Merely Being A Start-Up Company Is Not A Ground To Reject Participation In Fresh Tender: Karnataka HC Directs South Western Railway To Reconsider
The Karnataka High Court held that the respondent, South Western Railway, must consider the representation submitted by the petitioner regarding their bid in response to an e-tender notification. The Court emphasized that the petitioner's participation in the tender, especially in the event of a fresh tender, should not be rejected solely based on their status as a start-up company. In this case, the petitioner, a company engaged in supplying Crushing Equipments and Machineries, as well as civil construction works, approached the court seeking a direction to the respondent, South Western Railway. The petitioner had submitted a bid in response to an e-tender notification. However, it was informed that due to being a start-up and not meeting certain criteria, the respondent intended to call for a re-tender.
A Bench of Justice R Devdas held, “the respondent shall consider the representation given by the petitioner and consider whether the tender can be allotted to the petitioner or if the tender cannot be proceeded only on the ground that the petitioner is the only entity that has responded to the e-tender notification and a fresh tender has to be called for, then the participation of the petitioner in the fresh tender cannot be rejected on the ground that it is a start-up company. The respondents are required to take into consideration the directions issued by the Union of India as noticed hereinabove and proceed in accordance with law.”
Advocate R.V. Naik appeared for the Petitioner and Advocate K.S. Rajesh Gowda appeared for the Respondent.
The petitioner's counsel referred a communication from the Ministry of Micro, Small and Medium Enterprises, Government of India, which relaxed norms for start-ups and MSMEs in public procurement. It was pointed out that prior experience and turnover criteria could be relaxed for MSMEs in public procurements, provided they meet quality and technical specifications. Additionally, the petitioner had secured a tender from Konkan Railway Corporation Limited exceeding Rs.5 Crores 38 Lakhs, contradicting the respondent's claim that the petitioner couldn't participate in tenders exceeding Rs.50.00 Lakhs.
Considering the submissions and documents presented, the Court added, “this Court is of the considered opinion that the respondent is required to take into consideration the communication dated 10th of March 2016 at Annexure-A1, made by the Additional Secretary and Development Commissioner/MSMEs/ which is also applicable to the respondent-South Western Railway. The respondent also required to take into consideration the fact that a tender has been awarded by the Konkan Railway Corporation Limited to the tune of more than Rs.5 Crores 38 Lakhs to the petitioner.”
The Court ordered the respondent to review the petitioner's representation and decide whether to allot the tender to the petitioner. If a fresh tender had to be called for, the participation of the petitioner should not be rejected solely on the grounds of it being a start-up company. The respondent was directed to adhere to the guidelines issued by the Union of India and proceed in accordance with the law.
The writ petition was disposed of.
Cause Title: Pushkraj Crushing Equipments Pvt Ltd v. The Senior Divisional Engineer, [2023:KHC:36030]
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