The court emphasized the discretion of the authorities in procurement decisions and the interplay between the specific terms of the tender document and the government policy, ultimately upholding the allocation of orders to the MSE unit based on the tender terms and the government policy.

JUDGMENT :

SABYASACHI BHATTACHARYYA, J.

1. The petitioner is a non-MSME Developmental Vendor which participated in a tender floated by the respondent-Authorities for supply of motor suspension units for WAG-9 and WAP-7 LOCO. Under Clause 4 containing the “Eligibility Conditions” of the tender document, Serial No. 2 of the “Special Eligibility Criteria” stipulates that offers of development vendors appearing in UVAM can be considered for order up to 20 per cent of Net Procurement Quantity (NPQ) whereas Serial No. 1 provides that the CLW, that is, the tender issuing authority reserves the right to procure entire or bulk quantities (minimum 80 per cent of NPQ) from CLW-approved vendors. It is relevant to mention that the petitioners are Class-I non-approved local vendors.

2. Again, under the “Special Conditions” of the tender document, Serial No. 1 provides that MSE bidders whose bids are technically suitable and quote a price within price-band of L-1 + 15% shall be allowed to supply a portion of the requirement by bringing down their price to L-1 price. Such MSEs can be together ordered up to 20 per cent of NPQ. Serial No. 3 under the Special Conditions provides that the authorities reserve the right to distribute the procurable quantity to one or more than one of the eligible tenderers.

3. It is argued by learned senior counsel for the petitioner that in contravention of the said provisions, the entire orders of developmental vendors (up to 20 per cent of NPQ) has been allocated in favour of the private respondent which is an MSE unit. By relying on Annexure P-15 at page 161, it is pointed out that after allocating 80 per cent of the orders to two bulk vendors, the rest 20 per cent in its entirety has been allocated to the private respondent, which is a developmental vendor on otherwise equal footing as the petitioner apart from the fact that the private respondent is an MSE unit.

4. It is argued that the 25 per cent upper limit to be allocated to MSEs under Serial No. 1 of the Special Conditions refers to 25 per cent out of the total 20 per cent orders which can be placed on developmental vendors in total. Thus, out of the 20 per cent allocable to developmental vendors, at best 25 per cent (that is, 5 per cent of the grand total) could be placed with the private respondent, which is an MSE unit, and the rest ought to have been allocated to the petitioner, who is otherwise the L-1 bidder. It is submitted that the purpose of the tender would be frustrated if the entire amount allocable to developmental vendors is offered to the MSE units in exclusion of other developmental vendors such as the petitioner.

5. On the other hand, learned counsel for the respondent-Authorities places reliance on Clause 11.1 of Section II, the General Conditions of Tender, which provides Splitting Criteria. Clause 11.1.1 stipulates that normally full order would be placed on the L-1 firm. However, after due processing if it is discovered that the quantity to be ordered is more than the L-1 alone is capable of supplying and there is no prior decision to split the quantities then the quantity being finally ordered will be distributed among the other bidders in a fair, transparent and equitable manner.

6. Learned counsel places reliance on an order dated March 23, 2012 issued by the Ministry of Micro, Small and Medium Enterprises, Office of the Development Commissioner (MSME) which is a policy decision of the Central Government. Clause 6 of the same provides for price quotation in tenders. Under sub-clause (1), in tender, participating MSEs quoting price within price-band of L-1 + 15% shall also be allowed to supply a portion of requirement by bringing down their price to L-1 price in a situation where L-1 price is from someone other than an MSE. Further, such MSE shall be allowed to supply “up to” 20 per cent to total tendered value. Thus, the private respondent, being an MSE unit, has been allocated 20 per cent of the total tendered value in terms of the said