Premier Energies LTD. vs. Assam Power Distribution Company Limited And 2 Ors

Held

The Court held that the unilateral alteration of the terms and conditions of the proposed contract by APDCL in the LoA, specifically the payment terms, was not binding on the petitioner. The Court found that APDCL had no enabling power in the NIT or tender documents to make such unilateral changes. Consequently, the petitioner's non-acceptance of the LoA with altered terms could not be considered a breach attributable to them. The Court further held that APDCL's action in forfeiting the bid securities and encashing the bank guarantees was unfair and arbitrary, violating the principles of Article 14 of the Constitution. The Court reasoned that an instrumentality of the State must act fairly and cannot take unfair advantage of a situation it created through its own breach of obligation. The Court directed APDCL to refund the bid securities (EMDs) deposited by the petitioner for five packages, including Package No. 8, within fifteen days.

Facts

The petitioner, Premier Energies Ltd., filed five writ petitions challenging actions by the Assam Power Distribution Company Limited (APDCL). APDCL had issued a Notice Inviting Tender (NIT) for an off-grid rural electrification project. The petitioner was the successful bidder (L1) for Package No. 8. APDCL subsequently issued a Letter of Acceptance (LoA) with altered terms and conditions regarding payment, which differed from the original tender document. The petitioner did not unconditionally accept the LoA with these altered terms. APDCL then forfeited the bid security (EMD) deposited by the petitioner for Package No. 8 and encashed the corresponding bank guarantees. The petitioner argued that APDCL acted arbitrarily by unilaterally changing the payment terms and forfeiting the bid security.

Key Issues

1. Whether the unilateral alteration of the terms and conditions of the proposed contract by the employer (APDCL) in the Letter of Acceptance (LoA) is binding on the successful bidder (petitioner), thereby constituting a breach attributable to the petitioner for non-acceptance. 2. Whether the forfeiture of the bid security (EMD) and encashment of bank guarantees by APDCL, an instrumentality of the State, is fair and reasonable under Article 14 of the Constitution of India. Petitioner's arguments: The petitioner contended that APDCL, as an instrumentality of the State, is bound by Article 14 of the Constitution to act fairly and cannot unilaterally alter contractual terms after a bid has been accepted. They argued that the original terms of payment in Annexure-1 of the tender document should have been adhered to. The petitioner relied on the principles laid down in Kumari Shrilekha Vidyarthi, Vertex Broadcasting Company Private Limited, and Suresh Kumar Wadhwa. Respondent's arguments: The respondent APDCL argued that it was empowered to insert Annexure-A (Terms and Procedures of Payment) into the LoA, implying it had the authority to modify payment terms. The judgment does not explicitly record further arguments from the respondent regarding the forfeiture of bid security.