Background of the Case
The petitioner, an MSE, participated in a tender issued on April 16, 2024, for 'Composite Works on Open Domestic Competitive Bidding Basis.' Relying on the PPP-2012, which exempts MSEs from submitting an Earnest Money Deposit (EMD), the petitioner did not include the EMD in its bid. Consequently, the petitioner's technical bid was disqualified for non-submission of the EMD. Challenging this disqualification, the petitioner contended that, as an MSE, it was entitled to the EMD exemption under the PPP-2012.
Public Procurement Policy 2012 and Its Scope
The PPP-2012, issued by the Ministry of Micro, Small, and Medium Enterprises (MSME), Government of India, aims to promote MSEs by providing certain benefits in public procurement processes. Key among these benefits is the exemption from payment of EMD and the cost of tender documents. However, the policy's applicability to various types of contracts, particularly work contracts, has been a subject of interpretation.
Clarification Issued by the Ministry
On August 31, 2023, the Ministry of MSME issued a clarification through Frequently Asked Questions (FAQs), stating that the benefits of the PPP-2012, including EMD exemption, apply to all eligible MSEs, except for traders and in work contracts. This clarification explicitly excluded work contracts from the ambit of the PPP-2012 benefits.
Court's Analysis and Judgment
Justice Michael Zothankhuma, presiding over the case, examined the provisions of the PPP-2012, the August 2023 clarification, and precedents from various High Courts. The Court concluded that work contracts are not covered under the PPP-2012, and therefore, MSEs are not entitled to EMD exemptions in such contracts. The Court 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."
Implications of the Judgment
This ruling has significant implications for MSEs engaged in public procurement involving work contracts. It underscores the necessity for MSEs to carefully scrutinize tender documents and understand the specific exemptions applicable to different types of contracts. The judgment also highlights the importance of staying updated with policy clarifications issued by relevant authorities to ensure compliance and avoid disqualification in tender processes.
Conclusion
The Gauhati High Court's decision provides clarity on the applicability of the PPP-2012 to work contracts, emphasizing that MSEs cannot claim EMD exemptions in such cases. This judgment serves as a crucial reference for both procurement authorities and MSEs, ensuring a clearer understanding of the scope of benefits under the Public Procurement Policy.
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