The Madras High Court on Monday granted an interim stay of all further proceedings pursuant to a tender notification of the Transport Department issued in 2010 and the contract given to a Chennai-based company, Bon Ton Softwares (P) Limited, for smart card-based driving licences and registration of certificate project.

This means the company cannot proceed to manufacture smart cards and supply them to the government.

Rs. 96.21 crore

Following a writ petition filed by Smart Chip Limited, Noida, which challenged the award of the contract, Justice K. K. Sasidharan recorded his prima facie finding that in case Bon Ton is permitted to manufacture smart cards and supply them it would further complicate the issue and ultimately public interest would suffer and public money would go waste…, considering the huge loss to the exchequer on account of the vast difference in the amount quoted by the petitioner and the rate at which the contract was given to the Chennai-based company. “By accepting this tender, prima facie, the government sustained loss to the tune of Rs. 96.21 crore,” the judge added.

The Transport Department issued a notification on June 28, 2010, inviting tenders for preparation of driving licence and registration certificates in smart card form in 58 Regional Transport Offices and unit offices on build-operate-own-and-transfer (BOOT) basis. Smart Chip formed a consortium with Versatile Cards Technology, Chennai, to submit a bid.

But the department rejected its bid and accepted the bid of Bon Ton for a sum of Rs.389.80 crore. After two rounds of price negotiation, Bon Ton agreed to reduce the price to Rs.293.72 crore whereas Smart Chip quoted only Rs. 197.5 crore.

Hence, Smart Chip filed a writ petition challenging the contract given to Bon Ton.

Smart Chip said it had successfully implemented the smart card project in various States whereas the department awarded the contract on April 29, 2013 to Bon Ton, which was not qualified. It also submitted that the department failed to communicate the reasons for rejection of its tender. The very proceedings were liable to be quashed on account of violations of provisions of the Tamil Nadu Transparency in Tenders Act 1998 and its Rules.


  • Smart Chip petition challenged contract given to Bon Ton.

  • Bon Ton bid did not fulfill the eligibility criteria