The court upheld that 100% reservation for MSEs in public procurement is valid under the MSE Policy, rejecting claims of arbitrariness towards tender selection processes.

ORDER :

M.NAGAPRASANNA, J.

The petitioner is before this Court seeking a direction by issuance of a writ in the nature of mandamus to declare that the stipulation in the tender floated by the 3^rd respondent in reserving 100% of the work to MSEs in the tenders floated by it, is violative of law and it is in ignorance of the bid submitted by the petitioner, who according to the petitioner, is the lowest bidder and is fully qualified to be awarded the contract.

2. Facts in brief, germane, are as follows:

2.1. The petitioner is said to be a Company established in the year 2004 - a Private Limited Company. It is the case of the petitioner that it is a PAN - India entity and is engaged in providing services in the fields of security, housekeeping and outsourcing. In the year 2004-2005, the averment in the petition is, that the petitioner has been consistently from those said years, providing services to public sector banks and public sector undertakings. On 23-03-2012, the Government of India notifies a Public Procurement Policy for Micro and Small Enterprises (MSEs 2012) (hereinafter referred to as the ‘MSE Policy 2012’ for short) notified under the MSME Development Act, 2006. The said policy comes to be amended on 09-11-2018, by directing reservation of 25% and providing that MSEs quoting within 15% of the lowest bid may be allowed to match the L1 price and secure a portion of the tender.

2.2. On 04-10-2019, a clarification is issued by the Ministry of MSMEs, holding that the policy 2012, as amended in 2018, increased the procurement of goods and services by government departments from 20% to 25% of the total procurement. Therefore, the procurement, whatever be it, 25% was to be reserved to MSEs and they were required to render 15% of the amount in the lowest bid. When things stood thus, the 3^rd respondent-Canara Bank floats a tender through the 2^nd respondent-Government E Marketplace (GeM portal) for supply of security guards to it, for the purpose of guarding ATMs and branches. The petitioner participates in the tender, so does the private respondent. The petitioner claims to be fully qualified, but was excluded solely on the ground that he was not a MSE. The tender is finalized and awarded to the 4^th respondent, by completely excluding the petitioner and other bidders. Therefore, the petition is preferred, aggrieved by the action of the respondents in reserving 100% of procurement to MSEs, on the score that it is illegal, arbitrary and contrary to MSE policy 2012. A consequential direction to quash the award awarded to the 4^th respondent is sought.

3. Heard Sri A.B.Patil Madapur and Sri Basavaraj S Satannavar, learned counsels appearing for petitioner, Sri M.B.Kanavi, learned Additional Solicitor General of India for appearing for respondent No.1, Sri. Jitin Chadda and Sri Shashank Hegde, learned counsels appearing for respondent No.2 and Sri Suresh S Gundi, learned counsel appearing for respondent No.3.

4.1. The learned counsel appearing for the petitioner would vehemently contend that the impugned stipulation of 100% reservation for MSEs is arbitrary, unreasonable and discriminatory of its own Government policy, which mandates only 25% of the reservation. The policy, the learned counsel would submit, is the Public Procurement Policy for MSEs 2012, which holds the field even today. The learned counsel would further contend that tender conditions insisting on 100% reservation are arbitrary and exclusion of the petitioner and the like who have adequate experience in providing services is partisanism.

4.2. The learned counsel would emphasize on the fact that the present tender defeats the concept of level playing field in a tender. It is his submission that the 2^nd respondent - GeM portal through whom the tender is floated admits that during the evaluation process, only L1 MSE bidders were considered and non- MSE L1 bidders were not evaluated or considered for award. It