The Calcutta High Court granted a writ of mandamus directing the Steel Authority of India Limited (SAIL) and related authorities to invite the MSME petitioner to match the lowest bid in a reverse-auction tender, interpreting the 2012 MSE purchase-preference policy to extend eligibility even when the bidder did not select the preference option on the GeM portal.
Background & Facts
The Dispute
The petitioner, Sanjay Kumar Agarwal, a registered MSME engaged in handling and processing slag and scrap for steel plants, participated in a tender floated by SAIL (respondent no.1) for the handling, processing and management of raw material scrap and slag. The tender was issued on 5 December 2025 through the Government e-Marketplace (GeM) portal. The petitioner submitted the required MSME certificates, Udyam Registration Certificate and trade licence, and claimed exemption from Earnest Money Deposit (EMD) under Clause 16 of the invitation.
Key Facts
- The petitioner’s turnover was declared as Rs 60 crore (approx.), qualifying for the financial-turnover relaxation under Clause 19.
- The reverse-auction was scheduled from 10:00 AM on 26 February 2026 to 6:00 PM on 27 February 2026.
- The reverse-auction concluded on 3 March 2026. The petitioner’s final bid was Rs 1,55,34,01,218.49, only 0.5 % higher than the L1 bidder.
- The L1 bidder (added respondent) submitted a bid of Rs 1,55,26,83,638.14; the L2 bidder (FSNL Private Limited) submitted Rs 1,55,29,16,575.50.
- On 7 March 2026, the petitioner sent a letter requesting the authorities to match the L1 price and to recall the work order issued to the added respondent.
- On 9 March 2026, the GeM help-desk informed the petitioner that the buyer (SAIL) had not opted for the MSE/MII purchase-preference during bid creation, therefore the petitioner could not claim the preference.
- The petitioner reiterated that the 2012 Public Procurement Policy for MSEs provides a purchase-preference when an MSME’s bid lies within 15 % of the L1 price.
Procedural History
- W.P.A. No. 6836 of 2026: Writ petition filed by the petitioner seeking a mandamus to be invited to match the L1 price and to recall the work order.
- 06 August 2026: Hearing concluded.
- 01 September 2026: Judgment delivered.
The Parties' Positions
- Petitioner: Argues that under Clause 14 of the Additional Terms and the 2012 MSE purchase-preference policy, a bid within 15 % of the L1 price obliges the authority to invite the MSME to match the L1 price, irrespective of whether the MSE option was selected on GeM.
- Respondents (SAIL, GeM, added respondent and others): Contend that the purchase-preference applies only when the bidder explicitly selects the MSE option on the portal; since the petitioner did not, no preference can be granted.
Relief Sought
The petitioner sought a mandamus directing respondents 1-4 to (i) invite the petitioner to match the L1 bid of Rs 1,55,34,01,218.49, (ii) recall the work order issued to the added respondent, and (iii) issue a Letter of Award or Letter of Intent in favour of the petitioner.
The Legal Issue
Whether, under the Public Procurement Policy for Micro and Small Enterprises Order 2012, an MSME bidder whose financial bid falls within the 15 % band of the lowest bidder is statutorily entitled to be invited to match the lowest bid and be awarded the contract, even if the bidder did not expressly opt for the MSE/MII purchase-preference option on the GeM portal.
Arguments Presented
For the Petitioner
- The petitioner relied on Clause 14 of the Additional Terms, which provides that “Purchase preference to MSE parties shall be applicable as per MSE guidelines… if the order cannot be split, the 100 % order will be placed on the MSE party if their quoted price is within <L1 + 15 %”.
- Cited the Supreme Court’s directions in Lifecare Innovations Pvt. Ltd. v. Union of India (2025) that the 2012 Order has the force of law and its procurement-mandate is subject to judicial review.
- Submitted that the bid was within 0.5 % of the L1 price, satisfying the statutory band, and that the exemption from EMD does not preclude the purchase-preference right.
For the Respondents
- Argued that the GeM system automatically treats a bidder as non-MSE unless the purchase-preference option is explicitly selected, and that the statutory benefit is conditional on that selection.
- Relied on GTI Infotel Private Limited v. Hindustan Petroleum Corporation Ltd. (2024) to assert that procedural compliance with the portal’s requirements is essential.
- Maintained that the work order had already been issued to the L1 bidder, and that setting it aside would cause substantial loss to the added respondent.
The Court's Analysis
The Court began by examining the language of Clause 14 of the Additional Terms and Clause 16 of the invitation, noting that the former expressly links purchase-preference to the “price band of L1 + 15 %” and does not condition the benefit on the selection of a checkbox in the GeM portal. The Court observed that the exemption from EMD is a separate concession for MSMEs and does not negate the statutory purchase-preference right.
"The 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 judgment then turned to the Supreme Court’s pronouncement in Lifecare Innovations that the 2012 Order “has force of law” and that the statutory mandate to procure a minimum percentage from MSMEs is subject to judicial review. The Court held that the statutory scheme creates a positive duty on the procuring agency to extend the purchase-preference where the quantitative condition (price within 15 %) is satisfied, irrespective of a technical omission in the portal.
The Court distinguished GTI Infotel on the ground that the latter dealt with a purely procedural non-selection, whereas here the statutory provision itself overrides the procedural step. The Court further noted that the respondents had not produced any evidence that the petitioner had deliberately declined the preference; rather, the failure lay with SAIL’s omission in configuring the bid.
Consequently, the Court concluded that the petitioner was statutorily entitled to be invited to match the L1 price and that the respondents’ refusal amounted to a breach of the 2012 Order. The Court rejected the argument that setting aside the work order would cause loss, emphasizing that the loss was a consequence of the respondents’ own non-compliance with the statutory policy.
The Verdict
The Court allowed the writ petition. Respondents 1-4 are directed to invite the petitioner to match the L1 bid of Rs 1,55,34,01,218.49 within one week from the date of this order and to recall the work order issued to the added respondent. No costs were awarded. The order is effective immediately.
What This Means For Similar Cases
Statutory Preference Trumps Portal Mechanics
- Procurement agencies must ensure that the statutory purchase-preference provision is applied even if the electronic system does not capture the MSE selection.
- Failure to configure the GeM portal correctly can be treated as non-compliance with the 2012 Order, exposing agencies to mandamus petitions.
Quantitative Band Is Controlling
- A bid within the 15 % band of the lowest bidder automatically triggers the purchase-preference right, regardless of other procedural lapses.
- Lawyers should advise MSME clients to document the price band calculation and to raise the issue promptly before award.
Judicial Review of Procurement Policy
- The Supreme Court’s endorsement of the 2012 Order as having the force of law means that its provisions are enforceable through writ jurisdiction.
- Practitioners can rely on Lifecare Innovations to challenge arbitrary exclusions of MSMEs.
Practical Checklist for MSME Bidders
- Verify that the procurement agency has opted for MSE/MII purchase-preference in the bid creation stage.
- Keep copies of all certificates (Udyam, trade licence) and ensure they are uploaded correctly.
- Calculate the price-band percentage and be prepared to submit a formal request to match the L1 price.
- If the agency fails to extend the preference, file a writ petition seeking mandamus within the limitation period.
