SAIL must let MSME bidder match L1 price after GeM failed to enable purchase preference, Calcutta HC rules

The petitioner, an MSME engaged in handling and processing of slag and scrap, participated in SAIL’s GeM tender dated 5 December 2025 for handling, processing and management of raw materials, scrap and slag.

The tender exempted eligible MSEs from furnishing EMD upon submission of an Udyam Registration Certificate and provided financial-turnover relaxation for MSEs.

The petitioner qualified at the techno-commercial stage and participated in the reverse auction. Its final bid was ₹1,55,34,01,218.49, while the added respondent emerged as L1 with a bid of ₹1,55,26,83,638.14.

The tender conditions provided that, where the order could not be split and the L1 bidder was not an MSE, the entire order could be awarded to an eligible MSE quoting within 15% of L1, subject to matching the L1 price.

The petitioner claimed that it was entitled to such purchase preference, but SAIL did not invite it to match the L1 price.

GeM informed the petitioner that SAIL had not selected the MSE/MII purchase-preference option while creating the bid and that, consequently, the portal could not generate a price-match request.

Although a work order had been issued to the added respondent, SAIL continued the earlier contract up to 30 September 2026 and had not effectively implemented the new work order.

1. Whether an eligible MSE bidder, whose bid falls within the prescribed 15% band of the L1 bid, was entitled under the tender conditions and the Public Procurement Policy for MSEs to be invited to match the L1 price.

2. Whether SAIL could deny the petitioner MSE purchase preference on the ground that the MSE/MII preference option had not been selected on the GeM portal during bid creation, when the omission was attributable to SAIL and the petitioner had otherwise disclosed its MSE status and received EMD exemption.

3. Whether the work order issued to the added respondent was liable to be reconsidered or recalled in view of SAIL’s failure to implement the applicable MSE purchase-preference terms.

The Court applied Clause 14 of the tender’s Additional Terms and Conditions, which made MSE purchase preference applicable and contemplated placement of the entire order on an eligible MSE, where the order could not be split, if its quoted price was within L1 plus 15% and it agreed to match L1.

It also applied Clause 6 of the Public Procurement Policy for Micro and Small Enterprises Order, 2012, under which an MSE quoting within L1 plus 15% may be permitted to supply by matching the L1 price when L1 is not an MSE.

The Court relied on Lifecare Innovations Pvt. Ltd. v. Union of India, 2025 SCC OnLine SC 436, for the principles that the 2012 Procurement Policy has the force of law, imposes a statutory obligation on government authorities and public-sector bodies to implement its mandate, and remains subject to judicial review.

The Court also recognised that while tender authorities ordinarily possess decision-making latitude and courts should not substitute their commercial judgment, as reflected in N.G. Projects Ltd. v. Vinod Kumar Jain, (2022) 6 SCC 127, that principle does not justify departure from the tender’s own binding conditions.

The Court distinguished the respondents’ reliance on GTI Infotel Pvt. Ltd. v. Hindustan Petroleum Corporation Ltd., 2024 SCC OnLine Bom 3467, concerning system-generated MSE preference, because the present omission resulted from the buyer’s failure to activate the preference at bid creation.

The petitioner’s MSE status was not disputed, and it had been permitted to bid without EMD on the basis of its Udyam registration, while also receiving the MSE-related financial relaxation.

Its bid was within the tender’s L1-plus-15% price band, and Clause 14 expressly required consideration of an eligible MSE in an indivisible procurement where L1 was non-MSE.

GeM’s communication established that the MSE/MII preference had not been enabled by SAIL during bid creation, thereby preventing the petitioner from exercising the preference through the automated portal.

The Court held that a technical limitation caused by the buyer’s omission could not defeat the substantive purchase-preference mechanism expressly incorporated into the tender.

SAIL neither rebutted GeM’s explanation nor produced material showing that it had enabled the preference option.

Since the tender itself incorporated the MSE policy and the successful bidder had participated with knowledge of those terms, the Court found no justification for denying the petitioner an opportunity to match the L1 price.

The fact that a work order had been issued did not prevent relief, particularly because SAIL had continued the earlier arrangement and had not fully implemented the new work order.

It directed SAIL and the concerned respondents to invite the petitioner, within one week, to match the added respondent’s L1 price as proposed in the petitioner’s letter dated 7 March 2026.

If the petitioner matched the L1 bid in accordance with the Government’s MSE procurement policy, the respondents were directed to pass appropriate orders and recall the work order issued in favour of the added respondent.