The Gauhati High Court observed that the work contracts do not come within the purview of the Public Procurement Policy-2012 and the exemptions provided to Micro and Small Enterprises do not cover work contracts.

The petitioner approached the High Court challenging the disqualification of his Technical Bid, pursuant to the Invitation for Bid (IFB) (NIT) for “Composite Works on Open Domestic Competitive Bidding Basis”.

The Single-Judge Bench of Justice Michael Zothankhuma said, “In the present case, the petitioner cannot insist that the NIT dated 16.04.2024 should have contained a clause granting exemption to MSEs from depositing EMD.”

Advocate N Gautam represented the Petitioner while Standing Counsel H K Sarma represented the Respondents.

Factual Background

It was claimed by the petitioner 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. However, in spite of the exemption given to the MSEs the petitioner’s Technical Bid had been disqualified on the said ground.

Issue

One of the main issues before the Bench was whether the exemption provided to MSEs in the PPP-2012, regarding deposit of EMD for MSEs, would cover work contracts.

Reasoning

Reference was made by the Bench to the judgment in Rashtriya Ispat Nigam Limited vs. Union of India, represented by Secretary, (2022) where the Andhra Pradesh High Court by taking into consideration the fact that the term “works contract” provided in Article 366(29A)(b) was wide and could not be confined to a particular understanding of the term or to a particular form, held that the Micro Small and Medium Enterprises Development Act, 2006 would not apply to “works contract”. Further, it was held therein that works contract would not come within the purview of the PPP-2012.

On a perusal of the documents on record, the Bench observed that prior to the NIT of 2024, an earlier NIT was issued in 2003 wherein Clause 16.8 of the NIT provided exemption to the MSEs from submission of EMD, in accordance with the provisions of PPP-2012 and Clause 40 of the ITB. The Ministry of MSME, Government of India, made a clarification later stating 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”, the Bench said.

It was also noticed that the petitioner submitted his bid in terms of the NIT without making any objection in writing to the respondents, regarding the striking out the exemption given to MSEs from submitting EMDs. He however did not make any representation with regard to the same, prior to or after submission of his EMD. The petitioner’s challenge to doing away with the exemption clause, came into the picture only after the petitioner’s Technical Bid was disqualified.

“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. As such, 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 Bench held.

Thus, without finding any ground to exercise its discretion, the High Court dismissed the writ petition.

Cause Title: M/s Northeast Enginnering and Construction & Anr. v. The Union of India and Anr (Neutral Citation: 2025:GAU-AS:230)

Appearance:

Petitioner: Advocates N Gautam, Rangon Choudhury, K N Choudhury

Respondents: Standing Counsel H K Sarma, Advocates D Senapat, S.Mitra, R. Rameez, A K Boro

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Gauhati High CourtJustice Michael ZothankhumaMicro Small and Medium Enterprises Development Act

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.