Recognition of the contract as illegal / invalid Grounds for the invalidity of the transaction

According to paragraphs 1, 2 of Article 157 of the Civil Code, in case of violation of the requirements for the form, content and participants of the transaction, as well as for the freedom of their will, the transaction may be declared invalid at the request of interested parties, a proper government agency or a prosecutor. An interested party is a person whose rights and legitimate interests have been violated or may be violated as a result of the transaction. The grounds for the invalidity of a transaction, as well as the list of persons entitled to demand that it be declared invalid, are established by this Code or other legislative acts. The State Institution "Financial Control Inspectorate for the Karaganda region" (hereinafter referred to as the Inspectorate) filed a lawsuit against the State Institution "Department of Housing and Communal Services, Passenger Transport, Highways and Housing Inspectorate of the city of Karazhal" (hereinafter referred to as the Department), LLP "O" (hereinafter referred to as the Partnership) to invalidate the public procurement contract from September 10, 2015. With counterclaims, the Department asked the court to declare the representations regarding the Partnership illegal. The requirements are motivated by the fact that the Inspection carried out an inspection in the Department on the basis of a complaint from K LLP and established a violation by the Partnership of paragraph 9 of the electronic form of the tender documentation. A certificate in the prescribed form from the relevant tax authority has not been submitted on the absence of tax arrears and arrears on mandatory pension contributions, mandatory occupational pension contributions and social contributions, or on the presence of tax arrears and arrears on mandatory pension contributions, mandatory occupational pension contributions and social contributions of less than one tenge, issued no earlier than the date of the announcement of the electronic competition. In this regard, the application of "O" LLP was subject to rejection under Article 25 of the Law as not meeting the qualification requirements. The identified violations affected the results of public procurement in the amount of 87,558 thousand tenge. Therefore, an agreement concluded by way of a tender should be declared invalid, since the requirements for the content of the transaction have been violated. The Court found that the Partnership's tender application contained a certificate from the tax authority, and this was confirmed by a letter from the E-Commerce Center LLP dated November 4, 2015. Information on this certificate is obtained through the web portal of public procurement, in which a potential supplier does not have the technical ability to influence the content of the information generated by the system. The Karazhal city Prosecutor's Office conducted an audit of the legality of public procurement, which resulted in a certificate dated September 18, 2015 stating that the Partnership had not violated the law on public procurement.

Recognition of the contract as illegal / invalid Grounds for the invalidity of the transaction

The court's decision of January 28, 2016 dismissed the initial claim. The court satisfied the counterclaims of the Department. By the decision of the Appellate Judicial Board for civil cases of the Karaganda Regional Court dated March 16, 2016, the court's decision remained unchanged. When resolving issues of invalidation of public procurement contracts that have either been fully executed or most of them have been executed, the courts have a question about the expediency of invalidating such contracts, taking into account the consequences of invalidating transactions established by Article 157 of the Civil Code. Thus, by a court decision dated August 16, 2016, in satisfaction of the claim of the State Institution "Department of Internal State Audit for Atyrau region of the Committee of Internal State Audit of the Ministry of Finance of the Republic of Kazakhstan" to the State Institution "City Department of Housing and Communal Services, Passenger Transport and Highways", State Institution "Department of Public Procurement of Atyrau region", Medical Institution "Disinfection" on the annulment of the public procurement contract was refused. The court of first instance indicated that the defendant had obtained a license after signing the contract and 56 percent of the work had been completed. By the decision of the appeals board dated October 20, 2016, the court's decision was overturned and a new decision was made to satisfy the claim.

Recognition of the contract as illegal / invalid Grounds for the invalidity of the transaction

The basis for the adoption of such a resolution was the plaintiff's violation of the requirements of the Law. When participating in the competition, the plaintiff provided false information about himself, which allowed him to become the winner of the competition, according to the results of which a contract was concluded with him. According to the judicial acts that took place, the plaintiff provided information about his license, which was actually absent and received after the conclusion of the contract. In this regard, the court's decision was overturned with a new decision on the satisfaction of the claim. By the decision of the Council of Ministers of the East Kazakhstan region dated May 20, 2016, the satisfaction of the claims of LLP "C" to the State Medical University of Semey of the Ministry of Health and Social Development of the Republic of Kazakhstan, to IP V. on invalidation of the public procurement contract based on the results of the results of January 22, 2016 was refused. During the consideration of the case, it was established that on January 25, 2016, according to the results of a tender conducted by the method of requesting price proposals between the State Medical University of Semey State Medical University and IP V. A public procurement contract No. 04 was signed for the provision of services for the removal of solid household waste. Under the terms of the contract, the supplier is obligated to provide the service in accordance with the requirements and at the prices specified in the annexes to the contract, which are an integral part of it, and the customer is obligated to accept the service provided to him and pay for it under the terms of the contract, taking into account the proper fulfillment by the supplier of its obligations under the contract. By a decision of the judicial board for Civil Cases of the East Kazakhstan Regional Court, the decision was overturned, a decision was made to satisfy the plaintiff's claims, and the public procurement contract No. 7551 dated January 22, 2016 was declared invalid. By a decision of the Judicial Board for Civil Cases of the Supreme Court dated January 25, 2017, the judicial act of the appeals board was annulled, while the decision of the court of first instance remained in force. The Court of first instance, rejecting the claim, pointed out that the customer's conduct of public procurement by requesting price proposals did not violate the requirements of the law. In overturning the decisions of the court of first instance, the court of appeal proceeded from the fact that V. In fact, it provides services to the University, the tariff for which is approved by the local representative body, and the provision of paragraph 2 of the Order of the Minister of Energy of the Republic of Kazakhstan dated January 15, 2016 No. 10 "On approval of the methodology for calculating tariffs for the collection, removal and burial of solid household waste" was also ignored. It has been established that the tariff for the disposal of solid household waste at the Semey city maslikhat landfill has not been established. The supplier of services for the removal of solid waste V. assumes the obligation to deliver it to the landfill for the purpose of its burial already as the owner of solid waste. This fact is confirmed by concluded and executed contracts for the disposal of solid waste with IP X.

Recognition of the contract as illegal / invalid Grounds for the invalidity of the transaction

The norm approving the tariff for the export, collection and burial of municipal waste from legal entities/private business entities in the amount of 1,284 tenge per 1 cubic meter does not apply to state-owned enterprises and cannot be applied when conducting public procurement. Transportation (export) Solid waste with its delivery to the landfill for burial and the burial of solid waste itself are different types of services provided by different entities. All collected and exported in. the waste was delivered to the landfill for burial and accepted by IP X. to carry out burial under a paid contract, there are reconciliation reports with state-owned enterprises on the volume and quantity of solid waste removed, which coincide with the volume of solid waste accepted for burial. The Order of the Ministry of Energy of the Republic of Kazakhstan dated January 15, 2016 No. 10 "On approval of the methodology for calculating tariffs for the collection, removal and burial of solid household waste" was published by the information and legal system on February 16, 2016, the tariff was approved by the Maslikhat of Semey on March 18, 2015, and the disputed public procurement contract was concluded on January 25, 2016.  The methodology for determining the total cost of collection, export and burial of solid waste does not require the approval of a single tariff for three types of services – collection, export and burial of solid waste, but allows for separate billing of these services. Taking into account the above, the cassation instance concluded that the public procurement contract No. 4 dated January 25, 2016 meets the requirements of the legislation and there are no grounds for invalidating it. 

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