No court stay on Mumbai's road audit by Swiss company
MUMBAI: In a development that may help break the hold a group of contractors has over road works in the city, the Bombay high court on Tuesday refused to stay the quality audit of Rs 900-crore road projects by a Switzerland-based firm. It also observed that it might not be necessary to call for tenders to appoint an auditor.
A division bench of Justice Sharad Bobade and Justice R D Dhanuka said any stay on the work being carried out by Geneva-based SGS Consultancy at this stage "might frustrate the very intention of the civic body of simultaneous audit of road works, and would operate against public interest. It might result in (the) stoppage of road works".
The court's order paves the way for the BMC to issue a formal work order to SGS, which had started auditing road repairs in October 2011.
The state and the BMC's efforts to deal with contractors also got a boost. The high court considered the argument that if the work of quality audit was awarded through tenders to the lowest bidder, there was a possibility that the process might be jeopardized by the contractors, who could set up bidders to give reports in their favour.
"We are prima facie of the view that appointment of an auditor does not involve execution of a work or supply of materials and, therefore, it might not be necessary for the commissioner to invite tenders (for allotting work to a quality auditor)," said the judges. However, as their view was at odds with a 2006 HC order that ruled that audit work of city roads should be done only through a tender process, the judges referred the issue to a larger bench.
Senior advocates Iqbal Chagla and E Bharucha, appearing for SGS and the BMC, respectively, insisted that the corporation had the power to choose a world-class contractor to supervise and assess city roads.
"The road contractors quote prices that are 20-30% less, which is why reputable firms do not participate in the tender process," said advocate Chagla. "Though the BMC has been conducting audit of road works since 2005, the situation has not changed. This necessitated the appointment of a world-class quality auditor like SGS," added the advocate. SGS also submitted before the court a report of what it had found-contractors laying roads that were 50% thinner than the approved norms, shoddy materials and use of concrete mix that did not meet approval.
The petition filed by former NCP corporator Niyaz Vanu had challenged the BMC's decision to appoint SGS without calling for tenders.
Senior advocate S Aney, counsel for the petitioner, said SGS was to be paid over Rs 4 crore for the work, which could have been done by 16 other audit firms in the city at a lower cost.
SGS and BMC lawyers argued that the 2006 judgment did not apply in the case of handing over the audit work to a firm, as the nature of the task was supervisory, involved forming an opinion and could be given only to a firm that had the trust and confidence of the corporation.
They also contended that as per the BMC Act only those contracts which involved execution of a work or supply of materials should be through a tender process. The tender rule does not apply to appointments of a fiduciary nature such as that of an auditor, advocate or a chartered accountant.
The court agreed and referred the issue of whether it was necessary to call for tenders for appointing a quality auditor for roads to a larger bench. The petitioner's application for an interim stay on the audit work was also rejected by the court. The HC pointed out that Vanu had approached the court after a considerable delay - four months after SGS had started the work, where the whole tenure of the contract was only for eight months.
http://articles.timesofindia.indiat...86790_1_tender-process-audit-firms-road-works