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

Held

The Court held that APDCL, as an instrumentality of the State, acted unfairly and arbitrarily by unilaterally altering the payment terms in the Letter of Acceptance (LoA) for Package No. 8. The Court found no enabling provision in the NIT or tender documents that empowered APDCL to make such changes. The petitioner's refusal to unconditionally accept the LoA with altered terms was not considered a breach, as the breach occurred on APDCL's part by changing the original terms without authority. Consequently, the forfeiture of the petitioner's Bid Securities (EMDs) and the encashment of bank guarantees were deemed unfair and arbitrary and were set aside. The Court directed APDCL to refund the Bid Securities for Packages 5, 8, 9, 10, and 11 within 15 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. 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 did not unconditionally accept this altered LoA. Consequently, APDCL forfeited the petitioner's Bid Securities (EMDs) and encashed the bank guarantees. The petitioner argued that APDCL unilaterally changed the contract terms without enabling power, making the forfeiture unfair and arbitrary.

Key Issues

1. Whether the Assam Power Distribution Company Limited (APDCL), as an instrumentality of the State, acted fairly and reasonably in unilaterally altering the terms of payment in the Letter of Acceptance (LoA) for Package No. 8, thereby breaching its obligations under Article 14 of the Constitution of India? Petitioner's arguments: The petitioner contended that APDCL, by unilaterally changing the payment terms from Annexure-1 to Annexure-A in the LoA, acted arbitrarily and unfairly. They argued that APDCL lacked the enabling power in the NIT or tender documents to make such alterations. The petitioner asserted that their non-acceptance of the altered LoA did not constitute a breach on their part, and APDCL's subsequent forfeiture of the Bid Security was unjust. They relied on the principles laid down in Kumari Shrilekha Vidyarthi and UNITECH Limited regarding the duty of state instrumentalities to act fairly in contractual matters. Revenue/State's arguments: The judgment does not explicitly record arguments made by the respondent APDCL regarding this issue. However, it notes that APDCL claimed it was empowered to insert Annexure-A.