Gera Green Innovations vs. Northern Coalfields Limited

Held

The Court held that Respondent No. 3 was not entitled to the benefits of the MSE Order 2012. The Court reasoned that an enterprise cannot claim the turnover and work experience of a large predecessor enterprise to establish eligibility while simultaneously claiming Micro or Small Enterprise status as a newly formed entity or startup. This would allow the entity to 'blow hot and cold in the same breath,' which is impermissible. The object of the MSE Order 2012 is to promote and develop actual micro and small enterprises, not to extend benefits to large enterprises that have restructured. The Court found that Respondent No. 3's reliance on the turnover of Harsh Enterprises (which exceeded the MSE limits) to claim MSE status was incorrect. Therefore, the option given to Respondent No. 3 to match the L1 price as an MSE was invalid. The Court quashed the Letter of Acceptance dated 06.08.2025 awarding the contract to Respondent No. 3 and directed NCL to reprocess the tender, ignoring Respondent No. 3's status as an MSE.

Facts

The petitioner, GERA GREEN INNOVATION, filed a writ petition challenging the award of a tender for coal transportation by Northern Coalfields Limited (NCL) to Respondent No. 3. The tender was for 62.05 lakh tonnes of coal transportation for two years. The petitioner was the L1 (lowest) bidder. However, the tender was awarded to Respondent No. 3, the L2 bidder, by treating it as a Micro and Small Enterprise (MSE) eligible for preference under the Public Procurement Policy for MSEs Order, 2012. The petitioner argued that Respondent No. 3's turnover exceeded the limits for MSE status, making it ineligible for the preference. The petitioner also contended that the tender was wrongly declared 'non-splittable' to allow the entire contract to go to Respondent No. 3.

Key Issues

1. Whether Respondent No. 3, a newly incorporated company, was eligible to claim the benefits of the Public Procurement Policy for MSEs Order, 2012, by relying on the turnover and work experience of its predecessor proprietorship concern, Harsh Enterprises, which had a turnover significantly exceeding the prescribed limits for Micro and Small Enterprises. Petitioner's arguments: The petitioner argued that Respondent No. 3's turnover for the financial years 2021-22, 2022-23, and 2023-24 was Rs. 47.078 Crores, Rs. 118.978 Crores, and Rs. 145.373 Crores, respectively. As per the MSE Order 2012, the limit for a Small Enterprise was a turnover not exceeding Rs. 50 Crores. Therefore, Respondent No. 3 was a Medium Enterprise and not eligible for MSE benefits. The petitioner also contended that Respondent No. 3 was formed with a new GST and PAN, and by using the credentials of a company with a high turnover, it obtained the tender by misrepresenting its status. The petitioner relied on the MSE Order 2012, specifically clauses regarding the classification of enterprises and the conditions for awarding work to MSEs. Respondent's arguments: The respondents argued that Respondent No. 3 was a newly incorporated company with a Udyam registration date of 12.06.2024 and a PAN of a newly incorporated company with no prior turnover. They contended that the online portal automatically determined classification based on PAN and GSTIN. Respondent No. 3 claimed Micro Enterprise status, with a turnover not exceeding Rs. 5 Crores (later revised to Rs. 10 Crores). They relied on the turnover of Harsh Enterprises to demonstrate eligibility, but the court noted that Harsh Enterprises did not qualify as an MSE. The respondents also cited New Horizons Ltd. v. Union of India to argue that a newly formed company could benefit from the work experience of its promoter's proprietorship concern.