AePDS Tender: Telangana High Court Orders Status Quo On Consumer Dept's Letter Barring Legal Proceedings

The Telangana High Court has ordered status quo on a letter issued by the Commissioner of Consumer Affairs, Food and Civil Supplies, Government of Telangana to Oasys Cybernetics, noting that the said letter included a bar on initiating legal proceedings against the specified entities.

Justice Vijaysen Reddy passed the interim order in a petition filed by Oasys Cybernetics challenging the tender awarded to M/s LinkWell Pvt. Ltd. for the selection of a System Integrator for implementing Aadhar-enabled Public Distribution Systems (AePDS). 

The case revolved around a tendering process for implementing Aadhar-enabled Public Distribution Systems (AePDS). M/s Oasys Cybernetics Pvt. Ltd. challenged the tender awarded to M/s LinkWell Pvt. Ltd., claiming that the decision-making process by Telangana State Technology Services Ltd (TSTSL) was discriminatory and intended to favour LinkWell.

It was also contended that the agreement already subsisting between the petitioner, Telangana State Technology Services Ltd and the Commissioner Civil Services was arbitrarily shortened and awarded to M/s LinkWell by a subsequent Request of Proposal. They added that the Commissioner of Civil Services issued the letters in furtherance of Exit Management in January and August of 2023, and owing to the 'restrictive and coercive' nature of the letters, the petitioner sought an interim stay until the disposal of the case.

The letter read as follows:

"In view of the above, I once again informed to fulfill all the requisite obligations mentioned in the RFP clause No.6.10 & 6.10.1 and furnish an undertaking accordingly to this Department within a week from the date of serving of this reminder and include in undertaking that your agency will not pursue any post-closure dues, legally or otherwise, and it will not file any arbitration / Civil or Criminal case or cases against the State Government, the Department of F& C supplies, or its designated entities in any court of law within the country." 

The Bench, after considering the arguments advanced, ordered that the status quo be maintained on the letters.

"Learned Standing counsels for respondent Nos.1, 5 and 7 seeks time to get instructions. Status quo obtaining as on today, shall be maintained, pursuant to the letters bearing CCS.Ref.No.IT-1/1210/2016 dated 02.01.2023 and 05.08.2023 till next date of hearing" the Order read.

Background:

Senior Advocate Vikram Pooserla appeared on behalf of Oasys and contended that TSTSL disqualifying the petitioner is not only arbitrary but also against the principles of fair competition and equality of participation.

Senior Advocate Pooserla submitted that back in November 2016, TSTSL had released a Request for Proposal (RoP) for the selection of a System Integrator for implementing AePDS, so as to bring end-to-end inscription in Fair Price Shops(FPS). The petitioner was declared the successful bidder in 2017, and a Master Service Agreement was entered into for 5 years.

The counsel on behalf of the petitioner further stated that 45 months into the agreement, in 2021, the Petitioner Company was shocked to see that TSTSL had issued another RoP for manufacturing of the same device, and soon after issued a notice to the petitioner company informing them about non-compliance with certain conditions of the RoP and directed to upgrade the device within 10 days. The petitioner company replied to the notice and stated that the work delivered was in accordance with the specifications mentioned and that Satisfactory Performance Certificate was also issued in 2018. However, without considering the reply of the petitioner, the TSTSL took a unilateral decision to shorten the service agreement by 6 months.

When the second RoP was issued for the same device in 2021, the petitioner and 3 other companies applied.

Senior Counsel for the petitioner stated "..that the Petitioner submitted letters dt. 27.12.2021, 06.01.2022. 08.01.2022, 10.01.2022 and 10.02.2022 pointing out the discrepancies in the documents submitted by the other bidders, in regard to non-compliance of 4G communication and IP 54 requirement, not equipped to do cashless transactions & non-availability of EMV Level 2 & Level 3 certification and termination of Respondent No. 4's contracts by other However, the said representations were not considered by the Respondent No. 1 (TSTSL)."

Despite being the only applicant to have qualified, the petitioner contended that the application submitted for the RoP issued in 2021 was rejected for non-compliance, and M/s LinkWell was declared as the successful bidder.

Following this, in 2023, the petitioner contended that under the guise of ‘Exit Management' the Commission of Civil Supplies issued the above-mentioned letters.

Case Title: M/s Oasys Cybernetics Pvt. Ltd. Vs. Telangana State Technology Services Ltd. & Ors.

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