Exemptions Provided To Micro & Small Enterprises Doesn't Cover Work Contracts, Not Covered By 2012 Public Procurement Policy: Gauhati HC

The Gauhati High Court recently held that work contracts do not come within the purview of Public Procurement Policy 2012 issued by Central Government and the exemptions provided to Micro and Small Enterprise (MSE) do not cover work contracts.Justice Michael Zothankhuma observed:“On considering the PPP-2012 and the clarification given by the Government of India vide letter dated 31.08.2023, coupled with the decision of the various High Courts, which are referred to above, this Court holds that the work contracts do not come within the purview of PPP-2012, i.e. the exemptions provided to MSEs does not cover work contracts.”The Court was hearing a writ petition where the petitioner contended that being a Micro and Small and Small Enterprise (MSE), the petitioner was not required to deposit the Earnest Money Deposit (EMD) for participating in the tender process, in terms of the 2012 Public Procurement Policy (PPP-2012) issued by the Ministry of Micro, Small and Medium Enterprises, Government of India.The petitioner was aggrieved by the disqualification of its Technical Bid, pursuant to the Invitation for Bid (IFB) dated April 16, 2024 (NIT) for 'Composite Works on Open Domestic Competitive Bidding Basis'.It was alleged by the petitioner that in spite of the exemption given to the MSEs in terms of PPP-2012 exempting them from submitting EMD, the petitioner's Technical Bid has been disqualified on the said ground.The Counsels appearing for the respondents submitted that there is no infirmity with the decision taken by the respondent authorities, inasmuch as, the NIB (notice inviting bid) required the doing of work contracts which does not come within the purview of the Public Procurement Policy made by the Central Government.It was further submitted that at the time of issuance of the NIT dated April 16, 2024, there had been a clarification of the earlier PPP-2012 due to Frequently Ask Questions (FAQs), vide communication dated August 31, 2023 issued by the Ministry of Micro, Small & Medium Enterprise, Government of India, wherein it was stated that irrespective of the product category, the benefits of Public Procurement Policy, such as, exemption from payment of EMD, free tender document shall be given to all eligible MSEs, except for traders and in works contracts.The Counsels for the respondents–Union of India and Engineers Indian Ltd., placed reliance upon the judgment of the Supreme Court in Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corporation Ltd. & Another, (2016) 16 SCC 818 wherein it was held that it would be appropriate for Constitutional Courts to insist on all eligible bidders to be made parties in proceedings filed by unsuccessful or ineligible bidder. It was argued that as the petitioner has not impleaded all the eligible bidders and/or the successful bidder in the present case, the writ petition should be dismissed for non-joinder of necessary parties.The Court noted that the Union Ministry of MSME had clarified in its letter of August 31, 2023, that the benefits of the PPP-2012 should be given to all eligible MSEs, except for traders and in work contracts. “Subsequent to the clarification made by the Ministry of MSME, Government of India, the present NIT dated 16.04.2024 has been issued and Clause 16.8 of the said NIT clearly shows that the exemption provided to the MSEs under PPP-2012 from submitting EMD had been done away with. This is clear from the fact that the exemption that had been given in the earlier NIT had also been incorporated in the NIT dated 16.04.2024, with a line striking out the exemption given. Thus it is not the case of the petitioner that he did not know that the exemption given to the MSEs from submitting EMD, was not unknown to the petitioner,” the Court said.The Court relied upon the judgment of the Gauhati High Court in Sibaram Deka v. State of Assam & 7 Others, WA 395/2022 in which it was held that when a tenderer participates in a tender process without objection and he is subsequently found to be not successful, a challenge to the process is precluded.The reliance was placed upon Afcons Infrastructure Ltd. (supra), wherein it was held that the owner or the employer of a project, having authored the tender documents, is the best person to understand and appreciate it's requirements and interpret it's documents. “The Constitutional Courts must defer to this understanding and appreciation of the tender documents, unless there is mala fide or perversity in the understanding or appreciation or in the application of the terms of the tender conditions,” the Court noted. The Court held that the petitioner cannot make a challenge to the NIT after the rejection of his Technical Bid, on the ground that an exemption clause for doing away with the deposit of EMD by MSEs, should have been incorporated in the NIT.Thus, the Court dismissed the writ petition. Case Title: M/s Northeast Engineering & Construction v. The Union of India & Anr.Citation: 2025 LiveLaw (Gau) 4Case No.: ...

Exemptions Provided To Micro & Small Enterprises Doesn't Cover Work Contracts, Not Covered By 2012 Public Procurement Policy: Gauhati HC

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