SRINAGAR: The scrapping of the controversial Group Medical Insurance contract with Reliance General Insurance Company for nearly 5.5 lakh state employees and pensioners by J&K Governor S P Malik has raised demands for a high-level probe.

The controversial contract, which was finalised on October 1, has been scrapped following mounting pressure and allegations of favouritism, pushing the Governor to describe it as “full of frauds” with the alleged involvement of some top officers in the state government.

According to sources, Governor Malik had summoned some officers of the state’s finance department and two of his advisors to the Raj Bhawan recently for explanation regarding “some bungling” in the award of the contract to Reliance.

“Employees wanted it to be cancelled. There was some bungling. I read the entire file and when I reached the conclusion that something is wrong, it did not take me a minute to cancel it,” Malik told reporters on the sidelines of a function in Srinagar earlier this week.

However, it was Malik’s administration which cleared the contract with Reliance during the August 1 meeting of the all powerful State Administrative Council which is headed by Governor and his three advisers are key members, despite opposition from the state employees.

According to officials, Reliance had won the one-year contract by offering lowest premium of Rs 8,776 for employees and 22,228 for pensioners. The policy was initially planned for implementation this February but the then PDP-BJP government shelved it without giving any reasons.

Sources said the second lowest bid was offered by another private player at a premium of over Rs 15000 for state employees and over 35000 for pensioners, almost double the premium offered by Reliance, apparently making it a win-win situation for the state government as well as the beneficiaries of the policy.

However, the policy came under a cloud after it was revealed that the state government had shown no regard for set norms by floating the policy tender online through a broker, M/S Trinity Reinsurance Brokers Ltd, in some newspapers and that too on a holiday.

Sources said the government had mentioned two clauses in the original tender under which the companies which enter the bidding process should have a turnover of Rs 5,000 crore in 2017-18 and experience of working in the state.

“But these were done away with to pave way for Reliance. All employees were forced to buy the policy despite some of them already having availed health insurance policies from open market. This raised eyebrows in the government,” a senior J&K government officer said.

While Reliance has said it has not got any communication from the state government about the cancellation of the policy, there are conflicting rumours that the company may have backed out because of “financial unviability” of the policy and the state government may have raised the bogey of “fraud deal” to give the company a safe exit.

“There is every possibility that the deal was cancelled at the behest of Reliance because the policy had offered a host of attractive features at a very low premium which no other player can offer. Even the second lowest bid was almost double the premium cited by Reliance. The picture will become clear only if the heads roll. Otherwise, it is pure theatrics,” another official in the state’s finance department said.