Jharkhand High Court
M/S Mahalaxmi Infra Contract Ltd vs Union Of India on 15 September, 2025
Author: Rongon Mukhopadhyay
Bench: Rongon Mukhopadhyay
Neutral Citation
2025:JHHC:28111-DB
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (C) No. 4074 of 2025
M/s Mahalaxmi Infra Contract Ltd., a company registered
under the Companies Act, 1956, having its registered office at
816-817, Binori B Square-III, N.R. Trade Bulls, Sindhu
Bhawan Road, P.O. & P.S. Bodakdev, District Ahmadabad,
through its authorized signatory Mr. Suresh Harilal Patel, son
of Harilal Patel, aged about 55 years, resident of A-1302,
Seventh Paradise, Near Dharti Sanket, Opposite Silver
Harmony, Daskroi, P.O. & P.S. Gota, District Ahmedabad.
... Petitioner
Versus
1. Union of India, through Secretary Ministry of Coal,
Government of India, having its office at 120, 1st Floor, F-
wing, Shastri Bhawan, P.O. & P.S District New Delhi.
2. Coal India Ltd., through its Chief Managing Director,
having its registered office at Coal Bhawan Premise No-04
MAR, Plot No-AF-III, Action Area-1A, Newtown, P.O. & P.S.
Rajarhat, District Kolkata.
3. Central Coalfields Limited, (A Subsidiary of Coal India
Limited), Represented by Chairman-cum-Managing
Director, Having its office at Central Coalfields Limited,
Darbhanga House P.O.+P.S., Kutchery Road, District-
Ranchi-834029, Jharkhand.
4. The General Manager (CMC), Central Coalfields Limited,
Darbhanga House, Kutchery Road, P.O. GPO, P.S.
Kotwali, District Ranchi-834029, Jharkhand.
5. Government E-Market Place (GEM) through is CEO, a
Government of India Enterprise, having its Office at 3rd
Floor, Jeevan Bharti Building, Tower-2, Connaught
Circus, P.O., P.S. and District New Delhi.
W.P.(C) NO. 4074 OF 2025 1
Neutral Citation
2025:JHHC:28111-DB
6. BLA Infrastructure Private Ltd. through its director. &,
having its office at Indicon Viva, 3rd Floor, 53A Leela Roy
Sarani, P.O and P.S Gariahat, District Kolkata, West
Bengal - 700019. ... Respondent
----
PRESENT
HON'BLE MR. JUSTICE RONGON MUKHOPADHYAY
HON'BLE MR. JUSTICE PRADEEP KUMAR SRIVASTAVA
----
For the Petitioner : Mr. Rajiv Ranjan, Sr. Adv.
For the Resp. no. 1 : Mr. Anil Kumar, ASGI.
For the Resp. no. 2-4 : Mr. Tushar Mehta, SGI
For the Resp. no. 5 : Mrs. Khushboo Kataruka, Adv.
For the Resp. no. 6 : Mr. Sumeet Gadodia, Adv.
----
Dated : 15/09/2025
CAV JUDGMENT
Per Rongon Mukhopadhyay, J. :
1. Heard Mr. Rajiv Ranjan, learned senior counsel appearing
for the petitioner, Mr. Tushar Mehta, learned Solicitor General of
India and Mr. Sumeet Gadodia, learned counsel appearing for
the respondent no. 6.
2. In this writ application, the petitioner has made the
following prayers:
(a) In the nature of mandamus commanding upon the
concerned respondents to show cause as to how
and under what authority the work with respect
to Hiring of equipment for Extraction of 13.301 M
Te. of Coal by contractor's Surface Miner, Loading
of 13.301 M Te of Coal at surface miner by
contractor's Pay-loader into Tippers/Dumpers and
Transportation of the same to surface coal stock
yard of Amrapali OCP, A-C Area for the period of
six (6) months has been allotted to the private
respondent no. 6 despite the fact that the
petitioner was declared L-1;
Neutral Citation
2025:JHHC:28111-DB
(b) Upon perusing the cause shown, if any, for a
further writ / order / direction in the nature of
mandamus commanding upon the concerned
respondents to immediately and forthwith allot
the work to the petitioner considering the fact that
the bid of the petitioner has already been found to
be most responsive and it has been declared L-1;
(c) For a further writ / order / direction in the nature
of certiorari for quashing of letter of intent or any
other document through which the work has been
allotted to the respondent no. 6;
(d) For a further writ / order / direction in the nature
of mandamus declaring clause-19(III)(A)(i) as
manifestly arbitrary, illegal, discriminatory and
ultra vires the parent Act of MSME Development
Act, 2006;
(e) For issuance of any other appropriate writ(s) or
direction(s) or order(s) as Your Lordships may
deem fit and proper in view of the facts &
circumstances of the case for doing conscionable
justice to the Petitioner;
3. The factual matrix in brief is that the respondent no. 3
invited bids for the work of "Hiring of Equipment for Extraction
of 13.301 M Te of Coal by Contractor's Surface Mining, Loading
of 13.301 M Te of Coal at Surface Miner by Contractor's Pay-
loader with Contractor's Tippers/Dumpers and Transportation of
the same to surface coal stockyard of Amrapali OCP, A-C Area
for the period of six (6) months" through e-tender notice dated
07-05-2025. The salient features of the tender are as follows:
I. Total estimated cost of work- Rs.129,06,65,179.00/-
II. Bid Start Date- From the date of publication.
III. Bid End Date- 15 days from the date of publication.
Neutral Citation
2025:JHHC:28111-DB
4. The petitioner had participated in the entire bidding process
and submitted its bid along with Earnest Money Deposit of
Rs. 50 lakhs on 22-05-2025 as contemplated in the e-tender
notice. Upon opening of the Technical Bid, the petitioner was
found to be technically qualified and the same was also reflected
in the portal of the respondent no. 5. Subsequent thereto, the
Financial Bids were also opened in which the bid of the petitioner
was found to be the lowest as well as most responsive and
accordingly the petitioner was declared L-1. It is pertinent to
mention herein that the bid of the petitioner was 4.60% below
the estimated cost and the bid of the respondent no. 6 was 2.70%
below the estimated cost. It is the case of the petitioner that the
rate quoted by the petitioner was substantially lower than the
other bidders and the petitioner otherwise also possessed the
requisite work experience and eligibility criteria to be awarded
the work. Once the petitioner was declared the L-1 bidder, it
started making the necessary preparation including the
submission of bank guarantee as well as setting up of the
infrastructure for executing the work. However, since the Work
Order was not issued in favor of the petitioner, the representative
of the petitioner had enquired from the office of the concerned
respondent and it was informed that the work has been allotted
to the respondent no. 6 and in this regard a Letter of Acceptance
has also been issued in favor of the respondent no. 6. The
petitioner was also informed that the work has been allotted to
the respondent no. 6 since it is a Micro and Small Enterprise
(MSE) and the tender document contemplates giving preference
to MSE.
5. It has been submitted by Mr. Rajiv Ranjan, learned senior
counsel for the petitioner that the petitioner was declared L-1
and as a natural consequence of the same, the Letter of
Neutral Citation
2025:JHHC:28111-DB
Acceptance (LoA) should have been issued in favor of the
petitioner. The respondent-CCL has adopted a discriminatory
stance in awarding the work to the respondent no. 6 while relying
upon Clause 19(III)(A)(i) of the Additional Terms and Conditions.
Mr. Rajiv Ranjan, learned senior counsel has referred to Section
11 of the Micro, Small and Medium Enterprises Development Act,
2006 (MSMED Act, 2006 for short), while submitting that the
said provision empowers the State Government and Central
Government to notify preference policy with respect to MSME's.
The Central Government had issued a notification dated 23-03-
2012 for annual minimum procurement policy of 20% which was
subsequently amended on 09-11-2018 increasing it up to 25%.
Clause 6 of the notification limits the supply of a Micro and Small
Enterprises to 20% of the total tender value if the quoting price
of Micro and Small Enterprises is within the price band of
L-1+15% and in complete contrast to the said provision, the
tender document provides for awarding the entire work to MSME.
Clause 19(III)(A)(i) of the Additional Terms and Conditions is
ultra-virus the statute as it is self-contradictory to its own
heading which envisages mandatory requirement for adhering to
the procurement policy. It is evident that the tender document
itself provides that the tender must conform to the Public
Procurement Policy for Micro and Small Enterprises ("MSEs")
Order 2012 which only contemplates for providing 25% of the
work to the MSME and not more than the prescribed percentage.
The procurement policy dated 25-03-2012 has a statutory force
as held by the Hon'ble Supreme Court in Lifecare Innovations
Private & Ors. v. Union of India & Ors. reported in 2025 SCC
Online SC 436. It has been submitted that the respondent no. 6
is not an MSME as Clause 19(III)(A)(vi) provides that for small
enterprises, the investment in plant and machinery should not
exceed Rs. 10 crores, but from the MSME Certificate submitted
Neutral Citation
2025:JHHC:28111-DB
by the respondent no. 6, it is evident that its investment in plant
and machinery was Rs. 24,48,77,184/- and, therefore, the
respondent no. 6 should not have been allowed to participate in
the tender as an MSME. Learned senior counsel has submitted
that the purpose and object of the MSMED Act, 2006 is being
defeated as the benefit is not accruing to a Micro and Small
Enterprises, but the benefits are being taken by a big group with
multiple companies and ventures like the respondent no. 6. The
Promoters and Management of respondent no. 6 has formed
various companies like BLA Project, BLA Infrastructure and RA
mining and none of these companies are MSMEs. It has been
submitted that the bid of the petitioner has been used only for
the purpose of disclosure of the price after which the petitioner
has been completely ousted. The arbitrariness and
discrimination adopted against the petitioner is stark on the face
of record and the consequences of such act, according to the
learned senior counsel for the petitioner, is reflected in the case
of Banshidhar Construction Private Limited v. Bharat
Coking Coal limited & Ors. reported in (2024) 10 SCC 273.
The tender condition enunciated by the respondent-CCL is
tailormade for favouring the respondent no. 6, its joint ventures
and other group companies. He has referred to the case of
Jagdish Mandal v. State of Orrisa & Ors. reported in (2007)
14 SCC 517 while submitting that the allotment of tender to
favor someone based on a malafide decision is liable to be struck
down.
6. Mr. Tushar Mehta, learned Solicitor General of India
appearing for the respondent-CCL has submitted that Section 11
of MSMED Act, 2006 empowers the Central Government or the
State Government as the case may be to issue notifications from
time-to-time prescribing preference policies for the procurement
of goods and services produced or provided by Micro and Small
Neutral Citation
2025:JHHC:28111-DB
Enterprises by its Ministries, Departments, aided institutions or
Public Sector Undertakings. The notification dated 23-03-2012
was issued in exercise of the powers conferred under Section 11
of the MSMED Act, 2006 and this notification is absolutely silent
as to what procedure is to be adopted in cases where the work is
not splitable in nature. It has been submitted that in order to
clarify such ambiguity, an Office Memorandum dated
24-10-2016 was issued by way of certain guidelines through
"Frequently Asked Questions" (FAQs for short) in which the
answer to Question No. 21 clearly indicates that in case the
tender item is not splitable or non-divisible, the MSE quoting
price within price band L-1+15% may be awarded the
full/complete supply of total tender value to MSE. It has been
submitted that the amendment to the notification dated
23-03-2012 vide notification dated 09-11-2018 led to release of
FAQs wherein a similar clarification was provided in Question
No. 21 regarding award of the total tender value to MSE if the
tender item cannot be split or divided. The Central Government
had thereafter, through Ministry of Finance, Department of
Expenditure in the year 2024 has published and circulated a
Manual for Procurement of Goods, wherein at Clause 5(II), it has
been reaffirmed that in case the work is not splitable in nature
and an MSME quotes a rate within a price band of L-1+15%, the
MSME would be called upon to match the rate of L-1 bidder and
on doing so, the entire work would be awarded to the MSME. In
view of the policy decision of the Government of India to promote
MSME, Coal India Limited has also promulgated a guideline for
procurement of works wherein at Clause 1.8.2(i)(ii), the manner
in which the tender has to be awarded in case of a work not
splitable in nature has been incorporated. In consonance with
the policy of Coal India Limited as well as the Procurement Policy,
the Central Coalfields Limited through e-Tender Notice dated
Neutral Citation
2025:JHHC:28111-DB
07-05-2025 invited bids for the work of "Hiring of Equipment for
Extraction of 13.301 M Te of Coal at Surface Miner by
contractor's Pay-loader into Contractor's Tippers/Dumpers and
Transportation of the same to Surface Coal". Mr. Mehta, learned
Solicitor General of India has submitted that the effect of non-
splitability of the tender work has been interpreted in Clause
19(III) of the tender notice and the petitioner did not raise any
grievance and also did not seek to challenge Clause 19(III) and
on the other hand, by accepting the said clause, had participated
in the tender process. The subsequent challenge of any clause on
the basis of which the work has been awarded to a third party is
based on the principle of estoppel. Mr. Mehta, learned Solicitor
General of India in support of his contention has referred to the
case of Siddhivinayak Enterprises v. Union of India & Ors.
reported in 2019 SCC Online Bom. 665 and Central Institute
of Plastics Engineering and Technology v. Indian Oil
Corporation Limited & Ors. reported in 2015 SCC Online
P&H 4276. Regarding the eligibility of the respondent no. 6 to
participate in the tender process as MSME as raised by the
learned senior counsel for the petitioner, it has been submitted
that the respondent no. 6 had submitted UDYAM Registration
Certificate as well as other supporting documents which would
substantiate the fact that it is an MSME and was accordingly
permitted to participate in the bid as MSME.
7. Mr. Sumeet Gadodia, learned counsel representing the
respondent no. 6 has submitted that the respondent no. 6 has
been admittedly declared L-2 bidder and had quoted a price
which was within 15% of the L-1 price bid and as such, the
respondent no. 6 was allowed by the authorities to match the
price of the bid and consequently, the respondent no. 6 was
awarded the contract by Letter of Award dated 13-06-2025. The
petitioner was well aware about the MSE Bid Procurement Policy
Neutral Citation
2025:JHHC:28111-DB
having been made applicable in the said tender. Mr. Gadodia,
learned counsel has copiously referred to the MSE Public
Procurement Policy and on multiple occasions clarifications have
been made including that of a scenario in which the price bid has
been matched by the MSME of the L-1 bidder and the work is not
splitable in nature. It has been submitted that the clauses of the
contract under consideration do not test the confines of
arbitrariness or irrationality and, in fact, on the contrary the
clauses have been engrafted into the tender conditions in
obedience to specific policies which have been propagated to
provide a beneficial foothold to the MSEs. So far as the challenge
which has been mounted by the learned senior counsel for the
petitioner regarding the eligibility of the respondent no. 6 to
participate in the tender process as an MSE is concerned, it has
been submitted that the respondent no. 6 had participated in the
tender process by disclosing its status as a "small" industry
within the meaning of MSMED Act, 2006 which is reflected from
the UDYAM Registration Certificate of the respondent no. 6. The
permissible amount of investment in plant and machinery and
equipment for classification as a "small" industry has been
notified by the MOMSME vide notification dated 26-06-2020
bearing S.O. 2119(E), wherein the permissible limit was
prescribed as Rs. 10 crores. The said notification was amended
vide notification dated 21-03-2025 being S.O. 1364(E), wherein
the permissible limit for classification as a "small" industry was
increased to Rs. 25 crores. The respondent no. 6, therefore, falls
within the prescribed limit of being classified as a "small"
industry with respect to its investment in plant, machinery and
equipment. Mr. Gadodia, learned counsel has also relied upon
the cases of Siddhivinayak Enterprises v. Union of India &
Ors. (supra) and Central Institute of Plastics Engineering
and Technology (CIPET) v. Indian Oil Corporation Ltd. &
Neutral Citation
2025:JHHC:28111-DB
Ors. (supra).
8. Mr. Rajiv Ranjan, learned senior counsel for the petitioner
in reply has submitted that FAQs can never override or
supersede a statute. It cannot create a new right or new law
which is not originally included in the statute. The FAQs issued
by the concerned respondents are ex-facie self-contradictory,
mutually inconsistent and legally unsustainable. Far from
serving their intended purpose of clarifying the existing statutory
provisions, procurement policies or tender conditions, the FAQs
have created more ambiguity and interpretive confusion thereby
defeating the objective of ensuring transparency and uniformity
in the tendering process. Mr. Rajiv Ranjan, learned senior
counsel has highlighted the discrepancy in Question No. 8 and
Question No. 21 of the FAQ dated 25-03-2022 as though
Question No. 8 unequivocally states that up to 25% of the total
work can be awarded to a Micro or Small Enterprise under the
applicable policy, the answer to Question No. 21 appears to
permit award of the entire work to an MSME provided it meets
all the qualifying criteria. It has been submitted that there exists
no dichotomy between "splitable" and "non-splitable" contracts
either in the governing procurement policy for MSMEs or in the
clarification to Question No. 8. The introduction of such a
distinction, implicitly or otherwise through the FAQs is
unsupported by any policy framework and appears to have an
artificial construct not borne out of any statutory or policy-based
classification. The principles of legitimate expectation is flouted
every time an MSME is awarded the entire contract if it chooses
to match the L-1 price. So far as Clause 6 of the notification is
concerned, it does not use the word "splitable" or "non-splitable"
and it provides that 25% of the work can be awarded to an MSME
and not beyond that. It has been submitted that mere
participation in the tender process would not act as a detriment
Neutral Citation
2025:JHHC:28111-DB
to challenge the tender conditions as it is a settled principle of
law that there is no estoppel against law. Mr. Rajiv Ranjan,
learned senior counsel has submitted that none of the judgments
relied upon by the learned counsel for the respondents are
applicable in the facts and circumstances of the present case.
9. The MSMED Act, 2006 was enacted to provide for
facilitating the promotion and development and enhancing the
competitiveness of Micro, Small and Medium Enterprises and for
matters connected therewith or incidental thereto.
10. Section 11 of the MSMED Act, 2006 reads as follows:
"11. Procurement preference policy.--
For facilitating promotion and
development of micro and small
enterprises, the Central Government or
the State Government may, by order
notify from time to time, preference
policies in respect of procurement of
goods and services, produced and
provided by micro and small
enterprises, by its Ministries or
departments, as the case may be, or its
aided institutions and public sector
enterprises."
11. Section 11 of the Act endows upon the Central or State
Government to notify preference policies for procurement of
goods and services produced and provided by Micro and Small
Enterprises by its Ministries or Departments or its aided
institutions and public sector enterprises.
12. In exercise of the powers conferred under Section 11 of the
MSMED Act, 2006, a notification dated 23.03.2012 was issued
and Clause 6 of the notification reads as under:
"6. Price quotation in tenders.-
Neutral Citation
2025:JHHC:28111-DB
(1) In tender, participating Micro and
Small Enterprises quoting price within
price band of L1+15 per cent shall also
be allowed to supply a portion of
requirement by bringing down their
price to L1 price in a situation where L1
price is from someone other than a
Micro and Small Enterprise and such
Micro and Small Enterprise shall be
allowed to supply up to 20 per cent of
total tendered value.
(2) In case of more than one such Micro
and Small Enterprise, the supply shall
be shared proportionately (to tendered
quantity).
13. The aforesaid notification, therefore, equips the Micro and
Small Enterprises to supply 20% of the total tender value when
the participating Micro and Small Enterprises quote a price
within the price band of L-1+15% which makes it eligible for
supply. This notification was subsequently amended vide Gazette
Notification No. S.O. 5670(E) dated 09.11.2018 and "20 per cent"
was replaced by "25 per cent". On account of an ambiguity
regarding a tender item being non-splitable/non-dividable, the
answers to certain queries were necessary for clarification and
consequently, the Frequently Asked Questions (FAQ's) attain
center stage in this writ application. We may now refer to FAQs
on Public Procurement Policy for MSEs Order 2012 dated
24.10.2016 and for the purposes of this case, Question No. 8 and
21 and the respective answers are quoted hereinunder:
"Q. No. 8 Whether there is price match
making facility for procurement
from MSEs over large scale?
Neutral Citation
2025:JHHC:28111-DB
Ans. In tender, participating MSEs
quoting price within band of
L1+15% shall also be allowed to
supply a portion of requirement
by bringing down their price to L1
price in a situation where L1 price
is from someone other than an
MSE. Such MSEs shall be allowed
to supply at least 20% of total
tendered value. In case of more
than one such MSE, the supply
will be shared proportionately (to
tendered quantity).
Q. No. 21 Whether MSE quoting price within
price band L1+15% could be given
complete supply to tender in case
tender item is non-splitable/non-
dividable?
Ans. In case of tender item is non-
splitable or non-dividable, etc.
MSE quoting price within price
band L1+15% may be awarded
for full/complete supply of total
tendered value to MSE,
considering spirit of policy for
enhancing the Govt. procurement
from MSE."
14. In terms of the Office Memorandum dated 25.03.2022,
revised queries to Question Nos. 8 and 29 were
clarified/answered. Since we are concerned with Question Nos.
8 and 21, the answers to such queries are mentioned as under:
Neutral Citation
2025:JHHC:28111-DB
"Q. No. 8 Is there a price matching facility
for procurement from MSEs over
large scale?
Ans. (i) Price quotation in tenders: In
tender, participating Micro and
Small Enterprises, quoting price
within price band of L1+15
percent shall also be allowed to
supply a portion of requirement
by bringing down their price to L1
price in a situation where L1 price
is from someone other than a
Micro and Small Enterprise and
such MSE shall be allowed to
supply up to 25 per cent of total
tender value.
(ii) In case of more than one such
Micro and Small Enterprise,
the supply shall be shared
proportionately (to tendered
quantity.).
Q. No. 21 Can MSEs quoting a price within
the band L1+15% be given
complete supply to tender in case
tender item cannot be
split/divided?
Ans. In case of tender item cannot be
split or divided, etc. the MSE
quoting a price within the band
L1+15% may be awarded for
full/complete supply of total
tendered value to MSE,
Neutral Citation
2025:JHHC:28111-DB
considering the spirit of the Policy
for enhancing Govt. Procurement
from MSEs."
15. In the earlier clarification dated 24.10.2016, so far as
question No. 8 is concerned, there was no cap with respect to
supply of the tendered work so far as MSE is concerned, and it
was allowed to supply "at least" 20 percent of the total tender
value. However, in the subsequent Office Memorandum dated
25.03.2022, the supply has been restricted to 25% of the total
tender value. The clarified answer to Question No. 8 in terms of
the Office Memorandum dated 25.03.2022, according to Mr.
Rajiv Ranjan, learned senior counsel for the petitioner, is in
complete contradiction to the answer to Question No. 21 which
envisages complete supply of total tender value to the MSE. The
answer to Question No. 21 has not undergone any change in the
subsequent clarification from the earlier clarification and the
object and spirit for enacting MSMED Act, 2006 can be fathomed
from the clarification made to Question No. 21 which deals with
a tender item which cannot be split or divided. This, according to
the learned senior counsel for the petitioner, is beyond the scope
and purview of Clause 6 of the notification dated 23.03.2012. We
may, in such context, refer to Clause 16 of the notification dated
23.03.2012 which reads as under:
"16. Removal of difficulty.- Any
difficulties experienced during the
course of implementation of the
above Policy shall be clarified by
Ministry of Micro, Small and
Medium Enterprises through
suitable Press releases which
would be kept on the public
domain."
Neutral Citation
2025:JHHC:28111-DB
16. The clarification which has been made in case of any
difficulty is embedded in Clause 6 of the notification dated
23.03.2012 and the FAQs are by way of clarification, especially
in the context of a non-splitable item and which scenario has
emerged with respect to the tender issued by the respondent CCL
which is the subject matter of the present writ application.
17. The notice inviting tender dated 07.05.2025 at Clause v
speaks of the non-splitability of the work and it reads as under:
v. " The work cannot be split as per
the relevant provisions."
18. In the Additional Terms & Conditions (Instruction to bidder)
Clause 19(III)(A)(i) reads as follows:
(i) "Subject to meeting terms and
conditions stated in the tender
document including but not
limiting to prequalification
criteria, 25% of the work will be
awarded to MSE as defined in
MSE Procurement Policy issue by
Department of Micro, Small and
Medium Enterprises (MSME) for
the tendered work/item. Where
the tendered work can be split,
MSE quoting a price within a price
band of L-1+15% shall be
awarded at least 25% of total
tendered work provided they
match L1 price. In case the
tendered work cannot be split,
MSE shall be awarded full work
provided their quoted price is
within a price band of L-1+15%
Neutral Citation
2025:JHHC:28111-DB
and they match the L-1 price."
19. Though there appears to be an ambiguity with respect to
the part of the work to be awarded to the MSME if the other
conditions for eligibility are fulfilled which is "at least 25%", and
the answer to Question No. 8 of FAQ vide Office Memorandum
dated 25.03.2022 speaks of "up to 25%", but such ambiguity
would not be of much consequence in a situation where the
tender item is not splitable as in the present case. An MSME
participating in a tender successfully and getting a part of the
work if its quoting price is within a price band of L-1+15% where
the tender work is splitable is understandable as it is based on
rationality, but the same scenario in a non-splitable tender work
would border on the absurdity as the MSME would merely be
restricted to participating in the tender with not even a
semblance of expectation of being awarded the work if it is not
the L-1 bidder. This situation would be against the spirit and
object of MSMED, Act, 2006.
20. In the case of Siddhivinayak Enterprises v. Union of
India & Ors. (supra), it has been held as follows:
"17. We have considered the rival
contentions carefully. Mr. Dani has raised a
contention that the respondent No. 4 was not
eligible to be treated as an MSE because he
was not registered with any of the agencies
mentioned in the tender notice or the 2012
order. Both these documents i.e. the tender
notice as well as the 2012 order mention that
apart from the agencies named therein,
registration with any other body specified by
Ministry of MSME was also good enough to
satisfy this particular eligibility criteria. The
respondent Nos. 2 and 3, in their Affidavits-
Neutral Citation
2025:JHHC:28111-DB
in-Reply, have stated that the respondent
No. 4 was registered under UAM and a
document relating to such registration was
submitted by the respondent No. 4 along
with their tender. It is also mentioned in the
said Affidavit and is evident from the
frequently asked questions and answers
downloaded from the website of the Ministry
of MSME, that MSEs registered under UAM
were also eligible to avail the benefit under
the policy. It is clarified by the Ministry that
with effect from 18-9-2015, as part of ease
of doing business, UAM had been introduced
through dedicated portal on self-certification
basis. A copy of the said Notification dated
18-3-2015 is produced by the respondents
as directed by us. The 2012 order was
passed by the Ministry of MSME under the
powers conferred by section 11 of the
MSMED Act. Clause 16 of the 2012 order
clearly mentions that any difficulties
experienced during the course of
implementation of the above Policy could be
clarified by the Ministry of MSME through
suitable Press releases which would be kept
on the public domain. Under such powers
conferred by Clause 16 of the 2012 order,
the Ministry can explain the policy for better
implementation. The frequently asked
questions and their answers published on
24-10-2016 were thus in the nature of such
clarifications. Mr. Sharma, learned Counsel
Neutral Citation
2025:JHHC:28111-DB
for the respondent Nos. 2 and 3 has
submitted that this document is downloaded
from the official website of the Ministry.
Thus, this document was on the public
domain and gives explanation in respect of
the various doubts. Such publication is
recognized under Clause 16 of the 2012
order which, in turn, is issued under the
exercise of powers conferred under section
11 of the said Act. Therefore, these
explanations offered through answers to
frequently asked questions do have legal
force and they have to be given due effect.
These clarifications flow from the
Government of India Notification dated 18-9-
2005. Therefore, the registration under UAM
thus satisfies one of the eligibility criteria of
registration with specified agencies.
Therefore, we are not inclined to accept the
contention raised by Mr. Dani that the
respondent No. 4 did not satisfy the basic
criteria of eligibility of being registered with
any specified agency.
18. The next contention raised by Mr. Dani
was that the provisions permitting an MSE
falling within the band of Ll+15% to
negotiate and bring down his bid to the rate
of lowest bidder was highly unfair. Such
provision was arbitrary and discriminatory.
This contention has to be decided in the light
of objects and reasons for which the said Act
was enacted. One of the objects for such
Neutral Citation
2025:JHHC:28111-DB
enactment was to extend policy support for
the small enterprises so that they are able to
grow into medium ones adopting better and
higher levels and technologies and are able
to achieve higher productivity to remain
competitive in the fast globalization area.
The very purpose of such enactment was to
help smaller enterprises to grow and
compete with bigger industries. The 2012
order is issued in furtherance of such
objects. The 2012 order, as mentioned
earlier, was issued under the powers
conferred by section 11 of the MSMED Act.
The tender notice is also issued in
consonance with the 2012 order which
provides for the price band of Ll+15%.
Therefore, we do not think that the said
provision is arbitrary or discriminatory. On
the contrary, the order is issued and the
policy is embodied in such order to further
the very object of enacting the said Act. The
very existence of this sound policy gives fair
chance to smaller enterprises to grow and
work efficiently in today's competitive world.
Therefore, even this contention raised by Mr.
Dani is not acceptable. Suggestion of Mr.
Dani that even the LI should be given an
opportunity to further reduce the price would
destroy this object. Idea behind this policy is
to give an opportunity to an MSE to perform
the work at the rate of LI if the MSE's offer in
the tender was in the band of 15% higher the
Neutral Citation
2025:JHHC:28111-DB
LI offer. Idea is not to squeeze out the MSE's
profitability by permitting the LI to bring its
offer further down.
19. In the case of Michigan Rubber (India)
Ltd. v. State of Karnataka reported in 2012
MhLJ Online (S.C.) 83 : (2012) 8 SCC 216, it
was held and observed by the Supreme
Court that in the matter of formulating
conditions of a tender document and
awarding a contract, greater latitude is
required to be conceded to the State
authorities unless the action of tendering
authority is found to be malicious and a
misuse of its statutory powers, interference
by Courts is not warranted. This line of
Judgment is consistently followed by the
Supreme Court and the High Courts.
20. Mr. Dani has further submitted that
Clause 6 of the 2012 order provides that
Micro and Small Enterprises quoting price
within price band of Ll+15 percent should be
allowed to supply a portion of requirement
by bringing down their price to the price
offered by the lowest bidder and that such
MSE should be allowed to supply up to 20
percent of total tendered value. According to
Mr. Dahi, the contract up to maximum of 20%
should be allowed to the MSEs and not more.
Again here, we are unable to agree with Mr.
Dani. The scheme of the 2012 order shows
that it was mandatory for the Central
Government Ministry, the Department and
Neutral Citation
2025:JHHC:28111-DB
the public sector undertaking to procure
'minimum' 20% of their annual value of
goods and services from micro and small
enterprises. Thus, it is difficult to achieve
this object if a ceiling of maximum 20% is
applied to the contract awarded to any MSE
falling within the band of Ll+15%. Secondly,
the position is further clarified in Question
No. 8 from the frequently asked questions
(dated 24-10-2016, as mentioned earlier).
Such question and answer reads thus:
"Q. No. 8 Whether there is price match
making facility for procurement from
MSEs over large scale?
Ans. In tender, participating MSEs
quoting price within the band of
LI+15% shall also be allowed to supply
a portion of requirement by bringing
down their price to LI price in a
situation where LI price is from
someone other than an MSE. Such
MSEs shall be allowed to supply
atleast 20% of total tendered value. In
case of more than such MSE, the
supply will be shared proportionately
(to tendered quantity)."
21. As discussed earlier, such explanation
does have its own force and therefore, the
clarification offered that in such cases, the
MSE should be allowed to supply 'atleast'
20% of the total tendered value, makes it
Neutral Citation
2025:JHHC:28111-DB
clear that the figure of 20% was referred to
as the minimum of the contract which could
be awarded and not the maximum limit. In
any case, the tender notice itself mentions
that the contract was non-divisible and an
MSE quoting in the price band of Ll+15%
would be awarded full/complete work of
tender. Having participated in the tender
process initiated pursuant to this notice, the
petitioners cannot now challenge this
condition."
21. A similar case was considered in the case of Central
Institute of Plastics Engineering & Technology (CIPET) v.
Indian Oil Corporation Limited (supra) in which it has been
held as follows:
"13. In our considered view, the action
of respondent No. 2, Indian Oil Corporation
in awarding the complete work order (100%)
to respondent No. 3, a registered Micro and
Small Enterprise conforms to the terms and
conditions of the Notice Inviting Tender
dated 30.12.2014 and does not even fall foul
of the Public Procurement Policy, 2012. The
Public Procurement Policy, 2012 carries a
mandate to provide purchase preference in
favour of a Micro and Small Enterprise so as
to achieve an overall procurement of
"minimum of 20%" "minimum 20%". Clause
6 of the the Public Procurement Policy, 2012
providing for price preference would hold the
field in a situation where the work order can
be split and as such, a participating Micro
Neutral Citation
2025:JHHC:28111-DB
and Small Enterprise quoting price within
price band of 'L1' plus 15% would be
allowed to supply a portion of the
requirement and upto 20% of the total
tendered value. In the Notice Inviting Tender
dated 31.12.2014, while providing for
preference to MSEs, it was stipulated that
the "tender cannot be split". In such an
eventuality, it was open for respondent No.
2, Indian Oil Corporation to have granted
purchase preference as also price preference
in favour of respondent No. 3, a registered
Micro and Small Enterprise as regards the
complete work order as it had quoted a price
within the price band of 'L1' plus 15% and
has thereafter matched the 'L1' price.
14. The issue raised on behalf of the
petitioner-Institute as regards the condition
contained in the Notice Inviting Tender
stipulating "tender cannot be split" to be
unreasonable and arbitrary would be
beyond the scope of writ jurisdiction.
Judicial review in contractual matters is
confined to the manner in which the decision
is taken rather than the decision itself. The
Courts would interfere if the decision is
arbitrary, unreasonable or actuated by
malafides. This Court would not enter into
technical issues as regards a work order
being open to a division/split as it does not
have the expertise to deal with such issues.
The Government or a public sector
Neutral Citation
2025:JHHC:28111-DB
undertaking must have freedom in
formulating such conditions. This Court
cannot sit as a Court of appeal to review and
modify administrative decisions unless the
same are shown to be suffering from the vice
of arbitrariness or favouritism.
15. In Sterling Computers Ltd. v. M & N
Publications Ltd. AIR 1996 SC 51, it was
held as under:
"While exercising the power of judicial
review, in respect of contracts entered
into on behalf of the State, the Court is
concerned primarily as to whether
there has been any infirmity in the
'decision making process'. By way of
judicial review the court cannot
examine the details of the terms of the
contract which have been entered into
by the public bodies or the State.
Courts have inherent limitations on the
scope of any such enquiry. But at the
same time ... the courts can certainly
examine whether 'decision-making
process' was reasonable, rational, not
arbitrary and violative of Article 14 of
the Constitution.
If the contract has been entered into
without ignoring the procedure which can be
said to be basic in nature and after an
objective consideration of different options
available taking into account the interest of
Neutral Citation
2025:JHHC:28111-DB
the State and the public, then court cannot
as an appellate authority by substituting its
opinion in respect of selection made for
entering into such contract."
22. The rationality of Clause 19(III)(A)(i) of the Additional Terms
and Conditions is abundantly clear and is based on the object
and purport of MSMED Act, 2006 to promote Micro and Small
Enterprises. The clarification to Clause 6 of the notification dated
23.03.2012 by way of FAQs and Clause 16 of the said notification
empowering the authorities to clarify certain bottlenecks,
especially with respect to Question No. 21 is the progenitor to the
incorporation of Clause 19(III)(A)(i) of the Additional Terms &
Conditions. The said provision does not speak of any
arbitrariness or unreasonableness and is in consonance with the
Statute.
23. Another contention which has been raised by the learned
senior counsel for the petitioner is that the respondent no. 6 does
not fall within the classification of a "small" industry and,
therefore, was ineligible to participate in the tender. Such
submission is negated on the ground that as per the notification
dated 26.06.2020 being S.O. 2119(E), the permissible amount of
investment in plant and machinery and equipment for
classification as a "small" industry was Rs. 10 crores, but it was
amended vide notification being S.O. 1364(E) dated 21.03.2025
and the ceiling was raised to Rs. 25 crores which made the
respondent no. 6 come within the purview of a "small" industry.
24. Another aspect of the case is the participation of the
petitioner in the tender process even though it was aware about
the existence of Clause 19(III)(A)(i) of the Additional Terms &
Conditions. No grievance was raised earlier and the petitioner
had duly participated and it cannot be permitted to challenge
such condition after the entry of a 3rd party which was in
Neutral Citation
2025:JHHC:28111-DB
consonance to the guidelines and notifications issued from time
to time. In such context, reference is made to the case of
Municipal Committee Katra & Ors. v. Ashwani Kumar
reported in 2024 SCC Online SC 840, the relevant of which
reads as follows:
"20. The respondent-writ petitioner
participated in the tender process without
raising any issue about Clause-8 of the
auction notice. The highest bidder Shri.
Pritam Das did not come forward to execute
the contract thus, the respondent became the
highest bidder and was offered the work in
question. The respondent accepted the same
with open eyes. However, in order to avoid
full compliance of Clause-8 of auction notice,
the respondent went on to file a civil suit.
Having participated in the tender
proceedings with open eyes, the respondent
challenged the Clause-8 of the auction notice
in the civil Court and thereby, stalled the
issuance of the work order. The matter was
taken to the High Court and the appellants
gave a clear indication before the High Court
that they were proposing to hold a fresh
auction. However, during pendency of
appeal before the High Court, an order dated
7th May, 2010 came to be passed whereby,
the appellants were directed to award the
work to the respondent being L-2.
21. We feel that once the respondent-
writ petitioner had participated in the tender
Neutral Citation
2025:JHHC:28111-DB
process being fully conscious of the terms
and conditions of the auction notice, he was
estopped from taking a U-turn so as to
question the legality or validity of the terms
and conditions of the auction notice. By
dragging the matter to litigation, the
respondent himself was responsible for the
delay occasioned in issuance of the work
order which deprived him of the opportunity
to work for the entire period of 365 days."
25. Thus, in view of the aforesaid discussions, we do not find
any reason to entertain this writ application and consequently,
the same is dismissed.
26. Pending I.A.s, if any, stands closed.
(RONGON MUKHOPADHYAY, J.)
(PRADEEP KUMAR SRIVASTAVA, J.)
Jharkhand High Court, Ranchi
Dated the 15th Day of September, 2025
Preet/N.A.F.R.
