Facts of the Case

Power and Instrumentation Gujarat Limited JV Shalaka Infra Tech (India) Pvt. Ltd. was awarded a Letter of Award (LOA) by Assam Power Distribution Company Ltd. (APDCL) on 12.11.2021 for supply, erection, testing and commissioning of a Solar Home Lighting System under Package No.6 (Karbi Anglong district, 5,422 households), pursuant to a competitive tender. The invitation to bid (Appendix-1) specified that the first instalment of 60% of the price would be paid against supply of materials, price inclusive of 100% GST. When APDCL issued the LOA, however, Annexure-A changed the payment terms so that the 60% instalment was tied to physical progress of work rather than mere supply, given a fixed completion date of 31.12.2021. Objecting to this unilateral change, the petitioner revoked the LOA on 04.12.2021 and asked for return of its EMD. APDCL responded by terminating the LOA on 25.11.2021 (treating the petitioner's revocation as rejection) and invoking the bank guarantee of ₹25,00,000 furnished as EMD. The petitioner then filed this writ petition challenging the invocation as arbitrary and violative of Article 14 of the Constitution.

Issues Involved

  1. Whether APDCL could unilaterally alter the payment terms agreed at the tender stage through the subsequent Letter of Award.
  2. Whether invocation and forfeiture of the bank guarantee/EMD was legally sustainable.
  3. Whether the action violated Article 14 of the Constitution.

Petitioner's Arguments

  • The invitation to bid, accepted by the petitioner while submitting its bid, fixed the payment schedule (60% against supply, inclusive of GST); APDCL could not unilaterally change this in the LOA.
  • Since the terms were altered without consent, the petitioner was entitled to withdraw and have its EMD/bank guarantee released.
  • Invocation of the bank guarantee for exercising a legitimate right to withdraw was arbitrary, unreasonable and illegal.

Respondent's Arguments

  • APDCL treated the petitioner's revocation of the LOA as a rejection of the LOA and, on that basis, terminated it and invoked the bank guarantee.
  • The order does not record any further substantive defence of the changed payment terms beyond the fact of invocation.

Court Order / Findings

  • The Court held that the invitation to bid's payment terms, once accepted by the petitioner's bid, could not be unilaterally altered by APDCL through the LOA.
  • Changing the payment schedule without the petitioner's consent was itself an unfair, unilateral act; the petitioner's revocation of the LOA was for legitimate business reasons flowing from that change.
  • Invocation of the bank guarantee (BG No.08101GP210021009, ₹25,00,000) was declared illegal, arbitrary, unreasonable and irrational, and in violation of Article 14.
  • APDCL was directed to refund ₹25,00,000 within 20 days of production of a certified copy of the judgment.

Important Clarification

This is not a GST ruling — the case turns entirely on contract and constitutional (Article 14) principles governing government tenders. GST appears only as a component of the price schedule ("60% ... including 100% GST"), not as a point of tax law in dispute. Vendors and contractors dealing with public-sector tenders should note the broader principle: once bid terms including the payment schedule are accepted, the awarding authority cannot unilaterally rewrite them in the LOA and then penalise the bidder for objecting.

Sections Involved

  • Article 14, Constitution of India (1950) — equality before law, ground for quashing arbitrary state action
  • Central Goods and Services Tax Act, 2017 — referenced only as a component of the contract price, not adjudicated

Decision – In Favour of

Petitioner. Disposed of in favour of the petitioner with a direction to refund the invoked bank guarantee amount; no GST law question was decided.

Case Details

  • Court: Gauhati High Court (Assam, Nagaland, Mizoram and Arunachal Pradesh)
  • Case No.: WP(C)/1199/2022
  • CNR/Neutral Citation: GAHC010023272022
  • Coram: Hon'ble Mr. Justice Devashis Baruah
  • Date: 14.09.2023

Link to Download the Order

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