Madras HC puts halt to TN's smartcard plan

Seeing a scam in the state government's big budget project to issue smartcard driving licences and vehicle registration certificates, the Madras high court stayed its implementation.  The seeds of the scam were sown during the DMK regime when the city-based Bon Ton Softwares was chosen for the project though it quoted Rs 389.8 crore, about Rs 192 crore more that the lowest bid of Rs 197.5 by a Noida company. However, the contract was awarded in 2013, during the present AIADMK regime, after the company reduced the price to Rs 293.72 crore.

          Justice K. K. Sasidharan said that, the affidavit filed in support of the petition, if considered in the light of the documents found in the file produced by the transport secretary and commissioner, shows that all is not well. By accepting this tender, prima facie, the government sustained loss to a tune of Rs 96.21 crore. In case Bon Ton Softwares is permitted to supply smartcards, it would complicate the issue, public interest would suffer and public money would go waste.

On June 28, 2010, the government called for a tender for issuing smartcard-based driving licences and registration certificates. While Bon Ton quoted Rs 389.8 crore, the lowest bid was Rs 197.5 crore by the Noida-based Smart Chip Limited. Bon Ton was selected for the project after Smart Chip was "disqualified on technical grounds." However, Bon Ton later agreed to reduce the price, first to Rs 350.1 crore and then to Rs 293.72 crore, after negotiations. The company was given the letter of acceptance on April 30, 2013. Smart Chip approached the court challenging the tender process and sought an independent probe.

Interestingly, it has also come to light that the transport authorities did not pay any heed to pleas from the government-owned Electronics Corporation of Tamil Nadu (ELCOT) requesting them to hand over the project to it, as it had experience and expertise to carry out the scheme. ELCOT, which did not participate in the bidding process, tried twice in vain to convince the authorities saying since it was already handling the driving licence scheme, it could do the smartcard project at a much cheaper rate.

While hearing Smart Chip's petition, the court was dealing with two issues: one, the award of contract for a price which was Rs 96.21 crore higher than the lowest bid; two, the disqualification of Smart Chip and non-communication of the decision to the company.

Justice Sasidharan said the records revealed that in July 2011 (after the AIADMK came to power), the government refused to approve the contract and asked the transport department to refloat the tender. "The government has not approved this contract and it was the decision of the transport department to award the contract to Bon Ton in spite of the views expressed by the principal secretary and the transport commissioner earlier to cancel the contract on account of the exorbitant rate quoted by Bon Ton, which was substantially higher than the rate at which similar contracts were given by the neighbouring states of Karnataka and Puducherry."

ALL’S NOT WELL
The Madras HC puts on hold all the proceedings in the smartcard project citing wastage of public money
June 28, 2010	The government calls for a tender for production of smartcard-based driving licenses and registration certificates
Nov 29, 2010	Bon Ton Software chosen for the project for Rs. 389.8 crore. Rs. 197.5 crore quoted by Smart Chip Limited rejected on technical grounds
Nov 30, 2010	Bon Ton reduces the price to Rs. 350.1 crore
Dec 10, 2010	Bon Ton further reduces it to Rs. 293.72 crore
July 15, 2011	Transport commissioner cites exorbitant rate, wants tender cancelled
Apr 30, 2013	Bon Ton given the letter of acceptance for the project
June 2013	Smart Chip moves Court challenging the tender process and seeks an independent probe

Justifying stay on all further proceedings in the project, the judge said the company was yet to start manufacturing smartcards and hence no prejudice would be caused by staying the April 30, 2013 order. As for the disqualification of Smart Chip from the bidding process, Justice Sasidharan said its bid had been rejected without any justifiable reason and the authorities failed to inform the company about the reasons for rejection. This is in violation of the provisions of the Tamil Nadu Transparency in Tenders Act, 1998, the judge said, adding: "Taking into account the larger public interest involved in this matter and considering the huge loss to the exchequer on account of vast different in the amount quoted by Smart Chip and Bon Ton, there shall be an interim stay of all further proceedings until further orders."