to argue that any deduction for tax reduction was illegal.
  • Respondents’ Arguments: Asserted that while Clause 11 barred commercial price escalation, Clause 1.3.2(d) and Clause 1.3.15(a) of the NIT allowed statutory variations (including tax changes) to be reimbursed on production of documentary evidence. They contended the deduction was proper and that allowing the petitioner to retain the benefit of higher excise duty would constitute unjust enrichment.
  • Key Contractual Provisions:
  • Work Order Clause 9: Unit cost includes all applicable taxes & duties.
  • Work Order Clause 11: Unit price includes all charges; price shall remain firm and shall not be subject to any escalation.
  • Work Order Clause 31: Matters not mentioned are covered by tender documents.
  • NIT Clause 1.3.2(c): Price quoted shall be firm; no escalation admissible.
  • NIT Clause 1.3.2(d): Statutory variation in taxes & duties will be reimbursed on actual documentary evidence.
  • NIT Clause 1.3.15(a): All taxes, duties and levies are included in quoted rates; statutory variation to be reimbursed on evidence.
  • Section 64A, Sale of Goods Act, 1930: Tax increase/decrease after contract is payable/adjustable only if contract provides otherwise.
  • Court’s Reasoning:

1. The contract expressly incorporated the NIT clauses, making statutory tax variation a reimbursable element.

2. The phrase “statutory variation” was interpreted to cover both increase and decrease of tax rates; reimbursement is therefore bidirectional.

3. Since the contract price already included the tax component, a reduction in excise duty reduces the petitioner’s tax liability to the government, increasing his profit; the respondent (state electricity board) should benefit from the reduction, not the contractor.

4. The court held that the intention of the parties was that any tax variation, whether upward or downward, be borne by the respondent, and the petitioner cannot claim a refund of the amount already deducted.

5. The court also noted that the NIT and Work Orders contain no provision for interest on delayed payments; the petitioner did not press for interest, and the court found no basis to award it.

Final Outcome

  • The writ petition is dismissed in its entirety.
  • No refund of Rs 18,49,682 is ordered.
  • No interest on the deducted amount is awarded.

Topics: Contract Law, Excise Duty Variation