Sanjeev Sachdeva, J.

WP(C) 7201/2015 & CM No. 13229/2015(stay)

1. The petitioner has filed the present petition challenging the award of tender by Respondent No. 2/Indian Oil Corporation Limited to Respondent No. 3/M/s. Bansal Brothers. The contention of the petitioner is that the Respondent No. 2 has awarded the contract to the Respondent No. 3 applying clause (vii) of the tender document of the Notice Inviting Tender (NIT), which provides for giving preference to Micro and Small Enterprises (MSEs).

2. The contention of the petitioner is that the tender envisaged a “works contract” and “works contract” simpliciter is not covered under the Micro, Small and Medium Enterprises (MSME) Procurement Policy 2012 of the Respondent No. 1 and as such, the preference given to the Respondent No. 3 was invalid and the contract could not have been awarded to the Respondent No. 3.

3. Respondent No. 2 had issued the Notice Inviting e-tender (NIT for short) for first phase of replacement of sewer, waste water lines of residential flats of Indian Oil Nagar, site-I and II, Sector-55, Noida. Clause (iii) of the NIT stipulated that the work was indivisible and shall be awarded to single successful bidder. Clause (vii) of the NIT stipulated as under:-

(vii) IOCL will allow Purchase Preference to NSIC/MSE/IOCL JVs etc as per applicable Govt./Company Policy, for detail refer Instruction to Bidders (ITB) section of Tender Document.

4. As per the petitioner, Respondent No. 2 received only two bids; one bid from the petitioner and the second bid from the Respondent No. 3. Both the bidders were declared technically qualified after the opening of the technical bids. As the financial bids of the petitioner and the Respondent No. 3 were not disclosed by the Respondent No. 2, the petitioner made inquiries from the Respondent No. 2 about the same. In response to the queries raised by the petitioner, the Respondent No. 2 informed the petitioner that benefit of the Public Procurement Policy for MSE dated 26.03.2012 (hereinafter referred to as the policy) was given to the Respondent No. 3, who was an MSE bidder.

5. The petitioner has filed the present petition challenging the preference given by the Respondent No. 2 to the Respondent No. 3 as per the Public Procurement Policy for MSEs 2012. The grievance of the petitioner is two-fold. First of all, the subject contract was a works contract and the Policy was not applicable to works contracts, The policy was only meant for goods produced and services rendered by MSEs. Secondly, it was contended that only 20% of the contract could be given to an MSE and since the contract was indivisible, the entire contract could not have been awarded to the Respondent No. 3 by applying the MSE policy.

6. Respondent No. 2 sought to defend its action by contending that it is bound by the procurement targets fixed under the Policy issued by the Respondent No. 1. It is further contended that in terms of the Policy, the public sector undertakings are bound to procure a minimum of 20% of their annual value of goods and services from MSME. It is contended that the Respondent No. 2 is primarily engaged in refining crude oil, distribution and marketing the products of such refining and consequently, the types of contract awarded by it are primarily of three types, i.e., supply contracts, works contracts and service contracts. It is contended that the pre-dominant portion of the supply contracts awarded by the Respondent No. 2 generally relate to highly specialized sophisticated machinery, equipment and instruments such as machinery and equipment for refining, transportation, for transporting crude oil and/or petroleum product, to marketing terminals and given the highly specialized nature of such equipment and machinery, MSMEs cannot qualify for such supplies. It is further contended that pure service contracts of the Respondent No. 2 are limited to supply of specialized professional services such as engineering, consultants, doctors,