Karnataka High Court stays state government probe into previous dispensation’s ‘40% commission’ on contracts

Justice M Nagaprasanna who heard a petition stayed all proceedings unless the state justify its action of constituting the enquiry commission.

BySouth First Desk

Published Dec 10, 2023 | 1:02 PMUpdatedDec 10, 2023 | 1:03 PM

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The High Court of Karnataka has stayed a state government order constituting a one-man enquiry commission led by retired High Court judge HN Nagamohan Das to investigate the allegations of “40 percent commission” in government contracts alleged by some contractors.

The state government issued the order on 5 August 2023 to probe the alleged commission in works allotted in the Urban Development, Water Resources, Minor Irrigation and Rural Development, Public Works, and Panchayat Raj departments between 2019-20 to 2022-23.

The allegations said the previous BJP regime in Karnataka — including leaders at various levels within it as well as administrative personnel — reportedly demanded 40 percent of the cost of a project from contractors as “commission” before their remuneration was “cleared” at a formal level.

Related: Karnataka contractors’ association submits 2nd set of evidence

Stayed until state justified its action

Justice M Nagaprasanna who heard a petition filed by several contractors stayed the government order on 7 December stating, “Prima facie, it appears that the state is taking a different stand on the score of change in government. Unless the state would justify its action for issuing the impugned order or constituting a One-Man Enquiry Commission, all further proceedings shall remain stayed.”

A Special Investigating Cell has been constituted to investigate and inquire about all the works which have been challenged in the petition filed by Nikshep Infra Projects and 44 other contractors.

The Additional Government Advocate was directed to accept the notice for the Urban Development Department, Karnataka Government. The contractors have also made the Bruhat Bengaluru Mahanagara Palike (BBMP) the second respondent in the case though no relief is sought from the civic body.

“BBMP has been made a party for the sake of completeness,” the petition has claimed.

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Evidence submitted

On 7 December, Karnataka Contractors’ Association president D Kempanna, submitted an apparently compelling set of “evidence” to an investigative panel led by retired high court judge HN Nagamohan Das.

The Congress government, under Chief Minister Siddaramaiah, established the panel after assuming power in May.

The allegations of a substantial commission were a prominent issue during the Congress’ campaign in the run-up to the 2023 elections.

The party promised to investigate the claims that ministers in the previous BJP-led government collected such commissions — a charge vehemently denied by the saffron party.

The panel’s mandate encompasses a comprehensive examination of various facets of the allegations. This includes an assessment of whether projects received administrative approval in compliance with regulations, an evaluation of the quality of executed works, verification of the accuracy of project estimates, and an inquiry into the possibility of artificially inflated quantities in these estimates.

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The investigation by the panel

Furthermore, the panel has been entrusted with investigating whether Bills were cleared without corresponding work completion or if excessive payments were made for quantities beyond those initially approved.

The fairness of tendering rules and the potential existence of bias towards specific contractors will also be subjected to rigorous scrutiny.

In a proactive measure, the government has directed the inquiry commission to address any significant irregularities that may surface during the course of the investigation.

Notably, KSCA’s allegations of a 40 percent commission played a pivotal role in the political landscape, becoming a potent tool for the Congress against the incumbent BJP government during the 2023 Karnataka Assembly polls.

As a response to the perceived inaction of the Bommai government in ordering a probe into the commission allegations, despite contractors expressing their willingness to submit evidence, the Congress’ Karnataka unit, led by DK Shivakumar, had promised to launch a thorough investigation if voted to power.

(With PTI inputs)