LexLIFECARE INNOVATIONS PVT. LTD. & ANR. versus UNION OF INDIA & ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2025] 2 S.C.R. 727 : 2025 INSC 269 Lifecare Innovations Pvt. Ltd. & Anr. v. Union of India & Ors. (Writ Petition(C) No. 1301 of 2021) 25 February 2025 [Pamidighantam Sri Narasimha* and Sandeep Mehta, JJ.] Issue for Consideration Issue arose whether the Micro, Small and Medium Enterprises Development Act, 2006, coupled with the Public Procurement Policy for Micro and Small Enterprises Order 2012 mandate procurement of 25 percent of goods and services by the government, and its instrumentalities from the Micro and Small Industrial Enterprises; and whether the prescription of mandatory minimum turnover clause in Notice Inviting Tenders is violative of Arts.14 and 19 of the Constitution, provisions of the Micro, Small and Medium Enterprises Development Act, 2006 and the Procurement Preference Policy, 2012. Headnotes† Micro, Small and Medium Enterprises Development Act, 2006 – s.11 – Public Procurement Policy for Micro and Small Enterprises Order 2012 – Procurement preference policy – Petitioner-Micro Enterprise facing disqualification from participation in the procurement process to supply the drug it manufactures, evolved by the Central and State Governments and their instrumentalities due to the presence of mandatory minimum turnover clauses – Petitioners sought exemptions from the said minimum turnover requirement, but not granted – Writ petition seeking directions for the States and their instrumentalities to consider the bids of Micro and Small Enterprises-MSEs irrespective of the minimum turnover clauses in the tenders notification; alternatively quash the tenders being contrary to the 2012 Policy; and that any minimum turnover clauses to be confined to revenues received from specific drugs: Held: Public Procurement Policy for Micro and Small Enterprises Order 2012 has force of law and is enforceable as it is formulated * Author 728 [2025] 2 S.C.R. Supreme Court Reports 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 authorities- National 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, [2025] 2 S.C.R. 729 Lifecare Innovat
Excerpt shown. Read the full judgment & AI analysis in Lexace.