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

Held

The Court held that APDCL, as the employer, unilaterally altered the terms and conditions of the proposed contract for Package No. 8 without the petitioner's consent. This unilateral alteration was not binding on the petitioner. APDCL had no right to insist on the petitioner complying with the altered terms or to terminate the offer based on the petitioner's failure to provide unconditional acceptance. The Court found that the petitioner's non-acceptance of the LoA with altered terms was not a breach attributable to them. The Court further held that APDCL's action in forfeiting the Bid Securities (EMDs) and encashing the bank guarantees was unfair and arbitrary, violating Article 14 of the Constitution. The Court reasoned that APDCL, as an instrumentality of the State, has a public law duty to act fairly and cannot take unfair advantage of a situation it created by breaching its obligation. The Court directed APDCL to refund the Bid Securities deposited by the petitioner for five packages.

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 emerged as the successful bidder (L1) for Package No. 8. However, APDCL issued a Letter of Acceptance (LoA) with altered payment terms (Annexure-A) instead of the original terms (Annexure-1) stipulated in the tender documents. The petitioner sought unconditional acceptance of the LoA, but the petitioner did not provide unconditional acceptance due to the altered terms. APDCL subsequently forfeited the Bid Securities (EMDs) deposited by the petitioner for five packages, including Package No. 8.

Key Issues

1. Whether the unilateral alteration of payment terms by APDCL in the Letter of Acceptance (LoA) for Package No. 8, without the consent of the successful bidder (petitioner), renders the altered terms binding on the petitioner? 2. Whether APDCL's action in forfeiting the Bid Securities (EMDs) of the petitioner for five packages, including Package No. 8, was fair and reasonable under Article 14 of the Constitution of India? Petitioner's arguments: The petitioner contended that APDCL unilaterally altered the terms of the contract after the bidding process, making the LoA a counter-proposal. They argued that their non-acceptance of the altered terms did not constitute a breach. They relied on the principle that the State and its instrumentalities must act fairly and cannot unilaterally change stipulated terms, citing cases like Kumari Shrilekha Vidyarthi and UNITECH Limited. Respondent's arguments: The respondent APDCL argued that it was empowered to insert Annexure-A into the LoA. The judgment does not explicitly record arguments from APDCL regarding the forfeiture of EMDs, but it addresses their claim of being empowered to alter terms.