Sub Rule 2 of rule 2 of Chapter V of schedule D of the Act allows work to be done or material purchased without calling tenders. The relevant portion is quoted below :
``Provided that the standing committee may authorise the commissioner for reasons which shall be recorded in its proceedings, to enter into a contract without inviting tenders as herein provided or without accepting any tender which may be received after having invited them.''

Two things would be obvious here:
First, there would have to be special circumstances to invoke this section. This section seeks to make an exception to the general rule. The general rule cannot be bypassed on the whim and fancy of the corporation but only on the basis of special circumstances which can justify not calling tenders.

Second, the reason for not calling tenders should be recorded and should be cogent.

Unless these two conditions are met and the Act and the Accounts Code would be reduced to a meaningless heap of paper; the entire basis of sound financial management would be easily destroyed. The expenditure described in Charge No 2 and 3 has to be governed by special and unusual circumstances and is not in the nature of routine expenditure. For example, dispensing with tenders could be justified if there is only one monopoly supplier/producer or if certain rigid specifications are required which are met by only one producer etc.

However, the corporation has abused its powers in relation to this provision and has purchased material worth crores without calling tenders (as distinct from and in addition to the work done without tenders as stated in Charge no 2).

Three of the main categories of abuse under this section are as follows:
(a) No rigid specifications required and numerous suppliers in market yet no tenders invited.

When it is not necessary to have rigid, unusual or precise specifications or when specifications can be flexible and there are numerous suppliers in the market, tenders should be called. An example of abuse under this category has been the renovation of offices of the chairman, standing committee and leader of the house costing Rs 2,20,000 and Rs 2,01,875 respectively without calling tenders. This also illustrates how blatant and carefree the abuse of power has been.

Purchase of saplings and construction of a footpath without tenders are other examples.

(b) Numerous established supplier/makes available in the market for same product yet tenders not called.

Lights and electrical fittings have been purchased without tenders. Tenders should have been called from established manufacturers.

A glaring example of this type of abuse has been the purchase of medicines without tenders worth almost Rs 4 crore (Rs 3,98,70,432). Medicines worth this amount were purchased in small quantities from time to time. For economy, bulk purchases should have been done which would have made the rates more competitive. If it was not possible to estimate requirement (which should have been possible) then purchase could have been made in two or three lots in the course of the year. This would also have resulted in bulking of orders.

However, the second, more serious objection is that tenders were not called from establishment companies/manufacturers. Supplies could then have been obtained directly from the company quoting the lowest rate. And if supplies were to be purchased from local chemists/retailers then open tenders should have been called (as distinct from the limited tenders mentioned above). None of these procedures were followed and supplies were obtained from local chemists. Complaints were received that certain chemists were being favoured.

The purchases from local chemists without tenders can have no justification. The likely defence that honorary private doctors in municipal hospitals prescribe medicines of various brand names, is ridiculous. The brands stocked by the Corporation should be published/displayed in its hospitals and honorary doctors informed. It would be interesting to obtain information regarding the chemists with whom orders were placed.

(c) Numerous unknown/not established makes as well as established makes available in market yet tenders not called and purchases made.

A typical example has been the purchase of computers for more than Rs 23 lakh (Rs 23,31,657) without tenders. Specifications should have been spelt out and if a known or established brand was to be purchased then limited tenders should have been called from the makers/suppliers of these brands. In case some other brand or unbranded computers were to be purchased then open tenders should have been called after giving specifications. Neither of these procedures were followed. This becomes even more objectionable if purchases are made of not established brands.

Annexure `A' of Charge No 3 gives 21 examples of these illegal purchases which amount to over Rs 6 crore.

As in the case of Charge No 2, in this case also the Standing Committee and General Body very obligingly ratified the expenditure. This was another method of siphoning Corporation funds into the hands of favoured contractors. Here again the absence of competition has caused loss to the corporation and consequent curtailment of development expenditure, as explained above in respect of Charge no 2. Hence in addition to abuse of power, incompetence to perform duty also stands proved.