Assam: Gauhati High Court Rules that Exemptions Provided to MSEs do not Cover Work Contracts

Staff Reporter

Guwahati: The Gauhati High Court recently held that work contracts do not come within the purview of the central government’s Public Procurement Policy 2012, and the exemptions provided to Micro and Small Enterprises (MSEs) do not cover work contracts.

The single-judge bench of Justice Michael Zothankhuma was hearing a writ petition (WP(C)/4448/2024) in which the petitioner contended that being a Micro and Small Enterprise (MSE), he is not required to deposit the Earnest Money Deposit (EMD) for participating in the tender process, in terms of the Public Procurement Policy (PPP) 2012 issued by the Ministry of Micro, Small and Medium Enterprises, Government of India.

Justice Zothankhuma observed that upon considering the Public Procurement Policy (PPP) 2012 and the clarification given by the Government of India through a letter dated August 31, 2023, coupled with the decision of the various High Courts, that “work contracts do not come within the purview of PPP-2012, i.e., the exemptions provided to MSEs do not cover work contracts.”

It was alleged by the petitioner that in spite of the exemption given to the MSEs in terms of PPP-2012, which exempts them from submitting EMD, the petitioner’s technical bid was disqualified on the same ground.

The counsels appearing for the respondents submitted that there is no infirmity with the decision taken by the respondent authorities, as the NIT required the execution of work contracts that do not come within the purview of the PPP 2012.

The Court noted that the Union Ministry of MSME had clarified in its August 31, 2023, letter 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 April 16, 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, with a line striking out the exemption given,” the Court said.

Further, the court stated, “The petitioner is supposed to have submitted his bid after going through the NIT dated April 16, 2024, with an open eye. The above being said, the petitioner submitted his bid in terms of the NIT dated April 16, 2024, without making any objection in writing to the respondents regarding striking out the exemption given to MSEs from submitting EMDs.”

The Court relied upon an earlier judgement of the Gauhati High Court 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.

Thus, 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. The Court then dismissed the writ petition.

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