M/S Ganesh Electricals PVT LTD vs. The State Of Assam And 3 Ors

Held

The Court held that the Assam Power Distribution Company Ltd. (APDCL) could not unilaterally change the terms of payment stipulated in the Invitation of Bids. The Petitioner had accepted the original terms, including the payment procedure in Appendix-1, by submitting their bids. The modification of these terms in the Letter of Award (LOA), making the release of 60% payment contingent on the physical progress of the work, was deemed an imposition of new conditions to which the Petitioner had not agreed. The Court found this unilateral action by APDCL to be arbitrary, unreasonable, and illegal, violating the mandate of Article 14 of the Constitution. Consequently, the invocation of the Bank Guarantees for Rs. 25,00,000/- each for Package Nos. 4, 11, and 15, totaling Rs. 75,00,000/-, was declared illegal, arbitrary, unreasonable, and irrational. The Court directed APDCL to refund the forfeited amount of Rs. 75,00,000/- to the Petitioners within 20 days of the certified copy of the judgment being submitted. No specific issue was left undecided.

Facts

The Assam Power Distribution Company Ltd. (APDCL) invited bids for various projects, including Package Nos. 4, 11, and 15. The invitation for bids stipulated payment terms where 60% of the payment, including 100% GST, would be made against the supply of materials. The petitioner, M/s Ganesh Electricals Pvt Ltd, submitted bids for these packages and was issued Letters of Award (LOA) on November 12, 2021. However, the LOA contained modified payment terms, making the release of the 60% installment dependent on the physical progress of the work as of that date, requiring a certificate from APDCL's AGM. The petitioner represented against these changes, and on November 19, 2021, revoked the LOAs, seeking the return of their Earnest Money Deposit (EMD). APDCL, on November 25, 2021, terminated the LOAs and invoked the Bank Guarantees submitted as EMD, totaling Rs. 75,00,000/- (Rs. 25,00,000/- for each package). The petitioner filed three writ petitions challenging the invocation of bank guarantees.

Key Issues

1. Whether the Respondent APDCL could unilaterally change the terms and procedure of payment stipulated in the Invitation of Bids while issuing the Letter of Award, thereby imposing new conditions on the Petitioner? Petitioner's arguments: The Petitioner contended that they had agreed to the terms and conditions of the Invitation of Bids, including the payment procedure outlined in Appendix-1, when submitting their bids. They argued that APDCL unilaterally altered these terms in the LOA without their consent, making the payment dependent on physical progress rather than supply. This unilateral change, they argued, was arbitrary and illegal. They relied on the principle that terms agreed upon in a tender process should be adhered to by the tendering authority. Revenue/State's arguments: The judgment does not record any specific arguments made by the Respondent APDCL regarding their right to alter the payment terms or justify the invocation of bank guarantees. The court's analysis focuses on the unilateral change of terms by APDCL.