Reference to the DLRC Project being undertaken in the State of Punjab o

Chandigarh : Reference to the DLRC Project being undertaken in the State of Punjab on (Build, Own, Operate & Transfer) BOOT basis wherein termination notice was served on the contractor namely, M/s Smart Chip Ltd. (as Consortium Partner) vide letter no. PSTS/105429-31 dated 01/06/2018.There have been petitions pending in the Hon’ble High Court of Punjab and Haryana pertaining to the implementation of the DLRC and ADTT projects in the State of Punjab. In one of the petitions the Court ordered the State to make payments to the tune of Rs. 10 crore in favour of M/s Smart chip Ltd.,

the State thereby agreed to pay M/s Smart Chip Ltd. an amount calculated by taking the cost of each card to be Rs. 45/-. The State informed the Court that it was bound to make payment only to the tune of Rs. 8 crore and not Rs. 10 crore. To this, the Court refused to interfere holding that when the parties inter-se have agreed to a sum then the Court would not intervene and ordered the State to make the payments accordingly. The rate of Rs. 45/- according to which the State reached an estimation of Rs. 8 crores does not hold good on being compared with the rates in other States.

That the rate of Rs. 45/- in other States is inclusive of the profit and also the BOOT rate. That in the instant project, the company during the implementation of the DLRC Project has already recovered the capital component of the project during the first five years of the project. In addition to this, there has also already been a shift to VAHAN 4.0 so again there is no scope of incurring any additional expenditure. Therefore, the rate of Rs. 45/- is still excessive and the fact of government agreeing to such rate is astonishing for it manifests that the government is instead supporting loot of public money.

 In the State of Punjab, especially with respect to this particular project, the capital component has already been recovered by the contractor and the only work that is left with the contractor is that of operation and management which certainly doesn’t require incurring of additional money. Thus, this rate of Rs. 45/- that too at this stage of project when everything has been done, and all that is left is the operational and management aspect of the project is certainly arbitrarily high. The contractor was granted an extension by a letter no. PSTS/18749 dated 01/06/2015 for the next five years whereafter the contractor had zero cost over the initial investment and therefore,

the rates being charged from the consumers should have been lower than the rates in the original contract. Furthermore, adaptation of VAHAN 4.0 as designed, developed and maintained by NIC shrunk the scope of work for the BOOT operator as it eliminated the responsibility of using and maintaining the servers of local sites. Therefore, there is absolute no requirement or scope of the contractor incurring any further amount into this project and therefore is not entitled  to charge such exorbitant amount for the project.

Therefore, the State to agree to pay the amount of Rs. 8 crores to the Contractor is rather an act of looting public money and the State ought not to have agreed to this rate. Bestowing this money to the contractor is highly irrational and certainly opposed to public interest especially in light of the fact that a larger issue is pending before the Hon’ble Court and there exists no reasonable basis to make such interim payments to the contractor.

Background : An Agreement dated 27/09/2011 was entered into by the Government of Punjab with a consortium led by one M/s SmartChip Pvt Ltd., whereby the letter was awarded the Contract for introducing E-Governance in Transport Offices of the State and for the issuance of Smart Card based Driving Licenses and Motor Vehicle Registration Certificates. The said Contract initially provided for a tenure of 5 years.Under the Contract dated 27.09.2011, M/s SmartChip charges an abnormally high price of Rs. 65 for DLs and Rs. 136.5 for RCs, while NICSI, a Central Government Company, charges a sum of only Rs. 45 for both DLs and RCs in the States in which the DL/RC project is carried out under its aegis.

The company M/s Smart Chip Pvt. Ltd., though incorporated in India, is a subsidiary to a Foreign company M/s Morpho whose shareholding is to the tune of 97%. It is therefore not just the steep prices that were charged that’s questionable but also the fact that a Company with such an overpowering foreign hand could have been allowed to undertake and implement such an important project that requires constant generation and maintenance of sensitive data pertaining to motor vehicles and driving license in a state that borders the enemy territory of Pakistan. 

In March, 2015, Department of Transport, Government of Punjab, issued an NIT for the setting up of Automated Driving Test Tracks (ADTT) Project at 32 locations of the State. In the bidding process that ensued, there was a tie between the financial bids of one M/s Rosmerta and M/s Smart Chip. However, after the draw of lots, M/s Rosmerta was declared as the lowest bidder.Thereafter, Department of Transport, Government of Punjab, suspiciously cancelled the bid of M/s Rosmerta and annulled the bidding process altogether, citing frivolous reasons.

Subsequently, 01.06.2015, about one year before the expiry of the DL/RC Contract awarded to the consortium led by M/s SmartChip Pvt. Ltd, the Transport Department clandestinely issued a letter to M/s SmartChip Pvt. Ltd. whereby the DL/RC Contract under which the said company was exploiting the public was extended for a period of five full years from the date of its expiry i.e., 27.09.2016, and all civil works associated with the establishment of ADTT Centers was assigned to M/s Smart Chip Pvt Ltd. to be executed as a CSR project.  The letter of 01.06.2015, besides being highly conspicuous, reeks of impropriety and illegality on the following grounds,

amongst others:-1.The highly exploitative DL/RC Contract of 27.09.2011 has been secretively extended for a term of 5 years behind closed doors, without following a transparent tender process, in violation to the law laid down by the Hon’ble Supreme Court of India and CVC norms. This extension has been granted despite the fact that the CAG in its report of 2015 has clearly recorded the exploitation and misappropriation of funds in the implementation of the DL/RC project. 

2. The letter has been used as an indirect mechanism for awarding the ADTT project by assigning major works involved therein as a CSR project and, clothing the consideration thereof behind a highly exploitative DL/RC contract which the company was already executing and had therefore already incurred all major capital expenses.3.The CSR project, instead of being philanthropic, has been undertaken in return for a consideration in the form of an illegal and opaque extension in the over-priced and abusive DL/RC project. 

4. The company has been allowed to undertake a project in which it is commercially involved, as a CSR project.5.The State Government invited the company to implement as a part of its CSR obligations, a project which companies are willing to undertake at competitive prices, thereby denying other public services and public requirements that may not have any commercial value and are more in need of funding through CSR. 6.The notification dated 27-02-2014 issued by the Ministry of Corporate Affairs ,makes it mandatory for a company to have its CSR activity approved by a CSR committee, through a registered trust or a registered society or a company established by the company  or subsidiary or associate company under section 8 of the Act or otherwise.

However, M/S Smart Chip Limited has neither undertaken its CSR activities through any trust or society which is in violation of the notification nor has convened any CSR committee and has not even displayed its CSR activities on its website.
Shockingly, the assignment of civil works and installations pertaining to ADTT centres, has been misused and misrepresented by M/s Smart Chip Pvt Ltd in obvious connivance with certain unknown officials as a result of which they have suo-moto, with absolutely no authority, assumed for themselves the power to man and operate the ADTT centres in the State and also collect fee from the public and appropriate the same for themselves. 

Recently, the Government of Punjab terminated the extended DL/RC Contract with M/s SmartChip Pvt. Ltd. and has constituted a 3 member committee to inquire into the entire matter. It is hoped that the Committee would thoroughly inquire into the facts and circumstances and uncover the underlying collusion and embezzlement and appropriate action like the registration of an FIR, quick and efficient investigation, conducting of a thorough trial, initiation of disciplinary proceedings etc. are taken to bring the guilty to books. It is further hoped that the Government of Punjab takes necessary action to recover all such amounts that has been exploited from the public in the form of exorbitant charges for issuance of DL/RC by M/s SmartChip Pvt. Ltd. during the tenure of the now terminated extended contract.

It is also hoped that the State Government immediately assume charge and possession over ADTT centres, and initiate criminal proceedings against those who have been manning, operating and collecting fee without any authority, and civil proceedings to recover illegally misappropriated funds.   Finally, it is requested that all further contracts pertaining to the issuance of Smart card based DL/RCs and establishment and/or operation of ADTT centres, be awarded only through open and transparent public tender processes. 

Prayer : Please recover money Overcharged by the Contracting Company 

Therefore, the State to agree to pay the amount of Rs. 8 crores to the Contractor is rather an act of looting public money and the State ought not to have agreed to this rate. Bestowing this money to the contractor is highly irrational and certainly opposed to public interest especially in light of the fact that a larger issue is pending before the Hon’ble Court and there exists no reasonable basis to make such interim payments to the contractor.
VEHICLE REGISTRATION CERTIFICATES:

Party    State    Rate    Status
Smart Chip    Punjab    136.35    Extended on 01.06.2015
SMARTCHIP    Chattisgarh    74.70    Existing
NICSI    Uttar Pradesh    55.00    do
NICSI    Rajasthan    55.00    do

DRIVING LICENSES

Party    State    Rates    
Smart Chip    Punjab    65/-    Extended on 01.06.2015
SMARTCHIP    Gujarat    49.59    30.06.2015
NICSI    Uttar Pradesh    44.48    4th Sept, 2012
NICSI    Rajasthan    44.48    12th July 2013.

As per the court order attached (Annexure no. – 5) wherein the government agreed to pay contracting company M/s Smart Chip INR 8,43,39,961 in fact after the careful analysis and the facts given above Government of Punjab has to recover INR more than 50 Crores (to be decided by the finance department of Government of Punjab. The Government is a welfare state and is working for the welfare of Punjabis, the contracting company in question has been fooling the government and its people in connivance with the officials of department involved.

We demand an impartial enquiry/ investigation through special investigation team (SIT) of either Vigilance department or Center Bureau of Investigation - CBI. The respectable Chief Minister of Punjab Capt. Amarinder Singh has taken very bold step of cancelling the contract for the welfare of Punjabis but the question remain that justice has to be done with the people of Punjab and their hard earned money has to be recovered.

We request a dedicated, committed Ex-Capt. of mother INDIA Capt. Amarinder Singh to order an Vigilance / CBI enquiry and order his officials to recover INR more than 50 Crores of hard earned money of Punjabis and provide them justice so that no company who so ever it may be take the Punjab leadership & bureaucrats so lightly to cheat and manipulate through some corrupt officials.