SANJAY KUMAR AGARWAL vs STEEL AUTHORITY OF INDIA LIMITED (SAIL) AND ORS
- Court
- Calcutta High Court
IN THE HIGH COURT AT CALCUTTA
(Constitutional Writ Jurisdiction)
APPELLATE SIDE
Present:
The Hon’ble Justice Krishna Rao
W.P.A. No. 6836 of 2026
Sanjay Kumar Agarwal
Vs.
Steel Authority of India Limited (SAIL) & Ors.
Mr. Sakya Sen, Sr. Adv.
Mr. Ankan Rai
Mr. Sarosij Dasgupta
Ms. Nabanita Manna
Mr. Ratnesh Kr. Rai
Ms. Sakshi Kejriwal
Ms. Vipra Gang
Ms. Devanshi Deora
....For the petitioner.
Mr. Jishnu Chowdhury, Sr. Adv.
Mr. Suddhasatva Banerjee
Mr. Sooriya Ganguli
Mr. Somdutta Bhattacharyya
Mr. Mohit Dong
….For the respondent nos. 1 to 3.
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Mr. Ayan Poddar
Mr. Soham Dutta
Mrs. Yashodhara B. Roy
Ms. Shweta Bharti
Mr. Binsy Susan
Mr. Akshay Sharma
Ms. Shweta Sahu
Ms. Khushbu Turki
Ms. Anjali Shaw
Ms. Darshita Sethia
Mr. Aditya Sharma
….For the respondent no.5.
Mr. Ajay Chaubey
Mr. Madhu Jana
Ms. Prity Panja
Ms. Paromita Indu
….For the respondent no.6.
Mr. Jishnu Saha, Sr. Adv.
Ms. Trisha Mukherjee
Mr. Chetan Kr. Kabra
Ms. Suhani Diwedi
….For the respondent no.7.
Hearing Concluded On : 06.08.2026
Judgment Delivered On : 01.09.2026
Judgment Uploaded On : 01.09.2026
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Krishna Rao, J.:
1. The petitioner has filed the present writ petition praying for a mandamus
upon the respondent authorities to invite the petitioner to match the price
of the United Air Express being a sum of Rs. 1,55,34,01,218.49 as
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proposed in the communication dated 7 March, 2026, to reconsider the
bid of the petitioner and offer the petitioner to match the bid of the L1
bidder and to recall the Letter of Intent (LOI) issued in favour of the added
respondent.
2. The petitioner is a registered firm under the provisions of Micro Small and
Medium Enterprises Act and is running a proprietorship business of
handling and processing of slag and scrap for major steel plants in India.
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3. The respondent no.1 has floated a notice inviting tender dated 5
December, 2025, through the portal being Government e-Marketplace
(hereinafter referred to as “GeM”), the respondent no.5 herein for the
purpose of handling, processing and management of raw/material/
scrap/slag as well as for other miscellaneous job. Clause 16 of the
invitation to the bid relating to bid security/ earnest money deposit grants
exemption to MSMEs to furnish earnest money deposit and in lieu thereof
a bid securing declaration as per format of Apendix-1 is required to be
submitted by the prospective bidder who is a registered MSME unit to be
considered eligible for participation in the tender and such exemption was
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granted to the petitioner based on self-certified copy of UDYAM
Registration Certificate.
4. Clause 19 also provides relaxation in financial turnover criteria for
MSMEs. The petitioner has participated in the tender process and
submitted certificate of incorporation, along with MSME certificate and the
current trade license. The petitioner being an MSME unit have taken the
benefit of the Clause in the tender relating to reduce financial turnover as
stipulated in Clause 19 and submitted documents showing his turnover
as Rs. 60 Crores (approx.) which taking into consideration the relaxation
offered by the bid documents makes the petitioner eligible for
participation. The petitioner was qualified in the techno commercial stage
and was called upon to submit its financial bid. The respondents have
invited the petitioner to participate in reverse auction for the selfsame
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tender, which was scheduled to start from on 10:00 AM on 26 February,
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2026 and end at 6:00 PM on 27 February, 2026.
5. Upon opening of the financial bid, each and every technically qualified
bidder was asked to participate in the Reverse Auction Process through
the GeM Portal, save and except H1 bidder. The reverse auction was
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concluded on 3 March, 2026 and result of the same was published on
the website of the respondents wherein it was found that the final bid
value of the petitioner was Rs. 1,55,34,01,218.49 in the reverse auction
process, which was only 0.5% higher from the L1 bidder. The L1 bidder is
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the added respondent and L2 bidder is one FSNL Private Limited who had
submitted their financial bid at Rs. 1,55,26,83,638.14 and Rs.
1,55,29,16,575.50 respectively in the reverse auction result.
6. Mr. Sakya Sen, Learned Senior Advocate, representing the petitioner
submits that as per Clause 7 of the General Condition and Clause 14 of
the Additional terms and conditions forming part of the GCC of the
contract, read with the Public Procurement Policy for Micro and Small
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Enterprises Order dated 23 February, 2012, issued by the Government
of India, the petitioner being a MSE bidder is entitled to get relaxation in
its financial bid, in view of the Public Procurement Policy for MSEs Order,
2012. If the quoted price of the petitioner falls within 15% band of the
Lowest Bidder, the petitioner becomes directly eligible to match the price
of the lowest bidder and is further entitled to be considered for the Letter
of Award or work order in accordance with the said policy, read with the
guidelines of the respondents.
7. Mr. Sen submits that the financial bid of the petitioner is within 15% of
both the L1 and the L2 bidders, the petitioner is legally entitled to be
declared as the lowest bidder or at least be given a chance or opportunity
to match the price of the L1 bidder. As no offer was provided to the
petitioner, the petitioner has offered his willingness to match the price of
the lowest bidder shown in the details in terms of the tender conditions,
read with guidelines of the respondents and the policy of the Government
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of India. The petitioner has also informed the respondents to consider the
case of the petitioner, who is registered under the MSME Act and to issue
LOA and LOI in favour of the petitioner.
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8. Mr. Sen submits that the petitioner has made representation and on 9
March, 2026, the petitioner has received an e-mail from the help desk of
the respondents informed the petitioner that the petitioner has not
obtained MSE/MII purchase preference during the submissions of bid and
thus the petitioner is not entitled to avail such preference at the later
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stage. On 10 March, 2026, the petitioner has clarified that the petitioner
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has participated in the tender as MSE and the order dated 23 February,
2012, issued by the Government of India provides for such purchase
preference to the eligible MSE bidders in public procurement and rejection
of the offer of the petitioner to match the L1 bidder, during the tender
process effectively deprives the right of the petitioner which is specifically
provided in the policy.
9. Mr. Sen submits that the petitioner has submitted its bid with UDYAM
Registration Certificate along with declaration that the petitioner is a
registered MSME and the petitioner was permitted to submit bid without
Earnest Money Deposit (EMD). The petitioner has submitted financial
credentials of a turnover of Rs. 60 Crores (approx.) taking the advantage of
the Clause 19 of the invitation to bid granting exemption from financial
turnover stipulated in the eligibility criteria in case of an MSME unit.
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10. Mr. Jishnu Chowdhury, Learned Senior Advocate, representing the
respondent nos.1, 2 and 3 submits that the petitioner has not obtained
the MSE/MII purchase preference during the submission of bid and finds
that the added respondent is L1 bidder and thus work order is issued in
favour of the added respondent. He submits that the petitioner has not
submitted MSE/ MII purchase preference during submission of bid and
thus the petitioner is not entitled to avail such preference at the later
stage.
11. Mr. Chowdhury submits that the tender process on the GeM Portal is
system-driven and automated. Unless the bidder explicitly selects the
MSE purchase preference option, the system will automatically treat the
bidder as a non-MSE bidder for purchase of awarding purchase
preference. He submits that exemption from EMD may be a benefit
granted to MSEs, it does not automatically imply that the petitioner
exercised the purchase preference option. In support of his submissions,
he has relied upon the judgment in the case of GTI Infotel Private
Limited Vs. Hindustan Petroleum Corporation Ltd. reported in 2024
SCC OnLine Bom 3467 .
12. Mr. Chowdhury submits that the Court should refrain from imposing its
decision over the decision of the employer as to whether or not to accept
the bid of a tender. The Court does not have the expertise to examine the
terms and conditions of the present day economic activities of the State.
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He has relied upon the judgment in the case of N.G. Projects Limited vs.
Vinod Kumar Jain and Others reported in (2022) 6 SCC 127 .
13. Mr. Jishnu Saha, Learned Senior Advocate, representing the added
respondent submits that the petitioner has not submitted its bid with
UDYAM Registration Certificate along with declaration that the petitioner
is a registered MSME. He submits that after opening of bids, the
respondents find that the added respondent is an L1 and accordingly, the
respondents have issued work order to the added respondent.
14. Mr. Saha submits that on receipt of the work order, the added respondent
has procured materials and invested huge amounts to execute the work
order issued to the petitioner and at this stage, if this Court interfere with
the decision of the authorities and set aside the work order of the added
respondent, the added respondent will suffer severe financial loss without
any fault.
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15. Mr. Saha by referring Clause 3 of the guidelines dated 23 March, 2012,
submits that as per the said Clause, the Central Government and Public
Sector Undertaking shall set an annual goal of procurement from MSE
from the financial year 2012-2013 and onwards with the objective of
achieving an overall procurement of minimum of 20 percent of total
annual purchases of products produced and services rendered by MSE in
a period of three years. He submits that the respondents have to ascertain
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whether the said goal is achieved or not. Merely the bidder is an MSE shall
not be given benefits in all bid process.
16. Mr. Saha further referred Clause 6 of the said guidelines and submits that
in tender participating MSE quoting price within price band of L1+15 %
shall also be allowed to supply a portion of requirement by bringing down
their price to L1 price in a situation where L1 price is from someone other
than MSE and MSE shall be allowed to supply up to 20% of the total
tender value. He submits that as per the said clause, the MSE can only be
allowed to supply 20% of the total tender value and not the entire.
17. Mr. Saha has relied upon the judgment in the case of Lifecare
Innovations Pvt. Ltd and Another Vs. Union of India and Others
reported in 2025 SCC OnLine 436 and submits that the existing legal
regime of public procurement from MSE can now be identified as
mandating that initially setting annual goals of procurement for a period
of three years and thereafter mandating yearly procurement of a minimum
of 25% of the procurement by the ministries, departments and public
sector undertakings.
18. Mr. Ayan Poddar, Learned Advocate, representing the GeM, being the
respondent no. 5 submits that on receipt of the request of the petitioner,
the GeM has checked the portal and upon checking it was found that the
SAIL has not opted the MSE/MII purchase preference during the bid
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creation as a result of which the petitioner could not avail the MSE/MII
purchase preference during participation.
19. Clause 16 of the of the bid document reads as follows:
16. Bid security/ Earnest Money deposit
An interest-free Earnest Money Deposit
(EMD) or Bid Securing Declaration (as per
format of Appendix – 1) in place of EMD,
where bidders are exempt from submission
of EMD as per extant government guidelines
(e.g. MSMEs, etc.), is required to be
submitted with the bid, by the interested
bidders for their bid to be considered
eligible for participation.
Micro & Small Enterprises (MSEs)/PSUs/
Government Undertakings and Co-operative
Societies/ Start-ups as recognized by the
Department for Promotion of Industry and
Internal Trade (DPIIT) etc., shall be
exempted from submission of EMD as per
extant Government policy. For MSEs, the
exemption will be extended base on:
Self-certified copy of Udyam
Registration Certificate (UCR);
The concerned MSE is registered in
the MSME databank and
MSE is registered for the given scope
of job/procurement.
In case of Consortium, EMD can be
submitted by Leader or any member of the
consortium. Consortium bidder will be
exempted from submitting Bid security only
if each and every individual member is
exempted (as per extant Government
Guidelines existing on the date of BID
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submission). In case even one member is
not exempted, the consortium as a whole
shall be required to submit the stipulated
Bid security along with their Bid.
The value of the Earnest Money Deposit
(EMD) to be submitted is: ₹ 70 Lakhs/-.
In case of the Bid Security is submitted in
the form of Demand draft, Banker’s Cheque,
Bank Guarantee (BG) or fixed Deposit
Receipt (FDR), scanned copy of the same
shall be uploaded by the bidder in the
online bid and original document will have
to be submitted directly to SAIL-ISP,
Burnpur within 5 working days of bid
opening, failing which the bid may be
treated as incomplete and may lead to
rejection of the bid by SAIL-ISP, Burnpur
without making any reference to the bidder.
The Original Bid Security shall be submitted
physically in sealed envelope superscribed
with RFx no., GeM bid no. And due date to:
GM-Contract Cell, Contract Cell, KIND
ATTENTION – Shri Rajanikanta Rath, GM-
Contract Cell, SAIL-ISP, BURNPUR, WEST
BENGAL- 713325.
In case of Online payment of Bid Security,
bidder shall provide the Online transaction
details in their online bid as proof of
submission of Bid Security to SAIL-ISP,
Burnpur. The online payment of Bid
Security amount should be received in SAIL-
ISP, Burnpur’s bank account on or before
the Bid closing date and time failing which
the offer will be rejecred outright without
any further reference. Bid security will not
be in cash.
SAIL-ISP, Burnpur’s Bank account Details
for Online submission of Bid Security
Name SAIL-ISP, Burnpur
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Bank State Bank of India
Branch BURNPUR, WEST BENGAL-
713325
Account
Number
10981831604
IFSC Code SBIN0000049
The petitioner has submitted his bid without EMD as the petitioner is
a registered MSE having UDYAM Registration Certificate issued by the
competent authorities. It is not denied by the respondents that the
petitioner is not an MSE. The contention of the respondents that the
petitioner has not obtained the MSE/MII purchase preference during
submission of bid.
20. Clause 14 of the Additional Terms and Conditions of the contract provides
that “ Purchase preference to MSE parties shall be applicable as per MSE
guidelines. In case the order cannot be split, the 100% order will be placed
on the MSE party if their quoted price is within <L1+ 15%, with acceptance
of the MSE party to match the L1 price”.
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The reverse auction for the tender concluded on 3 March, 2026 and
the same was published in the website of the respondents. The final bid
value of the petitioner was Rs. 1,55,34,01,218.49. The added respondent
being the L1 bidder has submitted its financial bid at
Rs.1,55,26,83,638.14. As per the terms and conditions of the tender
documents in case L1 is non-MSE, preference is to be given to MSE/MII to
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match with L1+15% with acceptance of MSE party. The said conditions of
contract have not been followed by the respondents on the pretext that the
petitioner has not obtained the MSE/ MII purchase preference.
21. The Respondent no.5, namely, GeM authorities by a communication dated
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9 March, 2026, informed to the petitioner which reads as follows:
“ GeM Helpdesk <[email protected]> Mon, Mar 9, 2026 at 9:56 AM
To: [email protected]
Dear Sanjay,
Greetings from GeM!
This email is in reference to the concern regarding “Request for Award
of Work under MSE Purchase Preference Policy”
We regret the inconvenience caused.
We completely understand your concern and will surely help you with
the same.
We would like to inform you that upon checking buyer not opt the
MSE/MII purchase preference during bid creation as result bidder not
avail the MSE/MII purchase preference during participation. Hence
buyer is not eligible to send the price match request. Kindly proceed
accordingly.
We always recommend to retain the same subject line and the Ticket
ID for any communication regarding the concern raised. Email sent to
any other email IDs will not be monitored.
If you need any further assistance related to any other query on GeM,
please feel free to reach through various channels-
Mail us at: helpdesk-gem[at]gov[dot]in
Toll Free Numbers (Inbound): Call
1800-419-3436/1800-102-3436
HelpDesk Walk-In-Address:
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2 Floor, Jeevan Tara Building, 5 – Sansad Marg, Near Patel Chowk, New Delhi –
110001
Gemmy Chat – (Available at our homepage, left hand side at the bottom.
https://gem.gov.in/).
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Regards,
Shalu
GeM Helpdesk.”
22. From the communication of the respondent no.5, it is clear that SAIL has
not opted the MSE/MII purchase preference during creation of bid due to
which the petitioner could not avail the MSE/MII purchase preference
during participation. The stand taken by the SAIL is contrary but the SAIL
has not denied the information provided by the GeM to the petitioner
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dated 9 March, 2026, or the SAIL has not produced any documents to
established that the SAIL has opted MSE/MII purchase preference while
creation of bid.
23. The GeM portal has been developed for the Government to mitigate to a
completely transparent online bidding process with minimal human
intervention. Adoption of technology is always preferred since its purpose
is to increase efficiency, ease of doing any work, and also to reduce
inefficiency and corruption which may result on account of greater human
intervention. At the same time, it would be of no use, if the technology as
deployed has such inbuilt limitations and lacks flexibility to deal with
exceptional situations. The case of the petitioner is of exceptional
circumstances as the SAIL has not opted the MSE/MII purchase during
bid creation for which the GeM portal does not have the facilities to
consider the petitioner as MSE/MII though the petitioner has disclosed its
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UDYAM Registration Certificate and the SAIL has exempted to deposit
Earnest Money Deposit.
24. The added respondent relied upon Clauses 3 and 6 of the guidelines dated
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23 March, 2012, issued by the Ministry of Micro, Small and Medium
Enterprises which reads as follows:
“ 3 . Mandatory procurement from Micro Small
and Enterprises.– (1) Every Central Ministry or
Department or Public Sector Undertaking shall set
an annual goal of procurement from Micro and
Small Enterprises from the financial year 2012-13
and onwards, with the objective of achieving an
overall procurement of minimum of 20 percent, of
total annual purchases of products produced and
services rendered by Micro and Small Enterprises
in a period of three years.
(2) Annual goal of procurement also include
sub-contracts to Micro and Small Enterprises by
large enterprises and consortia of Micro and Small
Enterprises formed by National Small Industries
Corporation.
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(3) After a period of three years i.e. from 1
April 2015, overall procurement goal of minimum of
20 per cent shall be mandatory.
(4) The Central Ministries, Departments and
Public Sector Undertakings which fail to meet the
annual goal shall substantiate with reasons to the
Review Committee headed by Secretary (Micro,
Small and Medium Enterprises), constituted in
Ministry of Micro, Small and Medium Enterprises,
under this Policy.
6. Price quotation in tenders. % (1) In tender,
participating Micro and Small Enterprises quoting
price within price band of L1 + 15 per cent shall
also be allowed to supply a portion of requirement
by bringing down their price to L1 price in a
situation where L1 price is from someone other
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than a Micro and Small Enterprise and such Micro
and Small Enterprise shall be allowed to supply up
to 20 per cent of total tendered value.
(2) In case of more than one such Micro and
Small Enterprise, the supply shall be shared
proportionately (to tendered quantity)”
The other terms of the bid documents provided that:
“ Other Terms:
The bid cannot be spilt. Number of sources of
procurement shall be 1 (One) only. In case L-1 is
non-MSE and preference is to be given as per
MSE/MII guidelines, 100% order shall be placed on
the eligible MSE/MII vendor as per the extant
guidelines. ##Purchase preference as per the
extant MSE policy and Make in India (MII)
guidelines shall be applicable. ##Fifteen (15) %
Relaxation on Financial Turnover shall be
applicable to verified MSE and verified Start-ups.
#Registered companies may submit a copy of their
Certificate of Incorporation. Other Bidders should
submit a copy of a current valid trade license/
certificate of enlistment/ certificate of registration/
self-attested copy of declaration for non
applicability of Trade License. #If Trade License is
not applicable, please provide a signed declaration
explaining the valid reason for the same.”
Clause 14 of the Additional Terms and Conditions of the contract
reads as follows:
“ 14. Purchase preference to MSE parties shall
be applicable as per MSE guidelines. In case the
order cannot be split, the 100% order will be placed
on the MSE party if their quoted price is within <L1
+ 15%, with acceptance of the MSE party to match
the L1 price.”
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25. The added respondent having knowledge about the said terms and
conditions of the bid documents had participated in the said tender
process without any objection. The Hon’ble Supreme Court in the case of
Lifecare Innovations Pvt. Ltd. (supra) considered Clauses 2, 3, 5, 8, 11,
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12 and 13 of the guidelines dated 23 March, 2012 and passed the
following directions upon the authorities:
“38. In this view of the matter, apart from the
earlier direction relating to mandatory procurement,
we also direct the authorities under the Act,
including the Review Committee and in particular
the Grievance Cell, which is 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.
39. Having considered the matter in detail,
this writ petition is disposed of directing:
(a) the Public Procurement Policy for Micro
and Small Enterprises (MSEs) Order, 2012 has
force of law as it is formulated in exercise of
power under Section 11 of the Act and also
encapsulates the purpose and object of the
Act;
(b) 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 Procurement Order,
2012 to implement the mandate which is
subject to judicial review;
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(c) the judicial review will primarily
ensure proper constitution and effective
functioning of the authorities the National
Board for MSMEs, the Advisory Committee,
the Facilitation Council, the Review Committee
and the Grievance Cell and leave the policy
and decision making to them.
(d) the respondents, and in particular, the
Review Committee constituted under clause
12 of the Procurement Preference Policy 2012
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 such action as is
necessary for effective implementation of the
Policy within a period of 60 days from the date
of our order; and
(e) the respondents, including the Review
Committee and in particular the Grievance
Cell, shall examine and declare limits of
the minimum turnover clauses with respect to
MSEs and issue appropriate policy guidelines
within a period of 60 days from the date of our
order.
40.
With these directions the writ petition is
disposed of. There shall be no order as to costs.”
26. Neither SAIL nor GeM or the added respondent has brought to the notice
of this Court whether the authorities have modified the guidelines in terms
of the order of the Hon’ble Supreme Court. On the other hand, the SAIL
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has published tender notice in terms of the guidelines dated 23 March,
2012, by incorporating the terms and conditions in bid documents
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including the additional terms and conditions of the contract and the
added respondent after having knowledge has participated in the said
tender process.
27. Though the work order is issued to the added respondent but the SAIL
has not given effect to the said work order as the SAIL has issued a letter
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dated 26 March, 2026, wherein the SAIL maintained the continuity of
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the said work with the earlier contract till 30 September, 2026.
28. This Court finds that the SAIL has not opted for the MSE/MII purchase
preference during bid creation due to which the petitioner could not avail
the MSE/MII purchase preference during participation through GeM
portal. The respondent nos. 1 to 4 are directed to invite the petitioner to
match the price of the added respondent as proposed in the letter dated
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7 March, 2026, being Annexure “P-9” at page 298 of the writ petition
within a week from the date of this order and if the respondent nos. 1 to 4
finds that the petitioner is able to match with the L1 bidder in terms of the
Government of India procurement policy to pass appropriate order and to
recall the work order issued in favour of the added respondent.
29. WPA No. 6836 of 2026 is allowed.
Parties shall be entitled to act on the basis of a server copy of the
Judgment placed on the official website of the Court.
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Urgent Xerox certified photocopies of this judgment, if applied for, be
given to the parties upon compliance of the requisite formalities.
(Krishna Rao, J.)