Its your duty-obligation to ensure transparency in public procurement of goods and services by Govt. authorities


Bruhat Bangalore Mahanagara Palike officials worked overtime on Tuesday and Wednesday 12th & 13th January to give a big push to development. Keeping in mind that the election code of conduct comes into effect on January 15,[in view of the BBMP election scheduled to be held on 22nd ] officials cleared files on Wednesday, the last working day before the deadline.

The members of Civic Front stormed into the BBMP office and protested against e-tendering. The coalition of political parties like CPM, CPI and AIADMK accused the BBMP of clearing tenders worth over Rs.3,000 crore overnight on Tuesday in a very undemocratic process. BBMP councilors stayed on at office till the wee hours of Wednesday to clear all these tenders for developmental work, they alleged ‘What was the hurry to finalize the tenders at midnight’?

Professionals/Businessmen and People be Aware of the Law relating to Public Procurement of Goods and Services – to understand more go through the narration of the following case law – judgement delivered by Hon’ble Justice N.Kumar of Karnataka High Court.

[NSoft (India) Service Pvt. Ltd. Vs. BESCOM Ltd. and Ors.]
In the above case one M/s Nsoft(India) Services Pvt. Ltd., has challenged two contracts awarded to one M/s Zygox and sought for quashing of the same. The first contract is in respect of spot billing and collection in BESCOM Sub-Divisions,Second contract refers to maintenance of billing software.

The BESCOM Ltd., floated a tender inviting bids for Total Revenue Management of Billing and Collection of BESCOM Sub-Divisions in respect of 4 lots. The common qualifying requirements were stipulated for all the Lots. The Nsoft India Services was one such bidder and so also M/s Zygox. The Nsoft India’s bid was not accepted whereas the Zygox bid was accepted. The grievance of the Nsoft India is that the Zygox did not possess the requisite qualification, namely three years experience of providing similar services in any electricity supply utility in India. The Zygox contended that they do possess the three years qualification. The BESCOM has not categorically stated in the statement of objections that the Zygox do possess the requisite qualification of three years experience. And the Nsoft preferred a statutory appeal against the order passed by the tender accepting authority under Section 16 of the Karnataka Transperancy in Public Procurements Act 1999. The appellate authority after considering the rival contentions held according to BESCOM the requirement as stated in the bid document, is only work of similar nature. Since there is no specific definition in the tender document on what constitutes work of similar nature, the decision of the tender inviting authority in determinig this was accepted and accordingly it dismissed the appeal of Nsoft India. Aggreived by the said orders he is before the Hon’ble High Court.

Kindly be aware of the Law:
[Karnataka Transparency in Public Procurements Act (29 of 2000)]
The above Act was enacted by the Karnataka State Legislature to provide for ensuring transparency in public procurement of goods and services by streamlining the procedure in inviting, processing and acceptance of tenders by Procurement Entities and for matters related thereto.

“Procurement Entity” has been defined under the said Act to mean any Government Department, a State Government undertaking, Local Authority or Board, Body or Corporation established by or under any law and owned or controlled by the Government and any other body or authority owned or controlle4d by the Government and as may be specified by it.

Chapter II of the above Act deals with regulation or procurement. Section 5 provides that, on and from the date of commencement of the Act no procurement entity shall procure goods or services except by inviting tenders for supply. Section 6 contemplates that no tender shall be invited, processed or accepted by a procurement entity after the commencement of the Act except in accordance with the procedure laid down in the Act or the Rules made there under.

Act provides for publication of tender bulletins, tender bulletin officers, tender inviting authority and tender accepting authority, tender scrutiny committee, opening of tenders, duties of tender inviting authority, how a tender is to be accepted, how a tender is to be rejected and a statutory appeal to a person aggrieved in the aforesaid tender process.

Therefore, after coming into force of the Act, inviting tenders for procuring the goods and services is the rule and the said procurement should be in accordance with the procedure prescribed under the Act. However, the Act makes two exceptions. Firstly, as contemplated under Section 3 the provisions of the Act are not made applicable to the projects funded by international financial agencies or projects covered under international agreements. The Second exception , with which are concerned is found in Section 4 which reads as under :

“S.4 Exception to applicability-The provisions of Chapter II shall not apply to Procurement of goods and services:-
(a) During the period of natural calamity or emergency declared by the Government.
(b) Where the goods or services are available from a single source or where a particular supplier or contractor has exclusive rights in respect of the goods or services or construction work and no reasonable alternatives or substitutes exist:
Provided that for the purpose of this clause there shall be a committee of three experts consisting of one technical representative of the procuring entity one technical respresentative of the Government organization dealing with similar procurement and one respresentative from a reputed Academic or Research Institution or Non-commercial Institution having expertise in such line to examine and declare that the goods or services are available from a single source.”

In the above case After much deliberations the Hon’ble High Court held – applying exceptions as per Section 4 of the Act to the facts of this case the BESCOM has committed first error in not appointing experts in the field as committee members, The committee constituted was not of expert committee committed an error in referring the matter to a professor, an expert in the field for which they had no power under the Act, It is the procurement entity which has to constitute a three member expert committee to consider the services rendered by M/s Zygox and then to find out whether he is the only person who has got exclusive control of the said service. That has not been done. After the matter was referred to professor Sadagopan obviously he was not aware of the provisions of this Act. He has not certified that the petitioner is the only source from which this service could be procured. The recommendation made by him is very general in nature. It does not satisfy the requirement contemplated under proviso to sub-section(b) of Section 4 of the Act. In the letter addressed by him to the BESCOM he has not declared that the goods or services are available from a single source or that M/s Zygox has exclusive rights in respect of the goods and services. The third error committed was without properly understanding the contents of the said letter, the BESCOM has proceeded on the assumption that Sri Sadagopan is of the view that M/s Zygox is the only single source from whom the said service could be procured and they have awarded the contract to the M/s Zygox on the basis of the said letter.

From the aforesaid facts, it is clear that there is total non-application of mind by the BESCOM in the constitution of the expert committee, in making reference to an expert and also in not understanding what the expert has stated by way of his opinion. Therefore, the BESCOM has committed a serious illegality in awarding the contract to M/s Zygox.

Having regard to the object with which the Act was passed by the Karnataka Legislature nearly nine years back, the tendency of the BESCOM an Instrumentality of the State, to continue to indulge in manipulations and distributing the public largesse is quite evident in this case. When the whole machinery of an instrumentality of the State is directed towards preferring a particular individual or a company in preference to other persons who are similarly placed and anxiety shown by the statutory authority in awarding contract, in utter violation of provisions of the Act clearly demonstrates that the authorities are acting in violation of the rule of law. In fact the way tender is worded also gives an impression that from the inception they have kept in mind the interest of M/s Zygox and not of the authority. When these facts are brought to the notice of this Court, this Court cannot be a silent spectator. It is not a mere issue of a writ to quash an illegal action. A duty is cast on the Court to see in future such illegalities do not occur. Therefore it is very much necessary for this Court to quash these contracts in particular the second contract which is granted in utter violation of the provisions of the Act. As M/s Nsoft India has succeeded in showing the illegality he is entitled to succeed and is entitled to get both the contracts quashed.

However, merely because the contract awarded to M/s Zygox is quashed at the instance of M/s Nsoft India, M/s Nsoft India is not entitled to the award of Contracts straight away. Before they could be said to be entitled to the contract, he should satisfy the tender accepting authority that he possess the requisite qualification. That is an exercise to be done by the tender accepting authority and not by this Court. Writ Petition Allowed.

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