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

Held

The Court held that the unilateral alteration of the payment terms by APDCL in the Letter of Acceptance (LoA) was not binding on the petitioner. The Court found no enabling provision in the NIT or tender documents that empowered APDCL to make such changes. Consequently, the petitioner's refusal to unconditionally accept the LoA with altered terms was not a breach attributable to them. The Court further held that APDCL's actions in unilaterally changing the terms and then forfeiting the bid securities were unfair and arbitrary, violating the principles of Article 14 of the Constitution. The Court reasoned that state instrumentalities must act fairly and cannot take unfair advantage of their own breaches of obligation. Therefore, the forfeiture of the Bid Securities (EMDs) and the subsequent encashment of bank guarantees were set aside. The Court directed APDCL to refund the Bid Securities for Package No. 8, and by extension, for other packages where similar actions occurred.

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. Premier Energies Ltd. 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, considering it a counter-proposal. APDCL subsequently forfeited the Bid Securities (EMDs) deposited by the petitioner for Package No. 8, along with other packages for which the petitioner had also submitted bids. The petitioner sought the refund of these forfeited bid securities.

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), particularly concerning the payment terms (Annexure-1 vs. Annexure-A). 2. Whether the petitioner's refusal to unconditionally accept the LoA with altered terms constitutes a breach of the tender conditions, justifying the forfeiture of bid securities. 3. Whether the actions of APDCL, an instrumentality of the State, in unilaterally altering contract terms and forfeiting bid securities are fair, just, and reasonable under Article 14 of the Constitution of India. Petitioner's Arguments: The petitioner argued that APDCL unilaterally altered the payment terms in the LoA without any enabling provision in the NIT or tender documents. They contended that this alteration constituted a counter-proposal, and their non-acceptance of this altered proposal was not a breach. They relied on principles of fairness and non-arbitrariness under Article 14, citing cases like Kumari Shrilekha Vidyarthi and UNITECH Limited, asserting that APDCL, as a state instrumentality, must adhere to its representations and act fairly. Respondent's Arguments: The respondent APDCL argued that it was empowered to insert Annexure-A in the LoA. The judgment does not explicitly record further arguments from APDCL regarding the petitioner's alleged breach or the justification for forfeiture.