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2025 Supreme(Mad) 2973
IN THE HIGH COURT OF JUDICATURE AT MADRAS
D. BHARATHA CHAKRAVARTHY, J.
Reco Process Pumps - Appellant
Versus
Development Commissioner/Additional Secretary, New Delhi - Respondent
W.P. Nos. 35878 of 2023, 38037 of 2024, W.M.P. Nos. 35874 of 2023, 41132 of 2024
Decided On : 19-03-2025
Advocate Appeared:
For the Appellants : T. Mohan, N.C. Ashok Kumar
For the Respondents: V. Sudha, M.S. Krishnan, John Zachariah, R. Jaya Prakash
The procurement policy mandates that MSEs be prioritized and treated fairly, with a need for transparency in post-tender negotiations to prevent unfair practices.
Headnote:
(A) Micro, Small and Medium Enterprises Development Act, 2006 - Sections 9 and 11 - Public Procurement Policy for Micro and Small Enterprises, 2012 - Tender process for slurry pumps - Petitioner sought to match L1 price as per procurement policy; however, BHEL proceeded with L1 after negotiations with SAMTURBO, who reduced their price significantly - The court emphasized the need for fairness in the tender process and the obligation to prioritize MSEs in procurement. (Paras 2, 6, 18, 34)
(B) Tendering Process - Fairness and Transparency - The court observed that BHEL's actions lacked transparency and fairness, warranting a preliminary inquiry into the pricing process to ensure adherence to procurement norms. (Paras 32, 33)
Facts of the case:
The petitioner, a small enterprise, sought to match the L1 price for a tender on slurry pumps but was dismissed after BHEL negotiated a lower price with a larger competitor, SAMTURBO, leading to a significant price reduction. (Paras 5, 6, 34)
Findings of Court:
The court upheld BHEL's decision to proceed with SAMTURBO as L1 but mandated a review of the pricing process to prevent malpractice and ensure fair competition for MSEs. (Paras 34)
Issues: The main issues included whether BHEL's post-tender negotiations were valid and if they unfairly eliminated the petitioner from competition. (Paras 20, 34)
Ratio Decidendi: The court ruled that the procurement policy mandates fairness and prioritization of MSEs, and that BHEL must establish clear norms for pricing to prevent any unfair practices. (Paras 32, 34)
Result: W.P.No.35878 of 2023 is dismissed; W.P.No.38037 of 2024 is upheld, allowing BHEL to proceed with SAMTURBO.
ORDER :
1. These two Writ Petitions are connected and as such, are disposed of by this common order.
2. The petitioner, M/s. Reco Process Pumps (RECO), represented by its proprietor, S.Savitha, filed W.P.No.35878 of 2023, seeking a direction to the third respondent, M/s.Bharat Heavy Electricals Limited, Ranipet (BHEL), to consider the it’s offer dated 17.10.2023 to match the Non-MSE L1 price as per the Public Procurement Policy for Micro and Small Enterprises, 2012. This includes the Procurement Norms under Public Procurement Policy for MSEs (PPP-MSEs: 2012) as detailed on the third respondent's website, as well as the special provisions for Micro and Small Enterprises in Annexure-M mentioned on the same website, concerning Tender No.3820383E for the supply of slurry pumps for the Kahalgaon project and to award the contract in favour of the petitioner.
3. Originally, by the order dated 24.04.2024, the Writ Petition was allowed with certain directions. However, M/s.Sam Turbo Private Limited filed W.A.No.2316 of 2024, claiming to have been declared as L1 under the said tender and stating that the order was not passed in its presence. The contention was accepted by the Hon'ble Division Bench of this Court, which set aside the order dated 24.04.2024 and directed that the Writ Petitions be disposed of afresh after giving an opportunity to the said Company. Accordingly, M/s.Sam Turbo Private Limited (SAMTURBO) is impleaded as the fourth respondent in W.P.No.35873 of 2023 and the matter is taken up for disposal.
4. RECO also filed W.P.No.38037 of 2024 challenging the communications dated 18.11.2024 and 27.11.2024, with a prayer to quash them and for other orders. By the communication dated 18.11.2024, RECO was requested to provide acceptance of the price offered by L1. By the further communication dated 27.11.2024, it was informed that since they did not accept to match the price, the third respondent would proceed with the tender.
5. The factual background of these Writ Petitions is that BHEL floated a tender on 22.06.2022 for the procurement of slurry pumps for its projects at Kahalgaon, referenced as No.3820383E, and for its project at Sipat, referenced as No.38208786E. The due date for bid submission was 21.07.2022, when the bids were to be opened. RECO submitted its tender for both projects as a small unit according to MSE guidelines. Concerning the Sipat project, RECO filed W.P.No.35878 of 2023 to express its willingness to match the price of the L1 in terms of the Public Procurement Policy under the Micro, Small and Medium Enterprises Development Act, 2006. Subsequently, RECO was allowed to match the price of L1 and was awarded the Sipat project.
6. The present Writ Petitions pertain to the Kahalgaon project. Regarding Kahalgaon, SAMTURBO was declared as L1, having quoted Rs.6,36,98,255/-. RECO is L2, having quoted Rs.6,40,88,255/-. Therefore, RECO approached this Court through W.P.No.35878 of 2023 to seek permission to match the L1 price, as her quoted price is within 15% of the price band according to the Public Procurement Policy.
7. BHEL conducted post-tender negotiations, during which L1, SAMTURBO agreed to reduce the price from Rs.6,38,98,255/- to Rs.4,72,94,245.33 ps. By the communication dated 18.11.2024, RECO was directed to match the stated price. By the communication dated 27.11.2024, it was noted that since RECO did not accept the request to match the price, BHEL would proceed further according to the terms and conditions. Aggrieved by this, W.P.No.38037 of 2024 has been filed.
8. Heard Mr.T.Mohan, learned Senior Counsel for the RECO; Mrs.V.Sudha, learned Central Government Standing Counsel for the respondent Nos.1 and 2; Mr.M.S.Krishnan, learned Senior Counsel and Mr.John Zachariah for BHEL and Mr.R.Jaya Prakash, learned Counsel for SAMTURBO.
9. Mr.T.Mohan, learned Senior Counsel for RECO, by taking this Court through the relevant provisions of the Micro, Small and Medium Enterprises Development Act, 2006, including Sectio
