High Court clearance required for artillery tender

The Delhi High Court has placed a hold on the acquisition of artillery guns by the Indian Army without its clearance. In the course of hearings of writ petitions filed by arms company, Singapore Technologies Kinetics, a bench comprising Justice Sanjay Kishen Kaul and Justice Rajiv Shakdher passed an interim order on May 02, 2011, asking the Ministry of Defense to refrain from awarding the tender without ‘leave and liberty of the court’.

Singapore Technologies Kinetics has filed writ petitions with respect to at least three tenders in which it has either not been invited to compete or in which its status as a contestant is under a cloud of ambiguity following recommendations to blacklist the company, as a result of the allegations of corruption raised against Sudipta Ghosh, former Director General Ordnance Factories and Chairman of the Ordnance Factory Board, a decision that was first announced in June, 2009 with respect to seven companies, including the petitioner in these writs.

Referring to Singapore Technologies Kinetics, the court said, “It is made clear that the petitioner will be permitted to join the tendering process, if the petitioner ultimately succeeds in the petition. We consider appropriate to direct that though the respondents can proceed with the process of the tender, the tender will not be awarded without leave and liberty of the court.” The court said this while recognizing a submission made by the Additional Solicitor General of India, Amarjeet Singh Chandhiok that ‘there is no possibility of the tendering process being completed in the near future’.

While lawyers for the company refused to comment on the case, saying it was sub judice, Brigadier General Patrick Choy, retired from the Singapore Army and an Executive Vice President at Singapore Technologies, said in an emailed response solicited last week, “ST Kinetics has not been blacklisted as stated in Parliament by the Defense Minister earlier this year. Since the allegation against ST Kinetics, it was made very clear by ST Kinetics that it has done nothing wrong and we have sought recourse with all authorities to clear our reputation. ST Kinetics has been engaging the MoD (Ministry of Defense) to pursue this cause and any further comment will not be in the best interest of the company.”

[stextbox id=”custom” caption=”Statement of Minister of State for Defense, Mallipudi Mangapati Pallam Raju in Parliament on March 07, 2011″]

Proceedings have been initiated against some firms in the matter relating to the case against Shri Sudipta Ghosh, former DGOF and some others. However the matter is still in process and final orders regarding punishment, including blacklisting or otherwise are yet to be passed. Therefore, these firms are not in the category of blacklisted firms yet. The facts are that after examining the FIR (First Information Report) lodged by CBI (Central Bureau of Investigation), the Ministry of Defense had decided to put on hold all contracts with the following companies involved in the CBI case vide its order dated 28.5.2009 :

(i) M/s. Israel Military Industries Ltd., Israel.

(ii) M/s. Singapore Technologies Kinetics Ltd.

(iii) M/s. HYT Engineering.

(iv) M/s. T.S. Kisan & Co. Pvt. Ltd., New Delhi.

(v) M/s. R.K. Machine Tools Ltd., Ludhiana.

(vi) M/s. BBT, Poland.

(vii) M/s. Media Architects Pvt. Ltd.

The above order was contested by some of the companies before the Delhi High Court. The Delhi High Court set aside the order in its judgment dated 11.2.2010 directing that penal action against the companies can be taken only after following the principles of natural justice. Accordingly, show cause notices were issued to all the companies based on the contents of the FIR lodged by CBI. Replies were submitted by the companies denying the allegations and seeking specific evidence based on which penal action was proposed against them. When the information was sought from CBI, they informed that the charge sheet in this case will soon be filed. CBI filed charge sheet in June 2010 wherein it has recommended blacklisting of the following six firms for being involved in illegal gratification :

(i) M/s. Singapore Technologies Kinetics Ltd. (STK).

(ii) M/s. Israel Military Industries Ltd. (IMI).

(iii) M/s. T.S. Kisan & Co. Pvt. Ltd., New Delhi.

(iv) M/s. R.K. Machine Tools Ltd., Ludhiana.

(v) M/s. Rheinmetall Air Defence (RAD), Zurich.

(vi) M/s. Corporation Defence, Russia (CDR).

Fresh show-cause notices have been issued to all the firms which have been recommended for black listing by CBI based on the contents of the charge sheet. Some of the firms have requested to provide all documents and other substantiating material. The firms have been provided with the available documents in the Ministry and have been directed to submit their reply to the show cause notice.

The details of the total amount of supply orders and items procured by OFB in respect of the six firms which have been asked to show cause as to why necessary action be not taken against them is being collected and will be laid on the Table of the House.

A decision regarding the penal action against the foreign and Indian firms will be taken after examining the reply of the firms and in consultation with the Ministry of Law and Justice and CVC (Central Vigilance Commissioner).

[/stextbox]

A separate bench of the High Court, comprising Justice Pradeep Nandrajog and Justice Suresh Kait, had asked the government on March 15 to clarify the ambiguity regarding the blacklisting of the petitioner. “What is the status of the petitioner in the eyes of the respondents pertaining to procurement of 400 units of 155mm/52 Calibre Towed Guns, 155mm/39 Calibre Ultra Light Howitzer Guns and quantity 43,318 Close Quarter Carbine (CQB) with day and night sights and quantity 3,33,11,500 rounds of ammunition with transfer of technology (TOT),” asked the court.

The company was in the running to supply several pieces of equipment to India, including 155 mm/52 caliber Towed Artillery Guns and 155 mm/39 Caliber Ultra Light Howitzers to the Indian Army and Close Quarter Battle Carbines (CQB) for Indian paramilitary forces.

The first tender was for 1580 towed guns, of which 400 were to be purchased off the shelf and the rest 1180, to be license-produced in India by the Ordnance Factory Board (OFB) after transfer of technology. This tender was cancelled in July, 2010, when a fresh Request for Information (RFI) was issued, followed by a Request for Proposal (RFP) in January this year.

Singapore Technologies Kinetics was not invited to participate in this tender, for which it had earlier offered the iFH 2000 howitzer, possibly because of the CBI recommendation to blacklist the company.

When the leading rival manufacturer, BAE Systems, too, declined to participate in the tender process, with its FH-77B05 towed howitzer (a later version of the FH-77B02, already in service with the Indian Army), the last date for submission of bids was extended from April-end to June this year.

The second tender was for 145 units of 155 mm/39 Caliber Ultra Light Howitzers. Singapore Technologies Kinetics was the only vendor to respond to this tender in June, 2008, with its Pegasus light howitzer. But the process was put on hold around the time the proposed blacklisting of the company was announced.

With this process suspended, but not explicitly cancelled or withdrawn, a parallel process was initiated to acquire light guns via a direct Foreign Military Sale (FMS) from the US government, with a Letter of Request issued by the ministry on May 19, 2009, for BAE Systems’ M777 lightweight howitzer. An Indian Army technical delegation visited the US between January 09 and 16, 2010 for demonstrations of the weapons and the US government had requested 84 rounds of Indian ammunition for trials on two of the howitzers.

The third tender is for 43,318 Close Quarter Battle Carbines (CQB) with day and night sights and 3,33,11,500 rounds of ammunition for India paramlitary forces, administered by the Indian Home Ministry (Internal Security ministry).