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II. ARE THE SUBJECT CONTRACTS DIVISIBLE OR INDIVISIBLE CONTRACTS?

It is submitted, on behalf of the petitioners, that the assessing authority has integrated two divisible separate contracts as a composite indivisible contract drawing an adverse legal inference that the contracting parties are one and the same; courts have recognized dual capacities between the same contracting parties; it is open to the petitioner to sell goods in transit or as high sea sales, and to secure the same back as free supplies or as an agent or as a bailee, and execute the installation and commissioning work; it is for the contracting parties to design their contracts - either as divisible or indivisible; courts/tribunals cannot substitute or rewrite contracts; it is only if, in reality, the contracting parties execute an indivisible works contract, and the property actually passes at the time of accretion or incorporation, can splitting up of the contracts, into sale and service contracts, be construed a camouflage; a contract cannot be re-characterized based on the strength of a possible tax treatment; the subject contracts are divisible in nature; though not all contracts contain a cross-fall breach clause, such a clause has been ascribed to all the contracts in a sweeping manner; a cross-fall breach clause only ensures redressal measures being taken by way of a claim for damages, and neither encumbers nor restores title; this clause is of discharge of service obligations, and does not postpone passage of title to the goods; normally the bidding documents, for participating in the contract, require one entity to apply for both the supply and erection parts; award of the contract depends upon the lowest price for both supply and erection contracts; from the point of view of the buyer it is considered as one indivisible works contract; these conditions are prescribed in government contracts as per government policy, and are not relevant for taxation of goods; some of the contracts are negotiated contracts, no bidding took place and no bidding documents exist; and the effort of the assessing authority, to call the contracts indivisible works contracts, though they are not, is of no consequence since an indivisible contract is also divisible by legal fiction.

(b) the contractual clauses, and the description of the documents, itself show that the petitioner was executing one work; (c) the intention between the parties is only to execute the work with the material supplied by the contractor; (d) the rights of the dealer (supplier) over the property in the goods and the risk due to injury and loss to the goods, remains with the supplier till the commissioning of the turnkey project; (e) the assessee remains the owner of the goods till termination of its movement; and (f) the property in the goods is transferred to the employer only at the time of accretion; if the clauses in both the contracts are inter- linked, and are closely related to each other, the fact that they are embodied in two instruments does not alter the nature of the contract; the subject contracts are indivisible works contracts wherein title passes only upon incorporation; all the subject supply contracts not only provide a schedule for supply but also stipulate a schedule for erection; prohibition of assignment also shows that it is an indivisible works contract; the supply contracts (as opposed to the erection contracts) contemplate a certification clause for the entire work, and not just the supply component; the stipulation, as to the use of goods in the supply contract, shows that the goods are to be used for erection; in the supply contract, the seller is entitled for payment only when the goods, that were supplied, are successfully put to use ie upon successful erection; the presence of a cross fall breach clause in the supply contracts show that the supply and erection contract is an indivisible works contract; all the subject contracts have a cross fall breach clause in various manifestations; the bidding document is the source document, and forms the basis for the supply and erection contracts; the bidding document, for the Siemens-RINL contract, reveals that the employer contemplated only one work i.e., a turnkey project for which the supply and erection contracts have been executed; it is a condition of the bidding document that the parties, to the supply and erection contract, must be the same; the bidders had to quote one price for the entire project including supply and erection; and the petitioners are not in the business of supplying articles, but in executing turnkey projects.

For convenience sake the petitioners shall, hereinafter, be referred to as the contractor; the person, from whom the contractor purchased the goods, as the supplier; and the person, for whom the goods were purchased and incorporated in the works, as the owner. The submission, made on behalf of the petitioners, is that the subject contracts are two independent contracts - one for supply and the other for erection, and the bailment/free issues clauses in the contracts show that, after the goods are sold by the petitioner - contractor to the owner, the owner then issues the very same material as free issues to the petitioner-contractor for being used in the erection and installation of the plant. The contention of the respondents, however, is that the contract is, in effect, an indivisible contract and, while they are styled as two contracts i.e., supply and erection contracts, they are, in fact, one composite indivisible contract.

On the other hand, relying on Nagindas Ramdas v.

Dalpatram Ichharam ; Bishwanath Prasad v. Dwarka Prasad ; Viswalakshmi Sasidharan v. Branch Manager, Syndicate Bank ; Gautam Sarup v. Leela Jetly ; Heeralal v. Kalyan Mal ; Modi Spinning & Weaving Mills Company Ltd. v. Ladha Ram & Co. ; Steel Authority of India v. Union of India ; Union of India v. Pramod Gupta (Dead) by Lrs. ); Nichhalbhai Vallabhai v. Jawantlal Zinabha ; L. J. Leach and Co. Ltd. v. Jardine Skinner and Co ; and Vimal Chand Ghevarchand Jain v. Ramakant Eknath Jadoo , Sri K. Vivek Reddy, Learned Special Counsel, would submit that the petitioners cannot resile from their categorical admissions that the subject contract is an indivisible works contract; L & T has admitted in its Writ Petition that the contract between the petitioner and owner is an indivisible works contract; the averments in the Writ Affidavit cannot be treated as an inadvertent or a typographical error; the statement made by the petitioner is an admission; and admission in pleadings stand on a higher pedestal than evidentiary admissions. As we have held that the subject contracts are indivisible contracts, it is unnecessary for us to examine the effect of the admission, by L & T in their pleadings, that the contract is an indivisible contract.