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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vipin Sanghi, Sachin Datta, JJ.
M/s Cosmo Enterprise - Petitioner
Versus
Union Of India and Anr - Respondents
W.P.(C) 8939, 9458 of 2022 & C.M. No. 26865, 28246 of 2022
Decided On : 03-06-2022
MSME Act - Disqualification of Bidder - Railway Board’s letter No.2010/RS(G)/363/1 - Udyam Aakanksha Registration - Certificate of Commencement of Production - Udyog Aadhar Memorandum Certificate
Fact of the Case:
The petitions are against the disqualification of the petitioner for manufacturing and supplying items to the railways due to the petitioner's status as a 'Micro-Enterprise' under the MSME Act, 2006.
Finding of the Court:
The court found that the petitioner's documents did not establish a valid and subsisting registration as a micro-enterprise, and the petitioner's bid was liable to be assessed based on the materials/documents placed on record before the tendering authorities during the tender process.
Issues: The main issue was whether the respondents were justified in not accepting the 'Certificate of Commencement of Production' as a valid document to support the petitioner's bid as a bidder falling in the category of Micro & Small Enterprises (MSE).
Ratio Decidendi: The court emphasized that the decision making process should be assessed based on the materials placed before the tendering authorities, and not on the basis of materials/documents subsequently produced. It also highlighted that the terms of the invitation to tender are in the realm of the contract, and the bidders have no other right except the right to equality and fair treatment in the evaluation process.
Final Decision: The court dismissed the writ petitions, finding no merit in them, and ruled that there shall be no orders as to costs.
JUDGMENT :
SACHIN DATTA, J.
C.M. No. 28247/2022 (for exemption) in W.P.(C) 9458/2022
Exemption allowed, subject to all just exceptions.
The applications stand disposed of.
W.P.(C) 8939/2022 and C.M. No. 26865/2022 (for ex-parte stay)
W.P.(C) 9458/2022 and C.M. Nos.28246/2022 (for ex-parte stay)
1. These petitions are directed against the disqualification of the petitioner pursuant to the tender issued by the respondents for manufacturing and supply of certain items to the railways. The relevant product/item in W.P. (C) 8939/2022 is Elastic Rail Clip MK-III, whereas in W.P. (C) 9458/2022, the relevant product is Elastic Rail Clip MK-V. Since both the petitions involve identical issue, in the context of identical facts, the said petitions are being disposed of by this common order.
2. The petitioner participated in the tender as a “Micro-Enterprise” under the Micro and Small Enterprise Act, 2006 (hereinafter referred to as ‘MSME Act, 2006’).
3. Admittedly, the only document furnished by the petitioner to establish its status as “micro enterprise” is “Certificate of Commencement of Production” issued by the District Trade and Industries Centre, Raipur. The respondents have not found this document as being sufficient to establish that the petitioner had a valid and subsisting registration as a micro enterprise as on the date of submission of its bid. The relevant instructions to tenderers which contemplates subsisting, valid registration as MSEs is contained in Clause 3.1 of the instructions to tenderers which reads as under:
(i) District Industries Centers
(ii) Khadi and Village Industries Commission
(iii) Khadi and Village Industries Board
(iv) Coir Board
(v) National Small Industries Corporation
(vi) Directorate of Handicraft and Handloom
(vii) Any other body specified by Ministry of MSME.”
4. It can be seen that the aforesaid instructions to tenderers refers to Railway Board letter No.2010/RS(G)/363/1 dated 05.07.2012, para-1.2 of which reads as under:-
(i) District Industries Centres
(ii) Khadi and Village Industries Commission
(iii) Khadi and Village Industries Board
(iv) Coir Board
(v) National Small Industries Corporation
(vi) Directorate of Handicraft and Handloom
(vii) Any other body specified by Ministry of MSME”
5. In the counter affidavit filed on behalf of the concerned respondent, it has been explained that although the bid submitted by the petitioner was initially accepted; however, when the documents of the petitioner were being checked at the stage of evaluation of techno-commercial bid and financial bid, it was noticed that the “UDYAM AAKANKSHA” No.11101629761184 mentioned in “New Certificate of Commencement of Production” had since lapsed on 01.09.2018. This information is said to have been discovered upon checking the concerned website of the concerned department of the State of Chhattisgarh.
6. When confronted with the aforesaid averments contained in the counter affidavit of the concerned respondent, and also contentions of the Mr. Asheesh Jain, CGSC to that effect, learned counsel for the petitioner has sought to explain as to how reference to the Udyam Aakanksha number in its certificate on commencement of production has no bearing on its status as a mic
The decision making process in tendering should be based on the materials placed before the tendering authorities, and bidders have the right to equality and fair treatment in the evaluation process.
The main legal point established in the judgment is that the validity of the Udyam Registration Certificate is crucial for a firm's eligibility to avail benefits as a Small Enterprise under the MSME ....
MSEs with valid Udyam Registration are exempt from turnover and experience criteria in bidding processes as per applicable regulations, and arbitrary disqualification on these grounds is unlawful.
The court affirmed that eligibility criteria in tender processes must be adhered to strictly, and non-compliance disqualifies bidders from preferential treatment under procurement policies.
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