New Delhi, Aug 17: The department of telecommunications (DoT) and a group of equipment vendors, who were denied orders for procurement of jelly filled cables, are headed for a protracted legal battle.

The provocation has come with DoT deciding to go ahead with placing orders with bidders who had quoted higher prices in violation of a Delhi high court order.

Five vendors had gone to court seeking justice in the Rs 2,800-crore cable purchase when it became clear that DoT was violating its own tender conditions on the pricing of the items.

The affected parties, who are bracketed as non-sales tax paying companies (because their factories are located in backward areas), complained that a cartel of big companies had succeeded in browbeating the DoT into changing the tender conditions in their favour.

DoT created the confusion because of the peculiar definition it adopted under pressure from the companies which quoted higher prices.Since it is the basic price plus all government levies, five companies exempt from sales tax passed on the benefit to DoT and were able to quote lower prices. These companies are Sterlite Industries, three units of Gujarat Optical Cables and Paramount Cables.

Further, another five companies paying only 2 per cent sales tax also passed on this benefit to DoT. These companies, based in Andhra Pradesh, were Surana Cables, GR Cables, ARM, Bhagyanagar Metals and state-owned Hindustan Teleprinters Ltd. On the plea that the lowest composite price quoted by L-I bidder should be further subdivided into basic plus ST with ST payable at actuals, the L-I bidder was punished by DoT while giving his price to higher bidder.

The court had ruled last week, "subject to the final decision in the writ petition it is ordered that the respondents will proceed on the basis of the composite price (L-I) on a uniform basis and pay to the parties on that basis for the supplies made by them". Bypassing the court order, DoT has now issued letters of intent to 22 companies. The six companies which had quoted the lowest price and challenged the DoT approach were denied the LoIs. In all, 28 companies had participated in the tender and the technical evaluation committee (TEC) had found them all eligible for award of LoI. It is alleged by the affected companies that a cartel which was so far charging high prices from the DoT have again made the DoT change its own tender norms. The Delhi high court, in its interim order, had struck down the price on which the DoT had sought to place the cable orders. The DoT has decided to place orders on the basic price instead of the composite price as was mentioned in the tender. The affected companies contended before the court that the tender conditions clearly stated that orders would be placed on composite prices which were inclusive of all levies and taxes, packaging, forwarding, freight and insurance.

On the basis of the composite price, the Sterlite Industries which quoted the lowest price had emerged the L-I bidder qualifying for the major share of orders.

The company, which approached the court, said this system already existed in all the government departments like the railways and even the DoT had adopted this system in the case of tenders like optical fibre cables, transmission and switching equipment. The DoT in its letters, dated August 12, to select companies said, "consequent upon the receipt of your unconditional acceptance for the procurement of PIJF U/G Cables... the telecom circles have been authorised to place formal purchase order on your firm as per the allocation enclosed." "Wherever there is any conflict, the provisions of bid document and acceptance to terms and conditions of the APO (advance purchase order) by the firms shall prevail,'' it added. The firms, in their petition said, DoT "arbitrarily, unlawfully, illegally and in total violation of the tender conditions was breaking up the composite price and as per the advance purchase order the lowest sales tax exempt bidder like Sterlite will be paid only Rs 113.46 whereas the so-called sales tax charging bidder would get Rs 118. In as much as the price being the lowest quoted price - does not contain any element of sales tax - there can be no basis for for arbitrarily and notionally reducing the price of the L-I company". The petitioners further charged that paying Rs 4.54 per cable/km extra to some of the other bidders who have quoted a high price is unjustified and against the interest of government exchequer. In fact, this amounts to putting premium on the high price quoted by competing bidders. The net consequence of the exercise is that the lowest bidder is put to an additional disadvantage in as much as the competitors who quoted higher than him are even asked to make supplies at the rates higher than the lowest bidder. This is arbitrary and violative of all norms.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.