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IN THE HIGH COURT OF ALLAHABAD
Ashwani Kumar Mishra, J, VIPIN CHANDRA DIXIT
Thoughtsol Infotech Private Limited – Appellant
Versus
Union Of India – Respondent
JUDGMENT :
Ashwani Kumar Mishra, J.
1. Award of contract for hiring of cloud services for up- gradation of National Data Repository, by the Directorate General of Hydrocarbons, in favour of third respondent company, notwithstanding the lowest bid of petitioner, is the subject matter of challenge in this petition. The petitioner submits that preferential treatment meted out to the third respondent on account of its status as registered Micro & Small Enterprise (in short ‘MSE’), although substantial part of the contract is to be performed by Non-MSE i.e. Amazon Web Services (in short ‘AWS’) is in teeth of the applicable MSME policy and its objectives and thus wholly irrational and arbitrary.
2. Directorate General of Hydrocarbons (hereinafter referred to as ‘DGH’) came to be established under the administrative control of Ministry of Petroleum and Natural Gas, Government of India in 1993. Its object was to promote sound management of oil and natural gas resources having regard to environment, safety, technological and commercial aspects of the petroleum activity. DGH was also entrusted the management of natural exploration and production (E&P) data in the oil and natural gas sector.
3.
The MSE policy does not apply to works contracts or when the MSE does not provide the core services, rendering preferential treatment arbitrary.
The court upheld that 100% reservation for MSEs in public procurement is valid under the MSE Policy, rejecting claims of arbitrariness towards tender selection processes.
The Council has jurisdiction to adjudicate disputes in cases of works contracts, even if there is an arbitration clause in the contract.
The exemption for Micro and Small Enterprises under the Public Procurement Policy does not apply to work contracts, as clarified by the Ministry of MSME.
The court ruled that a contract involving both supply and installation qualifies as a works contract, which is outside the jurisdiction of MSMED Act, leading to the Arbitrator's award being set aside....
Point of Law : Court would not sit in the arm chair of experts or the Tender Scrutiny Committee, which has scrutinized and found the 3rd respondent to be responsive and had to be awarded the contract....
The MSEFC lacks jurisdiction to adjudicate disputes arising from works contracts, which necessitate arbitration under traditional frameworks, not the MSMED Act.
The applicability of the MSME Act to disputes arising from work contracts/agreements and the need for a sole arbitrator to adjudicate disputes arising from interlinked agreements related to the same ....
The Facilitation Council lacks jurisdiction over disputes arising from works contracts under the MSME Act, and principles of natural justice must be adhered to in adjudicatory processes.
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