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May 23, 1997


Delhi court quashes Sukh Ram's tender award decision

In a significant decision, the Delhi high court today quashed as illegal and arbitrary a decision by former communications minister Sukh Ram to award 90 per cent of the contract for transmission instruments to Hyderabad-based Advanced Radio Masts Limited and associate companies in 1995.

Justice C M Nayar noted that Sukh Ram took this unilateral decision after ''discarding'' the recommendation of a tender evaluation committee and thereby posed ''huge losses'' to the state exchequer.

The high court had stayed the awarding of the contract after VXL Engineering Limited and P S Measurements Limited petitioned it, contending that as per the recommendation of the tender evaluation committee they were to be awarded 30 to 50 per cent of the contract for digital transmission analysers.

Quashing the then communications minister's decision, the court noted that it was based on ''extraneous considerations''.

Not only had Sukh Ram overturned the Tender Evaluation Committee's recommendation, but had also directed that advance purchase orders be placed on ARM and four other chosen companies, which had quoted rates much higher than those bid by the petitioners.

Justice Nayar noted that ''There was no basis to say that the acceptance of higher rates would result in saving of Rs 15 crore (150 million) to the Department of Telecommunication compared to last tender rates. This averment is not borne out from the records and no explanation is offered.''

On the contrary, the acceptance of prices of ARM and the other companies in comparison to those of VXL and P S Measurements would have caused huge losses to the state exchequer, the judge added.

Justice Nayar noted that during the pendency of the proceedings DoT counsel Rakesh Tiku had filed an additional affidavit stating that the government had decided to pay a uniform price of Rs 107,000 and Rs 94,744 for packages one and three of the transmission instruments.

This was the price quoted by the petitioners and lower than that quoted by ARM and others.

However, the DoT said that it would stand by Sukh Ram's decision to award 90 per cent of the contract to ARM and four others.

Setting aside this decision, Justice Nayar directed that the placement of orders be worked out as per the tender documents.

According to the tender documents, 30 to 50 per cent of the contract was to be awarded for technically and commercially responsive bids in inverse proportion.

The tender is to be on Indian rupee terms and commercial supplies can start only after the goods have been type approved by the purchasers.

Justice Nayar held that the above provisions will have to be followed by the government and noted that this was the method recommended by the TEC also. However, the judge added that it would be open for the government to fully satisfy itself about the quality and technical viability of products before taking any further steps.

Counsels Maninder Singh and Pratibha Singh appearing for the petitioners had contended that the "favouritism" to ARM and others would cost the exchequer Rs 130 million.

Advance Radio Masts is owned by Hyderabad-based Pattalu Rama Rao, who is a co-accused with Sukh Ram in another multi-million-rupee deal for radio relay systems.

The contract awarded in the present case was for 528 pieces of DTA 34 MB/s without jitter and 1,137 pieces of DTA 140 MB/s without jitter floated on October 31, 1994.

Besides ARM, the other companies allegedly favoured by Sukh Ram are ARM's sister concern Advance Communications and Devises and Gurgaon-based S M Creatives Electronics Private Limited and Hyderabad-based Sinclaire Electronics India Limited and Surana Telecom Limited.

Noting the chequered history of the contract, Justice Nayar observed that the first tender evaluation committee did not consider the bids of the petitioners, who then represented to the minister.

Sukh Ram then appointed a second tender evaluation committee on March 12, 1995 headed by the chairman of the Telecom Authority and with member finance, member production, adviser production and deputy director general (materials management) as members.

This committee, in its report of November 1995, placed VXL and P S Measures and Control at first and second positions, entitling them to secure 30 to 50 per cent of the contract.

However, ARM then represented to Sukh Ram and argued against the eligibility of these companies to secure the contracts.

Justice Nayar noted that Sukh Ram had adopted the ARM's opinion as his own and proceeded to overturn the recommendation of the second TEC, which he himself had set up.

Noting that his decision was based on extraneous considerations, Justice Nayar observed that arm being a rival bidder, its opinion could not have been acted upon by the government.


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