Lifecare Innovations Pvt. Ltd. & Anr. vs Union of India & Ors.

Held: Public Procurement Policy for Micro and Small Enterprises Order 2012 has force of law and is enforceable as it is formulated in exercise of power u/s.11 and also encapsulates the purpose and object of the Act – Though there is no mandatory minimum procurement ‘right’ for an individual MSE, there is certainly a statutorily recognized obligation on the authorities and the bodies under the Act and the Policy 2012 to implement the mandate which is subject to judicial review – Judicial review would primarily ensure proper constitution and effective functioning of the authoritiesNational Board for Micro, Small and Medium Enterprises, Advisory Committee, Facilitation Council, Review Committee and Grievance Cell, and leave the policy and decision making to them – Mandates of Policy 2012, mandating 25 percent from MSEs and clause 11 reserving 358 items for procurement from MSEs, are independent of one another – Respondents-Review Committee to examine the issue of mandatory procurement of 25 per cent of goods and services by the Government, and its instrumentalities from MSEs under clause 3 of the Policy in the context of clause 11 providing for reservation of specific items for procurement and take necessary action for effective implementation of the Policy within the stipulated period – Respondents, including the Review Committee and the Grievance Cell, to examine and declare limits of the minimum turnover clauses with respect to MSEs and issue appropriate policy guidelines. [Paras 25, 27, 39] Micro, Small and Medium Enterprises Development Act, 2006 – s.11 – Public Procurement Policy for Micro and Small Enterprises Order 2012 – Procurement preference policy – Prescription of mandatory minimum turnover clauses in Notice Inviting Tenders, if violative of Arts. 14 and 19, the Act of 2006 and the Policy of 2012:

Held: Relevant criteria for framing suitable conditions in NIT relate to the ‘capacity’ and ‘capability’ of the bidder – Courts approach is also based on the idea that the executive should have greater latitude in selecting contractors and prescribing eligibility requirements – However, the law as applicable for procurement through MSEs stands on a different footing because there is a statutory prescription for notifying a procurement preference policy – Although it is generally permissible for the government, and its instrumentalities to provide minimum turnover criteria wherever public safety, health, etc. are involved, it must be ensured that such prescriptions do not defeat the Policy 2012 which declares the procurement preference obligations of the State and thus, statutory and executive authorities are bound to implement the same – Minimum turnover clauses cannot undermine or override the Procurement Preference Policy 2012 – Authorities under the Act, including Review Committee and in particular the Grievance Cell, specifically entrusted with the obligation to redress “imposition of unreasonable conditions in tenders floated by Government Departments or agencies that put Micro and Small Enterprises at a disadvantage” to examine limits of minimum turnover clauses and issue necessary and appropriate policy guidelines – Constitution of India – Arts.14, 19. [Paras 31, 32, 33, 38, 39]