Payment terms of a tender

I have a question - did XYZ contractor sign the modified terms? Note that changes were made before awarding the contract.  

as per my knowledge, there is no rule against amendment of contract terms before awarding the contract.
If the changes had been made after award, then the terms in tender document would have been binding. But if XYZ firm signed the contract (which contained amended terms) then they're probably legally bound to comply.

I'm not a legal expert.

@Sandeep

You said,"However, in my view it is the ABCD department who is cheating the contractor. "

Yes, you are right.Department can't modify the terms and condition regarding to payments after invitation.If invitation specify the mode of payment then after that they cant make any changes but if they made any then you have a option to cancel the deal i.e,agreement.

Here you only give the bid ,you and the department didnt make any agreement .

Under indian contract act,1872

5.        Revocation of Proposals and acceptance. -A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.

An acceptance may be revoked at any time before the communications of the acceptance is complete as against the acceptor, but not afterwards.

6.        Revocation how made. - A proposal is revoked-

(1)      By the communication of notice of revocation by the proposer to the other party;

Thus if they give a contract to you after that they cant make any changes and if they made then you can cancel the contract or file a 

1.Suit for damages or compensation

             2.Suit for specific performance.

Payment terms given in the tender document can not be altered or amended by the Department after award of Contract without the consent of contractor.

Whenever a Govt Deptt places order on any contractor it asks the contractor to submit written acceptance of order. In this case if you have submitted the acceptance then u are legally bound to work as per the terms and conditions given in the order i.e., award. Once the order is accepted with modified payment terms then the payment terms mentioned in the tender document can not be enforced.

@AK Puri - are you saying that award of the contact is not a tacit approval of terms of the contractor? This is news to me. 

@uma - Terms and Conditions mentioned by the contractor in his bid/offer which are not included in the contract, which is accepted by the contractor, are not enforceable. In all cases scope of work, terms and conditions, cost etc are negotiated between the govt and the contractor. On the basis of this negotiation contract is awarded. And if this contract is accepted by the contractor in writing (mandatory for govt contracts), then the contractor as well as the govt is legally bound to abide by the terms and conditions mentioned therein.

Once the Tender has been closed, the terms and conditions cannot be changed unilaterally. If the client changes or modifies the terms and conditions, the contractor has all the right to withdraw his bid without any penalty. However, contractor cannot force the client to stick to the old conditions.

However, if any condition is required to be changed post-Tender Closing, that has to be with mutual agreement only.

Though--howsoever wrong it may be--there might be a hidden clause somewhere in the tender that the client can modify the conditions of the tender and the contractor has to accept them and if the contractor has signed the Tender Document(without reading it fully) as a token of aceptance of the terms and conditions, then the contractor has to accept to accept the modified conditions.

In your case, it is not clear how the condition is being changed--unilaterally or taking benefit of a hidden clause.

Once the Tender has been closed, the terms and conditions cannot be changed unilaterally. If the client changes or modifies the terms and conditions, the contractor has all the right to withdraw his bid without any penalty. However, contractor cannot force the client to stick to the old conditions.

However, if any condition is required to be changed post-Tender Closing, that has to be with mutual agreement only.

Though--howsoever wrong it may be--there might be a hidden clause somewhere in the tender that the client can modify the conditions of the tender and the contractor has to accept them and if the contractor has signed the Tender Document(without reading it fully) as a token of aceptance of the terms and conditions, then the contractor has to accept to accept the modified conditions.

In your case, it is not clear how the condition is being changed--unilaterally or taking benefit of a hidden clause.