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IN THE HIGH COURT OF DELHI AT NEW DELHI
Satish Chandra Sharma, Subramonium Prasad, JJ.
M/s B G Sleeper Works – Appellant
Versus
Union of India & Anr. – Respondents
W.P.(C) 15212 of 2022, CM Appls. 47012 of 2022, 49358 of 2022
Decided On : 10-04-2023
MSME Act - Eligibility for Participation in Reverse Auction - Section 11 of MSME Act, 2006 - Notification No. 503 dated 23.03.2012 - Notification No. 2010/RS(G)/363/1 dated 05.07.2012 - Udyam Registration Certificate - Public Procurement Policy for MSEs - Clauses 3, 7.10.2(a) and 7.10.2(a) Note (ii) of the Tender document
Fact of the Case:
The petitioner, a partnership firm categorized as a Small Enterprise under the MSME Act, 2006, sought issuance of a writ to quash the decision disqualifying it from participating in a reverse auction and to conduct the reverse auction afresh. The dispute revolved around the petitioner's eligibility for participation in the reverse auction for a tender floated by the Ministry of Railways.
Finding of the Court:
The court found that the petitioner did not hold a valid Udyam Registration Certificate at the relevant point in time to avail benefits under the Public Procurement Policy and relevant clauses of the Tender document. The court held that the petitioner's claim for price benefit prescribed for MSEs based on a scrutinized but invalid certificate was not valid. The court also noted that the petitioner's second Udyam Registration Certificate was obtained after the tender closing date, and the petitioner had no vested right to participate in the reverse auction based on its past performance in a similar tender.
Issues: The key issue was the petitioner's eligibility for participation in the reverse auction as a Small Enterprise under the MSME Act, 2006, and the validity of the Udyam Registration Certificate submitted by the petitioner.
Ratio Decidendi: The court's decision was based on the finding that the petitioner did not hold a valid Udyam Registration Certificate at the relevant point in time, rendering it ineligible for the benefits available to MSEs under the Public Procurement Policy and the Tender document. The court also emphasized that the petitioner's past performance in a similar tender did not entitle it to participate in the reverse auction for the current tender.
Final Decision: The petition was dismissed, upholding the decision of the respondents in eliminating the petitioner from participating in the reverse auction for the tender.
JUDGMENT
Satish Chandra Sharma, C.J.
1. The instant Writ Petition has been filed under Article 226 of the Constitution of India seeking issuance of a writ in the nature of Mandamus and Certiorari, directing the Respondents to provide true copies of all the documents forming the basis on which the Petitioner was eliminated/ disqualified from participating in the reverse auction in tender bearing notice No. TS225033 floated by the Respondents; to quash and set aside the decision of the Respondents disqualifying the Petitioner from participating in the reverse auction in the said tender and, direct the Respondents to conduct the reverse auction afresh. It has also been prayed that this Court issue a Writ of Mandamus directing the Respondents not to issue a purchase order under tender notice No.TS225033.
2. The Petitioner herein has stated itself to be a partnership firm which is categorised as a Small Enterprise under the Micro, Small and Medium Enterprises Development Act, 2006 ("MSME Act, 2006"). It has been further stated that it is a duly approved vendor of the Research Designs and Standards Organization ("RDSO") for manufacturing and supply of Presetressed Monoblock Concrete Sleepers.
3. The instant dispute revolves around registrations obtained by the Petitioner under the MSME Act, 2006, the Public Procurement Policy notified thereunder by the Respondent No. 1, and tender bearing notice No.TS225033 which was floated by the Respondents. Before delving into the same, it would be pertinent to outline the Public Procurement Policy notified by Respondent No. 1. On 23.03.2012, Respondent No. 1 had issued Notification No. 503 in exercise of powers conferred upon it under Section 11 of the MSME Act, 2006, thereby notifying the Public Procurement Policy in respect of procurement of goods and services, procured and provided by Micro and Small Enterprises, by its Ministries, Departments and Public Sector Undertakings ("PSUs"). The policy envisaged extending certain benefits/ granting preferential treatment to MSEs by increasing their participation in government procurements and making efforts towards the development of such vendors.
4. Subsequently, on 05.07.2012 Respondent No.1 issued Notification bearing No. 2010/RS(G)/363/1 which revised and superseded the existing policy of price preference and benefits granted to the MSMEs. Relevant portion of the Notification dated 05.07.2012 is reproduced hereunder for reference:
"No: 2010/RS(G)/363/1 New Delhi, dated: 5.7.2012
The General Manager, All Indian Railways & PUs including NF(C).
The General Manager, CORE, Allahabad.
The General Manager, Metro Railway, Kolkata.
The Director General, RDSO, Lucknow & Railway Staff College, Vadodara.
CAO/Workshop Projects organization, 1st, Floor,
Chamber Bhawan, JC Road, Patna-800001.
CAO/DMW, Patiala and COFMOW, New Delhi.
CAO/RCF/RBL, Old TA Building, Kishanganj, Delhi,
MD/AII Railway PSUs, KRCL, MRVC
CAO/AII autonomous entity under Ministry of Railways
Sub: Public Procurement Policy for goods produced and services rendered by Micro and Small Enterprises (MSEs) by Central Ministries/Departments/Public Sector Undertakings (PSUs).
In exercise of the powers conferred on it in Section 11 of the Micro, Small and Medium Enterprises Development (MSMED) Act 2006, the Central Government, by Order, notified the Public Procurement Policy in respect of procurement of goods and services, produced and provided by micro and small enterprises, by its Ministries, Departments and Public Sector Undertakings. The copy of notification No.503 dated 23.3.2012, as printed in the Gazette of India, is enclosed for guidance and compliance.
****
3. In order to extend the benefit/preferential treatment to eligible MSEs, suitable conditions may be included in the bid document as indicated below:
(a) "Para 2(i) to 2(iii) above".
(b) (I) "MSEs who are interested in availing themselves of these benefits will enclose with their offer the proof of their being MSE registered with any of the agencie
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.
Remitted the matter back to the High Court for deciding the matter on merits even when the subject tender had already been finalized and the purchase order had been issued to the successful.
Compliance with specific pre-qualification criteria and terms and conditions of a tender notice is crucial for the acceptance of a bid.
Bidders must ensure timely registration renewal to avoid disqualification; compliance with tender requirements is essential for fairness and integrity in the tendering process.
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