The Uttar Pradesh Avas Evam Vikas Parishad had to pay an avoidable payment of interest of Rs. 11.38 crores.

Avoidable payment of interest. The Parishad had to pay avoidable compensation of Rs. 11.38 crore to the allottees due to violation of tendering process.

Uttar Pradesh Avas Evam Vikas Parishad (Parishad) opened registration (21 January 2011 to 5 March 2011) for allotment of flats (216 flats) in Shikhar Enclave, Vasundhara Yojna, Ghaziabad under a self-finance scheme with the expected date of completion of construction in 24 months from the date of issue of the demand notice. The eligibility draw was organized on 7 June 2011 and demand letters were issued in June 2011. Therefore, the tentative date of possession of flats worked out to July 2013. The Parishad executed two agreements for the construction of flats on 3 August 2011. As per the agreements with the Contractors, the dates of start and completion of work were 3 August 2011 and 2 February 2013 respectively.

Further, the Parishad had invited (21 July 2013) bids based on a two-bid system for external development works at Shikhar Enclave. Technical bids of three firms were opened (29 July 2013) and all the firms were found technically qualified. Thereafter, their financial bids were opened (30 July 2013) and a recommendation for the award of work in favor of the lowest bidder (who was also one of the contractors for the construction of the flats) was sent to the Superintending Engineer (SE) for approval. However, the SE did not approve the recommendation on the grounds of poor progress made by the contractor in the construction work of the said building. The Contractor was informed (4 September 2013) about the cancellation of the bid without assigning any reason thereof. Fresh tenders were invited (12 September 2013).

The Contractor moved the High Court and obtained a stay (8 October 2013) on the award of work of external development through fresh tendering on the grounds that re-invited tenders would be disadvantageous to the firm. The stay could not be vacated in the next 21 months. As a result, no progress could be achieved in the matter. On the other hand, allottees were also demanding interest for the period of delay. The Parishad tried to settle the matter out of court with the Contractor who agreed (8 July 2015) to settle the matter provided the work was awarded in its favor at the rates quoted in the tender which was canceled. Accordingly, the Parishad Board decided (8 October 2015) in favor of an out-of-court settlement keeping in view the delay, and the demand of interest/compensation by the allottees. The work was awarded in favor of the Contractor (02 November 2015). The High Court dismissed the written petition as withdrawn (21 January 2016) at the request of the petitioner.

The Parishad, after approval of final costing, decided 31 December 2016 as the date for physical possession which was further extended to 31 July 2017 due to slow progress of work.

Meanwhile, aggrieved by excessive delay in handing over of the flats, allottees demanded (September 2016) interest on the ground that the Parishad had charged interest at the rate of 13.5 percent from the allottees who had defaulted in making timely payment. The Parishad decided (30 December 2016) to pay interest at the rate of six percent to allottees after six months from the date of the last deposit made by them and accordingly paid an interest amounting to Rs. 15.60 crores to 201 allottees (for 37 months).

The audit analyzed the reasons for the delay. While assessing records relating to the tendering process, it noticed (September 2017) that the Tender Committee had not analyzed the technical bid (Pre-Qualification Bid) properly as per the requirements of the standard tendering process. The bidders were required to submit details of works satisfactorily completed by them during the last three financial years indicating the date of start of the work, the date of completion
of the work, the amount of work actually completed, etc. Further, as per terms of the tender, if any ongoing work of a tenderer was running behind schedule by more than 15 percent due to fault of the contractor at a stage when 50 percent time period from the date of start had passed, the contractor was to be held technically disqualified and his financial bid was not to be opened.

Though the Tender Committee analyzed the details of works satisfactorily completed by the tenderer during the last three years, it ignored the status of the ongoing work of the Contractor. This resulted in an omission to analyze the bids on this important pre-qualification criterion. Instead, the Tender Committee treated all the participants as technically qualified and recommended for opening their price bids despite the non-submission of required information regarding ongoing works by the Contractor.

Later on, the SE canceled the tender on the ground that the progress of construction of flats by the Contractor was less than 50 percent. The Contractor obtained a court stay on the ground that his bid was canceled without assigning any reason. This delayed the work for at least 27 months. Thus, violation of the tendering process by the Tender Committee resulted in a delay of 27 months and consequent payment of interest for such period amounting to Rs. 11.38 crore.

The Parishad stated (January 2019) that evaluation of pre-qualification bid was correctly done as per pre-qualification condition by the Tender Committee.

The Government, however, accepted (June 2019) the contention of Audit but did not intimate about the initiation of any action for fixing responsibility on the concerned officials of the Tender Committee.