The maximum benefit that can be reaped by an MSE under the Public Procurement Policy for MSMEs is up to 25% of the total tendered value, and the tender issuing authority cannot deviate from this stipulation unless it is clearly mentioned in the NIT.

JUDGMENT :

(Sabyasachi Bhattacharyya, J.) :

1. The petitioner was the L-1 bidder in a tender floated by the respondent no.1-Authority, the Steel Authority of India (SAIL) with regard to supply of certain boiler spares and parts to the IISCO Steel Plant of the respondent no.1. Clause 2 of the Conditions of such tender stipulates that if the L-1 bidder is not an MSE (Micro and Small Enterprises) and MSE Seller(s) has/have quoted price within L- 1 + 15% (selected by Buyer) of margin of purchase preference/price band defined in relevant policy, such Seller shall be given opportunity to match the L-1 price and contract will be awarded for 25% (selected by Buyer) of total quantity.

2. It is submitted by learned counsel appearing for the petitioners that, in the present case, the petitioner was the L-1 bidder and was the successful bidder after the reverse auction. However, in pursuance of Clause 2 of the NIT (Notice Inviting Tender), the respondent no.2 was granted opportunity to quote price within 15% and, having matched the price of the petitioner, was awarded the entire work, contrary to the stipulation of 25% in Clause 2.

3. Learned counsel for the petitioner places reliance on the Procurement Policy for MSMEs vide order dated March 23, 2012 passed by the Ministry of MSMEs and contends that the same, as amended till date, clearly stipulates that in cases such as the present one, after matching the price of the L-1 bidder, the MSME shall be allowed to supply “up to 25% of the total tendered value”. Contrary to the same, the entire work was awarded to the respondent no.2, which is de hors the Procurement Policy as well as contrary to the NIT.

4. Learned counsel appearing for the respondent no.1 argues that as per the clarification in the FAQ (Frequently Asked Questions), in cases where the tender item cannot be split, the full/complete supply of the total tendered value may be awarded to the MSME, “considering the spirit of the Policy for enhancing Government Procurement from MSEs”. Hence, it is submitted that in view of such clarification by the concerned Ministry itself, the Procurement Policy has to be read in such light. Such an interpretation of the policy, it is argued, implies that Clause 2 of the NIT permitted SAIL to grant the work order totally in favour of the MSE, that is, respondent no.2 herein.

5. The question which falls for consideration is whether the respondent no.1 was justified and acted in terms of law in awarding the entire contract to respondent no.2, an MSE.

6. The relevant Clause in the NIT is found at page 34 of the writ petition. The said Clause, that is, Clause 2 provides that if the L-1 is not an MSE and MSE Seller(s) has/have quoted price within L-1 + 15% (selected by Buyer) of margin of purchase preference/price band defined in the relevant policy, such Seller shall be given opportunity to match L-1 price and contract will be awarded for 25% (selected by Buyer) of the total quantity.

7. It is also relevant to mention that under the heading “Splitting” on the same page, it is stipulated that Bid Splitting is not applied.

8. Clause 2 has to be construed in the perspective of the relevant policy of the Government. In the order dated March 23, 2012 issued by the Ministry of MSME, pertaining to the Public Procurement Policy for MSEs Order, 2012, there is a clear indication, throughout the Policy, that the same is intended to encourage MSEs and ensure procurement of minimum of 20% of their annual value of goods or services from MSEs. In the subsequent order dated November 9, 2018 published in the Gazette dated November 9, 2018, the figure “20%” has been increased to 25%.

9. Accordingly, throughout the procurement policy, the figure 20% is to be read as 25%. Hence, the amended Policy provides for procurement of minimum 25% of total annual purchases from MSEs.

10. Clause 4 of the same provides that out of the 25% target of annual procurement from MSEs, asub-target of 25% shall be earmarked for procurement from MSEs ow