It is truly disconcerting as to how PSUs such as BPCL are conducting tenders and listed entitles such as KSB Ltd. purchasing technology without a clear flow of title.

Prime Minister Narendra Modi on Thursday called for devising a mechanism to rank government departments on the basis of pending corruption cases against officials, on the lines of the Swacchta (cleanliness) rankings, and publishing the related reports on a monthly or quarterly basis.

In contrast to this, in the recent past, PSUs have been issuing tenders in a cavalier fashion, the procedure / protocol followed has often been questioned not only by bidders, but been the subject matter of litigation. This apart, the terms and conditions in such tenders are entirely vague and unsatisfactory, and certainly not appropriate given the fact that PSUs, have to act in a fair and transparent manner, since they are ‘State’, for the purposes of Article 12 of the Constitution of India.

The expression “Tender” refers to an invitation to bid for a project. Tendering usually refers to the process whereby, Government institutions (such as PSUs) and private institutions invite bids / issue tenders for the supply/ sale of goods, products, services etc.

Bharat Pumps & Compressors Limited (BPCL) in August 2022 conducted a tender bearing Tender No. MSTC/LKO/Bharat Pumps & Compressors Limited/3/ Allahabad/22-23/14334 (“August Tender”) for sale of Technology of BPCL.

It is pertinent to note that, despite the fact that BPCL is a PSU and has to comply with the settled legal position (as regards the role and responsibility of a PSU), it miserably failed to do so and as a result of which the said August Tender was cancelled.

The irregular manner in which the said BPCL’s August Tender first came to the public attention was when an article entitled “Govt’s attempt to sell Bharat Pumps Tech may hit a bump”, was published in The Hindu Business Line on 12^th September 2022. The said Article pointed out gross irregularities in the Tender bidding processes.

As per the said Article: –

the Government had appointed MSTC Limited, a government owned e-commerce service provider (“MSTC”), to auction the Technology of BPCL.
when the bidding process was completed, the highest bidder was notified to be M/s Vasavi Power Services Private Limited (“Vasavi”), who apparently won the bid by quoting the highest amount, i.e., INR 27.02 Crore (for the Technology of BPCL).
in pursuance of the Tender, MSTC had created a wallet into which payment of the Earnest Money Deposit (“EMD”) had to be made by the bidders.
One of the terms of the said Tender, was that payment towards Pre-Bid EMD, Security Deposit, balance payments and taxes, would all have to be made by the “Bidder” only and could not be made by a Third party.
notwithstanding this express stipulation in the terms of the Tender, Vasavi (the bidder to whom the Tender had been awarded) did not make payments, but the payments were made apparently on their behalf by a “Third Party”, viz. one Allox Infra, who appears to have transferred about INR 7 Crore to the wallet (in relation to the aforesaid Tender) on behalf of Vasavi, which had been adjusted against the 25% paid as Security Deposit.
the said technology proposed to be sold was critical due to its application in the Atomic Energy and Nuclear Power sectors and that it could be dangerous if the technology fell in the wrong hands.

The terms of the August Tender (as then hosted on the MSTC website and referred to in the aforementioned Hindu Article) made it abundantly explicit and clear that, payment towards Pre-Bid EMD, Security Deposit, balance payments and taxes, had to be made by the “Bidder” only and could not be made by a Third party. Furthermore, the Auction Catalogue (as then hosted on the MSTC website), also categorically and expressly mentioned that “Third-Party Payment will not be accepted”.

Notwithstanding the aforesaid express stipulations, in the August Tender, it was shocking and distressing to note from the said press Article in the Hindu; that Vasavi (the bidder to whom the Tender had been awarded) did not make the payments themselves, but apparently the payments were made on their behalf by a “Third Party”, viz. one Allox Infra, who appeared to have transferred about INR 7 Crore to the wallet (in relation to the aforesaid Tender) on behalf of Vasavi, which as per the aforementioned Press Article, had been adjusted against the 25% paid as Security Deposit.

Despite this fragrant disregard by Vasavi of the terms and conditions of the August Tender, Vasavi was chosen as the successful bidder. This was a clear, blatant and glaring irregularity on the part of BPCL/ MSTC, in selecting Vasavi as the successful bidder although they had breached the tender conditions as regards pre-payment.

The other terms and conditions in the August Tender were vague and misleading, and least expected from a respected PSU. The August Tender related to the sale of certain Technology which is critical due to its use / application in Atomic energy and Nuclear power sectors. There was no provision in the August Tender requiring any validation as regards the credentials of prospective bidders (who were accorded a right to inspect the Technology) and also seeking an undertaking from the successful bidder as to how they would use the Technology and not sell the same. This poses a real risk to national security which a responsible PSU such as BPCL should have been mindful of and provided for in the tender conditions. It is more than likely that BPCL did not validate the antecedents / credentials of Vasavi, its owners and the businesses in which they are involved in.

Evidently, after the aforesaid Article was published and there was a general public outcry, BPCL hurriedly cancelled the August Tender.

After cancelling the August Tender, BPCL floated a fresh tender bearing No. MSTC / LKO / Bharat Pumps & Compressors Limited / 4 / Allahabad / 22-23 / 22241 [348173] (“Fresh Tender” or “October Tender”) which was again issued hurriedly without any careful evaluation and thought by BPCL/ MSTC.

What was particularly shocking was the fact that this Fresh Tender did not exclude/ disqualify/ blacklist Vasavi from participating despite Vasavi having blatantly disregarded, flouted and not complied with the terms of the August Tender. Although, the tender contained a document entitled ‘Integrity Pact’ (which is even currently hosted on the MSTC website); which imposes an obligation on a prospective bidder (viz. such as Vasavi) to ensure strict compliance with the Integrity Pact and take all necessary measures to prevent corruption, Vasavi was allowed to submit a bid. It is shocking that Vasavi was even permitted to submit a bid, notwithstanding the express stipulation in Section 1(c) of the Integrity Pact which expressly stipulates that “MSTC will exclude from the process all known prejudiced persons”.

In view of “Third Party payments” having been made on behalf of Vasavi by Allox Infra; which was a clear, blatant and glaring violation of the terms of the August Tender (and resulting in its cancellation), Vasavi is clearly a “prejudiced person” who should have been excluded / disqualified / blacklisted by BPCL/ MSTC from participating in the Fresh Tender.

In failing to do so, BPCL has been derelict in discharge of its obligations as a responsible PSU, and this merits an investigation by the CVC, into the conduct of BPCL since even the Fresh Tender lacks transparency, reeks of suspicion and corrupt practises.

Apart from the disturbing facts as mentioned aforesaid, even the terms of the Fresh Tender (as then hosted on the MSTC website), are vague, iniquitous, misleading and not in the public interest (moreso since the successful bidder will never be endowed with a clear title or be sure of what it has acquired).

The Pre-Bid EMD amount which was Rs. 5 Lacs under the Tender had been arbitrarily enhanced to Rs. 1 crore under the Fresh Tender. There was no explanation or reason given in the Fresh Tender as to why there was such a gross enhancement in the quantum of EMD amounts (which was a minimum Pre-Bid amount to be deposited by the bidders) just in a matter of 2 months for the very same Technology.

As per the disclosure made to the stock exchanges on 17^th October, 2022 by KSB Ltd., a listed entity, it is learnt that the Fresh Tender (a project worth Rs. 28 crores), has been awarded to them.

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