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2025 Supreme(Online)(Mad) 39766
IN THE HIGH COURT OF JUDICATURE AT MADRAS
D.BHARATHA CHAKRAVARTHY, J
M/s.Reco Process Pumps, By its Proprietor, S.Savitha – Appellant
Versus
The Development Commissioner/Additional Secretary, (Micro, Small and Medium Enterprise) – Respondent
W.P.No.35878 of 2023 | W.P.No.38037 of 2024 | W.M.P.No.35874 of 2023 | W.M.P.No.41132 of 2024
For the Appellants/Petitioners: Mr.T.Mohan
For the Respondents: Mrs.V.Sudha, Mr.M.S.Krishnan, Mr.John Zachariah, Mr.R.Jaya Prakash
The court upheld BHEL's right to negotiate L1 pricing, affirming compliance with procurement policies while dismissing claims of unfair treatment towards a small enterprise.
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 and post-tender negotiation - Petitioner sought to match L1 price of tender according to MSE policies, previous order set aside due to absence of respondent, raising questions on fairness. (Paras 2-32)
(B) Fairness in Tender Process - BHEL's post-tender negotiations raised allegations of unfairness; Court found the necessary provisions to conduct negotiations valid under established policies, with requirement to provide reasons for price matching. (Paras 9-26)
Facts of the case:
The petitioner filed Writ Petitions seeking to match L1 pricing for slurry pumps after being aggrieved by communications that risked exclusion from the tender process.
Findings of Court:
W.P.No.35878 of 2023 is dismissed, as M/s.Reco did not accept L1's negotiated price. W.P.No.38037 of 2024 upheld BHEL’s communications to proceed with tender.
Issues: Whether BHEL’s post-tender negotiation with L1 eliminated competition, and if regulations were followed.
Ratio Decidendi: Court ruled that BHEL's price reduction process, while initially alarming, complied with established procurement norms and did not violate regulations set forth by the Central Vigilance Commission.
Result: Writ petitions disposed of with directions for fairness in future tenders.
| Table of Content |
|---|
| 1. petitioner sought permission to match tender price. (Para 2 , 3 , 4) |
| 2. evaluation of parties’ actions in the tender process. (Para 5 , 8 , 32) |
| 3. discussion on tender negotiations and compliance. (Para 6 , 7 , 9) |
| 4. court upheld bhel's authority to negotiate l1 offers. (Para 24 , 30 , 31) |
COMMON ORDER
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
