The Hindu 24.11.2010
BMTC under pressure to refund penalty to bus manufacturers
Bageshree S. and Anil Kumar Sastry
| Bus makers threaten not to participate in tender process |
The penalty was levied for delayed supply and technical defects in buses
Both the companies have claimed that the penalty is ‘not justified'
BANGALORE: The Bangalore Metropolitan Transport Corporation (BMTC), which had levied about Rs. 20 crore penalty on two bus manufacturing giants for delayed supply and technical defects in buses, now seems all set to refund the amount, apparently bowing to arm-twisting tactics and political pressure.
While the corporation had levied penalty for non-fulfilment of clearly specified contract conditions, Tata Motors and Ashok Leyland have petitioned the Transport Minister that the penalty was not justified and pleaded for refund.
Minutes of the BMTC board meeting chaired by Transport Minister and BMTC Chairman R. Ashok, in possession of The Hindu, show that manufacturers have threatened not to participate in the tender process for supply of buses to BMTC this year if their demand is not met.
The two being major suppliers of buses and chassis, this virtually means that the process of acquisition of new buses will be seriously jeopardised.
The corporation had placed orders for supply of about 1,000 fully built semi-low floor buses with these two manufacturers under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) at a cost of Rs. 323.82 crore.
As per the tender conditions, they not only defaulted in supplying buses on time, but also, according to the corporation, supplied buses with several technical defects. Accordingly, it levied a penalty of Rs. 28.53 crore on Tata Motors, and Rs. 3.30 crore on Leyland.
Of the Rs. 28.53-crore penalty on Tata, BMTC has already refunded a part of the amount, which was appropriated against technical defects, and Tatas has demanded further refund of Rs. 16.24 crore that was levied towards delayed supply. Leyland too has demanded refund of Rs. 3.3 crore.
In the BMTC board meeting held on August 3, Mr. Ashok said that both the companies had claimed that the penalty was “not justified” and said that the issue had to be sorted out on “priority basis” since it impacts acquisition of new buses.
Penalty justified
During the meeting, the Director (Projects) justified levying of the penalty and said it was as per the contractual terms. Despite pin-pointing the defects in the coaches and variation in design, the suppliers had supplied the buses without addressing these issues, he said.
Later, a subcommittee comprising the KSRTC Managing Director, Director (Projects) of the BMTC and Managing Director of the NWKRTC was formed, which again justified the penalty.
Finally, the issue has now been referred to BMTC Managing Director Syed Zameer Pasha, who has visited Hyderabad to learn about the practice adopted by Andhra Pradesh State Road Transport Corporation, which, as per the bus manufacturers, does not levy penalty for default.
Mr. Pasha told The Hindu that a decision would be taken within a week. He did not specify whether BMTC would refund the amount or not.
Sources in the corporations said that levying of penalty for violation of tender conditions was an ongoing practice in the corporations across the country. The manufacturers/suppliers cannot dispute the agreed tender conditions at a later stage, they maintained.
