ORDER: GANNAMANENI RAMAKRISHNA PRASAD, J. 1. Heard Sri Heard Sri N.Subba Rao, learned Senior Counsel appearing on behalf of Sri N.Jeevan Kumar, learned Counsel for the Writ Petitioner and Ms. S.Siva Kumari, learned Government Pleader for Irrigation. 2. The present Writ Petition is filed with the following prayer: “For all the aforesaid reasons, it is prayed that this Hon'ble Court may be pleased to issue a Writ, in the nature of a Writ of Mandamus or any other appropriate Writ, direction or order declaring the Memo. No. 12918/Maj. Irr.II/A2/2008-1, dated 21/05/2008 (EX P-6) of the Government of Andhra Pradesh, the 1 st respondent herein, in so far as it has directed the Engineer-in- Chief & Chief Engineer (Projects), the 2 nd respondent herein, to inform the agency that the amount provided in the IBM will be deducted from the agreement value and the consequential Memo dated 05/11/2008 and letter 05/12/2008 of the Superintending Engineer, Construction Circle, Ongole, the 3 rd respondent herein, in respect of Agreement No. 10/2007-08, dated 21/06/2007, as illegal and void; and” 3. W.P.M.P.No.37881/2008 is also filed by the Petitioner seeking stay of all further proceedings pursuant to Memo No.12918/Maj.Irr.II/A22008-1 dated 21.05.2008 (Ex.P6). Vide order dated 31.12.2008, this Court has passed the following Interim Order: “Rule Nisi call for records. Notice returnable in four weeks. W.P.M.P.No.37881 of 2008 There shall be interim stay as prayed for. However, this will not preclude the respondents from effecting recovery of such amounts, if necessary, at the time of settlement of final bill payable to the petitioner. Notice.” 4. The facts, as projected by the Writ Petitioner, are that the Writ Petitioner is the Vice President (Technical) of the Costal Projects Private Ltd., (CPPL). The Writ Petitioner is also the authorized signatory of a joint venture of HCC-CPPL. 4.1. The HCC-CPPL (herein after referred to as „JV?) had participated in the tenders which were invited by the Superintending Engineer, Construction Circle, Irrigation and CAD Department, Ongole (Respondent No.3) for the purpose of executing contractual work for “Investigation, design, executing and construction of 2 nd tunnel with 9.2M internal dia for Pula Subbaiah Veligonda Project using double shield Tunnel Boring Machine i.e., from Kollam Vagu in the foreshore of Srisailam Reservoir up to Guntur-Kurnool road to join into the Feeder canal, including construction of head regulator approaches, approach channel, exist channel and obtaining necessary permissions from the Government of India”. The JV submitted its bid on 13.02.2007. 4.2. The JV secured the tender being the lowest bidder at Rs.735.21 crores. The JV entered into a contractual agreement with the Respondent No.3 vide agreement No.10/2007-08 dated 21.06.2007. It is submitted that the contractor is eligible for exemption from paying customs duty from the goods imported for execution of „water supply projects? for irrigation and drinking water as per the following proceedings: i. Project Imports (Amendment) Regulations, 1986; ii. The Customs Notification No.42/96 dated 23.07.1996; iii. The Customs Notification No.14/2004 dated 08.01.2004; and, iv. The Provision No.98.01 of the 1 st schedule of the Customs Tariff Act, 1975. 4.3. It is submitted by the learned Senior Counsel that by taking note of the aforementioned Project Imports (Amendment) Regulations, 1986, the Custom Notification Nos.42/96, dated 23.07.1996, 14/2004 dated 08.01.2004 and the Provision No.98.01 of the 1 st Schedule of the the Customs Tariff Act Provision, the Writ Petitioner was under legitimate expectation that it would also be eligible for exemption from paying custom duties for the goods imported for execution of irrigation project as well as for drinking water purposes. It is further submitted that the Writ Petitioner has submitted a Letter to the Superintending Engineer, Ongole on 27.02.2008 (Ex.P.1) requesting the said Superintending Engineer to issue recommendatory letter certifying that the project which is going to be undertaken by the Writ Petitioner along with certification of the list of goods required to be imported are to be issued by the Sponsoring Authority, which is the District Collector. Therefore, the Writ Petitioner requested the Superintending Engineer to issue a recommendatory letter to the District Collector and also request the District Collector to further issue another recommendatory letter to the Commissioner of Customs, Seaport, Chennai, by certifying that the attached list of goods are exclusively required to be imported by the Writ Petitioner for the execution of 9.2 mtrs dia 18.8 KM long VeligondaTunnel-2 and most importantly for availing the facility of „customs duty exemption? as per the Customs Notifications mentioned supra. as per the Customs Notifications mentioned supra. The Superintending Engineer, in response to the request made by the Writ Petitioner and after examining the legal position, had addressed a Letter to the District Collector dated 07.06.2008; that the District Collector, Prakasam District, vide Proceeding dated 23.07.2008 (Ex.P.2) addressing to the Commissioner of Customs, Sea Port, Chennai, had clearly stated that the project benefits farmers for irrigating 4.38 lakh acres of land in Prakasam, Nellore and Kadapa Districts which are chronic drought affected areas, besides providing drinking water for about 15 lakh people and by protecting them from „Fluorosis disease?. The District Collector, therefore, vide the said Proceeding dated 23.07.2008 (Ex.P.2), has issued the recommendation to the following effect: “In order to enable M/s HCC-CPPL (JV), Hyderabad to avail the facility of Importation under project import Regulation 1986 a recommending letter along with certification of list of goods required to be imported are to be issued by the concerned District Collector, Sponsoring Authority. In view of the above, I recommend that the goods certified in the attached list may be excepted from payment of Custom duties to M/s HCC-CPPL (JV), Hyderabad for supply of equipments imported for execution of irrigation and water supply projects (Velugonda Tunnel Project, Prakasam District, A.P) as per rules in force.” 4.4. After having been equipped in accordance with the Order of the Superintending Engineer, Construction Circle, dated 07.06.2008 and the Recommendation of the District Collector, Prakasam District dated 23.07.2008 (Ex.P.2), the Writ Petitioner herein has submitted an Application on 26.07.2008; that in pursuance of the said Application of the Writ Petitioner dated 26.07.2008, the Office of the Commissioner of Customs (Sea Port), Government of India, had issued a Letter dated 29.07.2008 to M/s. Coastal Projects Private Limited to the effect that the Application for imports have been registered under the project contract (Ex.P.3). 4.5. 4.5. It is further submitted that in the meantime, vide Proceeding dated 21.05.2008 (Ex.P.6), the Secretary to Government of Andhra Pradesh had issued Proceeding to the Engineer-in-Chief and Chief Engineer (Projects), Ongole, stating that the project in hand is eligible for custom duty but it is directed to inform the Agency (Writ Petitioner herein) that the amount provided in the IBM will be deducted from the agreement value; that basing on the stand taken by the Government of Andhra Pradesh vide the Proceedings of the Secretary to Government dated 21.05.2008 (Ex.P.6) and the Proceedings of the Superintending Engineer dated 05.11.2008 and also the Proceedings of the Executive Engineer (Respondent No.4) dated 22.11.2008 (Ex.P.5), the Writ Petitioner herein has submitted a detailed Reply on 25.11.2008 (Ex.P.7). The Writ Petitioner has cited the relevant Clauses in the Contract Agreement and also the exemption which the Writ Petitioner is entitled to with regard to the customs duty and had informed the Superintending Engineer that the Writ Petitioner is not liable to pay any customs duty on the goods imported for the execution of irrigation and drinking water since the same has been granted exemption and therefore the same is neither payable by the Contractor nor is the Government entitled to recover the same from the Contractor (Writ Petitioner). 4.6. It is further submitted that on 05.12.2008 (Ex.P.8), the Superintending Engineer, has addressed a Letter to the Writ Petitioner that as per the latest guidelines of the Government, any exemption, in respect of Central Excise and Customs Duty etc., for the imported materials, imported duty etc., is to be remitted to the Government Account and that the customs duty amount, as provided in the IBM, will be deducted in the monthly bills as and when the IBM and other accessories are received in the site of work as per Government instructions. 4.7. Learned Senior Counsel would submit that the exemption from custom duty for irrigation and drinking water is given to the importer of the machinery, as provided by the Union of India and that the State Government has no power to make any adjustments in that regard. Learned Senior Counsel would further submit that there is no provision either in the tender schedule or in the contract agreement, empowering the Respondents to deduct from the accepted agreement value and that the customs duty is exempted for the machinery for executing the contract work. Learned Senior Counsel would further submit that there is no provision either in the tender schedule or in the contract agreement, empowering the Respondents to deduct from the accepted agreement value and that the customs duty is exempted for the machinery for executing the contract work. It is contended by the learned Senior Counsel that the entire machinery is purchased by the contractor by way of import and it belongs to the contractor alone and it does not belong to the Government. It is further contended by the learned Senior Counsel that the IBM (Internal Bench Mark) that is referred to in the Clause 29 of the Notice Inviting Tender that the Government has no power or jurisdiction to unilaterally enforce the IBM provisions to the detriment of the contractor. It is also contended that the action of the Respondents is nothing but an unjust enrichment in an arbitrary manner infringing the Articles 14, 19(1)(g) and 300A of the Constitution of India. It is also contended by the learned Senior Counsel that as on the date of filing of the present Writ Petition, the Writ Petitioner has received part of the imported machinery at the site after clearance by the Customs Officials at Chennai and the balance machinery is expected to arrive by the end of February, 2009. It is further submitted that the Customs Duty payable is 23.9% of the value of the goods and if the Respondents are allowed to deduct the amount from the running bills, the Writ Petitioner would suffer serious loss and irreparable injury that may result in forcing the Writ Petitioner to stop the execution of work due to stoppage of funds. It is the submission of the learned Senior Counsel that the customs benefit ought to accrue to the Writ Petitioner (Contractor) and the claim made by the Official Respondents that the benefit accrues to them is wholly illegal and arbitrary. It is submitted that at the time of bidding, the Writ Petitioner has clearly taken into account the benefits conferred through the Project Imports (Amendment) Regulations, 1986, the Customs Notification No.42/96 dated 23.07.1996, the Customs Notification No.14/2004 dated 08.01.2004 as well as the Customs Tariff Act, provision 98.01 at the time of submitting the bid. The Writ Petitioner has factored-in the beneficial exemptions that are likely to be enjoyed while quoting the bid rate. The Writ Petitioner has factored-in the beneficial exemptions that are likely to be enjoyed while quoting the bid rate. He would also submit that the Superintending Engineer as well as the District Collector, having considered the legal position thoroughly, has made recommendation in favour of the Writ Petitioner about its entitlement for its exemptions. 4.8. Learned Senior Counsel has drawn the attention of this Court to Clause 13.04 of the Tender Notice dated 01.11.2006 which relates to the Financial Bid. The Relevant Clauses are usefully extracted hereunder: “Cl. 13.04.2: "The rates and prices quoted by the Bidders are not subject to adjustment during the performance of the Contract for taxes, duties and any other levies except specified in the document. Cl. 13.04.5: All duties, taxes, and other levies payable by the contractor as per State/Central Government rules, shall be included in the contract value quoted by the Bidder. Likewise Clause 18.0 under the caption "Special Attention" is as below:- "18.0 SPECIAL ATTENTION While preparing the B id-Price the Bidders shall also take into account the following:- i) Infrastructure & Construction Facilities, Preliminary, Enabling & Ancillary works whatsoever required by them for successful completion of the Project in the specified time schedule. ii) Indian Income Tax and Surcharge on Income Tax on Salaries of Expatriates etc. iii) Corporation Income Tax iv) All Taxes, Duties and expenses such as Excise Duty, Sales Tax on Indian Supplies, Customs Duty and Custom Clearance on imported items, transportation and storage at site etc. v) All local duties, royalties, octroi etc. vi) vi) Sales Tax and Commercial Tax or VAT on works contract etc., in the State of Andhra Pradesh.” 4.9. He would submit that the above Clauses would indicate that all duties, taxes and other levies payable by the Contractor as per State/Central Government Rules, shall be included in the Contract value quoted by the Bidder. The above extract would also indicate that under Clause 18.0 titled as “Special Attention” the Tender Document that the Bidder shall take into account the aspects mentioned therein for the purpose of arriving at the estimates or the bid price. The above extract would also indicate that under Clause 18.0 titled as “Special Attention” the Tender Document that the Bidder shall take into account the aspects mentioned therein for the purpose of arriving at the estimates or the bid price. He would further submit that under terms of the contract, the bidder has to purchase equipment and machinery that is necessary for executing the contract and the said machinery will remain with the Bidder/Contractor upon conclusion of the contract in as much as the said machinery is purchased by the Bidder/Contractor out of his own funds. Therefore, any benefit that the Contractor gets through the Customs exemptions shall accrue to the Petitioner alone and the Official Respondents are not entitled to recover the same by way of adjustments. 4.10. He would further submit that the attempt made by the Official Respondents that the amount of Customs Duty provided in the I.B.M (Internal Bench Mark) will be deducted from the work bills is not only illegal but contrary to the terms of the contract. He would also submit that the Employer neither does have the contractual nor the legal right for deduction from the quoted bid price; because the reference to the Internal Bench Mark (IBM) in the contract document can be found at Clause 29 of the Notice inviting the Tender to the effect that the Tender with a cost of more than 5% over the Internal Bench Mark (IBM) value arrived by the Department shall be summarily rejected. He would submit that the reference to the I.B.M is only with regard to qualifying amount of price bid with reference to criteria for award of work. He would also submit that the Contractor has quoted his price in accordance with requirements of the tender documents and that there is no clause or reference, either direct or indirect, anywhere in the contract documents that empower the Employer to make payments that has been made vide letters dated 05.11.2008 and 22.11.2008. He has drawn the attention of this Court to Clause 45.1 of the General Conditions of Contract dealing with Taxes and would submit that the goods imported for the purpose of use at Veligonda Tunnel-Project are exempted from Custom Duty and the same is thereby not payable by the Contractor. He has drawn the attention of this Court to Clause 45.1 of the General Conditions of Contract dealing with Taxes and would submit that the goods imported for the purpose of use at Veligonda Tunnel-Project are exempted from Custom Duty and the same is thereby not payable by the Contractor. Learned Senior Counsel would submit that when Clause 45.1 of the General Conditions of Contract had categorically stated that the Petitioner would get an exemption with regard to Custom Duty as indicated above, it is obvious that the Writ Petitioner had never factored-in the Customs Duty into his calculation of bid price. Counter Affidavit of the Superintending Engineer, Construction Circle (Respondent No.3): 5. It is contended in the Counter Affidavit that in compliance with the Letter dated 21.05.2008 and as per the Proceedings of the Government dated 05.12.2008, the Customs Duty will have to be recommended in order to freeze public property and to perform its duty of implementing the Government Orders. 6. Learned Senior Counsel has drawn the attention of this Court to the Clauses in the tender documents. He would submit that the bid itself was submitted on 13.02.2007. As on the date of the submission of the bid, the Customs Notification of the Central Government and the Custom Tariff Act provisions were already in force. The Proceeding of the Government dated 21.05.2008, which is to the effect that the customs duty will have to be remitted to the Government account and it cannot be applied retrospectively for the bids which were submitted on 13.02.2007. He would also submit that until the execution of the Contractual Agreement No.10/2007-08 on 21.06.2007, the Government has never indicated that customs benefit would accrue to the State Government and the customs duty will have to be remitted to the Government. It is an admitted fact that the bids were called on or about 01.11.2006 and the bid document was submitted by the Writ Petitioner on 13.02.2007. The Contractual Agreement No.10/2007-08 was signed and executed on 21.06.2007. It is noticed that for the first time, the Secretary to Government, vide Proceeding dated 21.05.2008, had addressed a cryptic Proceeding to the following effect: “The attention of the Engineer-in-chief & Chief Engineer (Projects) Ongole is invited to the reference cited and he is requested to write to the District Collector, Ongole for necessary exemption if the m/c is eligible for exemption of customs duty. He is also requested to inform the agency that the amount provided in the IBM will be deducted from the agreement value. RAJIV RANJAN MISHRA SECRETARY TO GOVERNMENT” 7. An attempt to make the deductions has started for the first time only on 21.05.2008. It is noticed that neither the Government Memo dated 21.05.2008 was circulated to the Engineering Department nor to the District Collector. The Superintending Engineer, vide Proceeding dated 07.06.2008 has already approved the list of equipment and positively communicated to the District Collector. The District Collector vide Proceeding dated 23.07.2008 has already issued the Recommendatory Certificate which is required to be submitted to the Customs Authority. 8. Although the Proceeding was issued by the Secretary to Government on 21.05.2008 which is prior to the final recommendation made by the District Collector, this Court is of the opinion that this would have no bearing inasmuch as the date on which the tender was issued and the agreement was executed by the successful bidder, the Letter of Secretary to Government was never in existence. In other words, by the time that the Writ Petitioner had executed the contract agreement on 21.06.2007, the Proceeding of the Secretary to Government did not even take birth. The Proceeding of the Secretary to Government dated 21.05.2008 was issued nearly 11 months after the Contractual Agreement had been executed. It is a settled law that the Official Respondents even with regard to the execution of commercial targets, are required to follow the provisions of the Constitution, particularly Article 14 etc., 9. This Court has taken note of the General Conditions and terms of Contract. This Court has noticed that even in the Tender conditions, Clause 13.05.5 would stipulate that all duties, Taxes and other levies payable by the Contractor as per the State/Central Government Rules shall be included in the Contract Value quoted by the Bidder. It is also stated very clearly in Clause 18.0 “Special Attention” that while preparing the bid price, the Bidders shall also take into account the corporate income tax, all Taxes, Duties and expenses such as Excise Duty as well as Taxes on Indian Supplies, the Custom Duty and Custom Clearance on imported items, Transportation and Storage at site. It is also stated very clearly in Clause 18.0 “Special Attention” that while preparing the bid price, the Bidders shall also take into account the corporate income tax, all Taxes, Duties and expenses such as Excise Duty as well as Taxes on Indian Supplies, the Custom Duty and Custom Clearance on imported items, Transportation and Storage at site. Clause 45.1 of the General Conditions of Contract would categorically indicate that the bid price quoted by the Contractor shall be deemed to be inclusive of all the Statutory Taxes on all Machinery and Material that the Contractor will have to procure for performance of contract. As seen from the Record, it does not transpire that the Official Respondents, in their Tender documents or contract agreement has anywhere stated that the exemption in import duty/ Customs charges will be adjusted from the bills of the Contractor. It is also noticed that the Official Respondents have never factored-in the cost of the machinery that was liable to be imported in as much as the Contractor was made liable to bear the entire cost of the machinery and after the completion of the project, the said machinery which is imported or which is purchased for the purpose of contract work shall remain with the Contractor. It is noticed that the investment by the Contractor on the machinery is a Capital Investment. Since the Official Respondents have never factored-in the cost of machinery in the contract, benefit that may accrue to the Petitioner in the form of relaxation in Import Duty and Customs cannot be claimed by the Government in as much as the same may tantamount to unjust enrichment. Merely because the Government is in dominant position as a payer of the pending bills, it cannot take undue advantage out of such dominant position to adjust amount it pays to the Contractor. This Court is also in agreement that the statement made by the Learned Senior Counsel in so far as the Internal Bench Mark is concerned, this Court is of the view that the Internal Bench Mark (IBM) is only with regard to qualifying amount of price bids with reference to the criteria for award of work and that such IBM has no further relevance beyond that. Therefore, this Court is also of the view that the attempt made by the Official Respondents that the amount provided in the IBM will be deducted from the agreement value is irrational and arbitrary and is impermissible. 10. In view of the above discussion, this Court is of the opinion that the decision taken by the Official Respondents to adjust the Customs Tariff from the pending bills is not only irrational but illegal. Accordingly, the impugned Memo No.12918/Maj.Irr.II/A2/2008-1 dated 21.05.2008 is bad in law and has to be set aside. Therefore, the impugned Memo No.12918/Maj.Irr.II/A2/2008-1 is set aside. 11. Accordingly, Writ Petition is allowed. No order as to costs. 12. Interlocutory Applications, if any, stand closed in terms of this order.