Holding

The Public Procurement Policy for Micro and Small Enterprises Order 2012 has the force of law, imposing statutory duties on the authorities to implement the 25% procurement mandate, and minimum turnover clauses must not defeat this policy.

Summary

Lifecare Innovations Pvt. Ltd., a micro‑enterprise manufacturing a specialised liposomal drug, was repeatedly disqualified from government tenders because the Notice Inviting Tender (NIT) imposed mandatory minimum turnover requirements that it could not meet. The petitioners argued that such clauses violated Articles 14 and 19 of the Constitution, the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 and the Public Procurement Policy for Micro and Small Enterprises Order 2012, which mandates that at least 25% of government procurement be from MSEs. The Supreme Court held that the 2012 Procurement Order has the force of law and creates statutory duties for the authorities, though it does not confer an enforceable individual right to procure from any particular MSE. The Court directed the Review Committee and the Grievance Cell to examine the mandatory 25% procurement target and the legality of minimum turnover clauses, and to issue appropriate guidelines within 60 days. Consequently, the writ petition was disposed of with directions for institutional compliance, without granting any specific exemption to the petitioner.

Issues considered

Whether the MSMED Act, together with the Procurement Preference Policy 2012, mandates that the government procure at least 25% of its goods and services from Micro and Small Enterprises.
Whether the prescription of mandatory minimum turnover clauses in NITs violates Articles 14 and 19 of the Constitution, the provisions of the MSMED Act and the Procurement Preference Policy 2012.

Legislation cited

Constitution of Indias. Arts.14, s. Arts.19
Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993
Micro, Small and Medium Enterprises Development Act, 2006s. s.10, s. s.11, s. s.3, s. s.7, s. s.9

Headnote

Issue for Consideration Issue arose whether the Micro, Small and Medium Enterprises Development Act, 2006, coupled with the Public Procurement Policy for Micro and Small Enterprises Order 2012 mandate procurement of 25 percent of goods and services by the government, and Micro and Small Industrial Enterprises; and whether the prescription of mandatory minimum turnover clause in Notice Inviting Tenders is violative of Arts.14 and 19 of the Constitution, provisions of the Micro, Small and Medium Enterprises Development Act, 2006 and the Procurement Preference

Subjects

Micro and small enterprisesNotice inviting tendersMinimum turnover clausesProcurement policyLiposome technologyLiposomal Amphotericin B Suspension in Saline-FungisomeMandatory procurementReview CommitteeNational Board for Micro, Small and Medium EnterprisesAdvisory CommitteeFacilitation CouncilGrievance CellDuty of Constitutional CourtsJudicial reviewCapacity of bidderCapability of bidderPreference PolicyPublic Procurement Policy for Micro and Small Enterprises Order 2012Procurement of 25 percent of goods and services by the government from the Micro and Small Industrial EnterprisesExemptions from the minimum turnover requirementQuashing of tendersImposition of unreasonable conditions in tenders floated by Government Departments

Judgment

[2025] 2 S.C.R. 727 : 2025 INSC 269

Lifecare Innovations Pvt. Ltd. & Anr.
v.
Union of India & Ors.
(Writ Petition(C) No. 1301 of 2021)
25 February 2025
[Pamidighantam Sri Narasimha* and Sandeep Mehta, JJ.]

Issue for Consideration
Issue arose whether the Micro, Small and Medium Enterprises
Development Act, 2006, coupled with the Public Procurement Policy
for Micro and Small Enterprises Order 2012 mandate procurement
of 25 percent of goods and services by the government, and its
instrumentalities from the Micro and Small Industrial Enterprises; and
whether the prescription of mandatory minimum turnover clause in
Notice Inviting Tenders is violative of Arts.14 and 19 of the Constitution,
provisions of the Micro, Small and Medium Enterprises Development
Act, 2006 and the Procurement Preference Policy, 2012.

Headnotes†
Micro, Small and Medium Enterprises Development Act,
2006 – s.11 – Public Procurement Policy for Micro and
Small Enterprises Order 2012 – Procurement preference
policy – Petitioner-Micro Enterprise facing disqualification
from participation in the procurement process to supply
the drug it manufactures, evolved by the Central and State
Governments and their instrumentalities due to the presence
of mandatory minimum turnover clauses – Petitioners sought
exemptions from the said minimum turnover requirement, but
not granted – Writ petition seeking directions for the States
and their instrumentalities to consider the bids of Micro and
Small Enterprises-MSEs irrespective of the minimum turnover
clauses in the tenders notification; alternatively quash the
tenders being contrary to the 2012 Policy; and that any
minimum turnover clauses to be confined to revenues received
from specific drugs:
Held: Public Procurement Policy for Micro and Small Enterprises
Order 2012 has force of law and is enforceable as it is formulated

* Author
728 [2025] 2 S.C.R.

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in exercise of power u/s.11 and also encapsulates the purpose
and object of the Act – 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 Policy 2012 to implement the mandate which
is subject to judicial review – Judicial review would primarily ensure
proper constitution and effective functioning of the authorities-
National Board for Micro, Small and Medium Enterprises, Advisory
Committee, Facilitation Council, Review Committee and Grievance
Cell, and leave the policy and decision making to them – Mandates
of Policy 2012, mandating 25 percent from MSEs and clause 11
reserving 358 items for procurement from MSEs, are independent
of one another – Respondents-Review Committee 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 necessary action for effective implementation of the Policy
within the stipulated period – Respondents, including the Review
Committee and the Grievance Cell, to examine and declare limits
of the minimum turnover clauses with respect to MSEs and issue
appropriate policy guidelines. [Paras 25, 27, 39]

Micro, Small and Medium Enterprises Development Act,
2006 – s.11 – Public Procurement Policy for Micro and Small
Enterprises Order 2012 – Procurement preference policy –
Prescription of mandatory minimum turnover clauses in Notice
Inviting Tenders, if violative of Arts. 14 and 19, the Act of 2006
and the Policy of 2012:
Held: Relevant criteria for framing suitable conditions in NIT
relate to the ‘capacity’ and ‘capability’ of the bidder – Courts
approach is also based on the idea that the executive should have
greater latitude in selecting contractors and prescribing eligibility
requirements – However, the law as applicable for procurement
through MSEs stands on a different footing because there is a
statutory prescription for notifying a procurement preference policy –
Although it is generally permissible for the government, and its
instrumentalities to provide minimum turnover criteria wherever
public safety, health, etc. are involved, it must be ensured that
such prescriptions do not defeat the Policy 2012 which declares
the procurement preference obligations of the State and thus,
[2025] 2 S.C.R. 729

Lifecare Innovations Pvt. Ltd. & Anr. v. Union of India & Ors.

statutory and executive authorities are bound to implement the
same – Minimum turnover clauses cannot undermine or override
the Procurement Preference Policy 2012 – Authorities under the
Act, including Review Committee and in particular the Grievance
Cell, 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 – Constitution
of India – Arts.14, 19. [Paras 31, 32, 33, 38, 39]

Case Law Cited
NBCC (India) Ltd. v. State of West Bengal [2025] 1 SCR 610 : 2025
SCC Online 73; Bennett Coleman & Co. v. Union of India [1973]
SCR (2) 757 : (1972) 2 SCC 78; T.N. Godavarman Thirumulpad
v. Union of India, 2024 INSC 78 : [2024] 1 SCR 1194; Krishnan
Kakkanth v. Govt. of Kerala [1996] Supp. 7 SCR 487 : (1997) 9
SCC 495; Ugar Sugar Works Ltd. v. Delhi Administration [2001]
2 SCR 630 : (2001) 3 SCC 635; M.R.F. Ltd. v. Inspector Kerala
Govt. [1998] Supp. 2 SCR 632 : (1998) 8 SCC 227 26; Tata
Cellular v. Union of India [1994] Supp. 2 SCR 122 : (1994) 6 SCC
651; Monarch Infrastructure (P) Ltd. v. Commissioner, Ulhasnagar
Municipal Corporation [2000] 3 SCR 1159 : (2000) 5 SCC 287;
Association of Registration Plates v. Union of India [2004] Supp.
2 SCR 783 : (2005) 1 SCC 679; Krishnan Kakkanth v. Govt. of
Kerala [1996] Supp. 7 SCR 487 : (1997) 9 SCC 495; Ugar Sugar
Works Ltd. v. Delhi Administration [2001] 2 SCR 630 : (2001) 3
SCC 635; Gulf Goans Hotels Co. Ltd v. Union of India (2014) 10
SCC 673 – referred to.

List of Websites
2024 Theme: MSMEs and the SDGs’ (United Nations) https://
www.un.org/en/observances/micro-small-medium-businesses-day;
‘Contribution Of MSMEs to the GDP’ (Press Information Bureau)
https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2035073;
‘The MSME Revolution: Transforming India’s Economic Landscape’
(Press Information Bureau) https://pib.gov.in/PressReleasePage.
aspx?PRID=2087361; ‘MSMEs: The Backbone of India’s Economic
Future’ (Invest India) https://www.investindia.gov.in/team-india-
blogs/msmes-backbone-indias-economic-future; ‘Women-led
Enterprises’ (Lok Sabha Digital Library) https://eparlib.nic.in/
730 [2025] 2 S.C.R.

Supreme Court Reports

bitstream/123456789/2502792/1/AU3648.pdf; ’Participation of
Females in MSMEs’ (Lok Sabha Digital Library) https://eparlib.nic.
in/bitstream/123456789/2974207/1/AU1128.pdf; Report No. 18 of
2018, ‘Compliance with Provisions of Public Procurement Policy,
2012 For Micro and Small Enterprises’, (CAG,2018) https://cag.
gov.in/uploads/download_audit_report/2018/Chapter_7_Impact_
of_IND-AS_of_Report_No_18_of_2018_-_Compliance_Audit_on_
General_Purpose_Financial_Reports_of_Central_Public_Sector_
Enterprises_of_Union_Government__.pdf; ‘Relaxation of Norms for
Start-ups in Public Procurement regarding Prior Experience – Prior
Turnover criteria’, https://dpe.gov.in/sites/default/files/relaxsation_
of_norms.pdf – referred to.

List of Acts
Constitution of India; Micro, Small and Medium Enterprises
Development Act, 2006; Interest on Delayed Payments to Small
Scale and Ancillary Industrial Undertakings Act, 1993.

List of Keywords
Micro and small enterprises; Notice inviting tenders; Minimum
turnover clauses; Procurement policy; Liposome technology;
Liposomal Amphotericin B Suspension in Saline-Fungisome;
Mandatory procurement; Review Committee; National Board
for Micro, Small and Medium Enterprises; Advisory Committee;
Facilitation Council; Grievance Cell; Duty of Constitutional Courts;
Judicial review; Capacity of bidder; Capability of bidder; Preference
Policy; Public Procurement Policy for Micro and Small Enterprises
Order 2012; Procurement of 25 percent of goods and services by
the government, from the Micro and Small Industrial Enterprises;
Prescription of mandatory minimum turnover clause in Notice
Inviting Tenders; Procurement process; Exemptions from the
minimum turnover requirement; Quashing of tenders; Imposition
of unreasonable conditions in tenders floated by Government
Departments; Policy guidelines.

Case Arising From
CIVIL ORIGINAL JURISDICTION: Writ Petition (Civil) No. 1301
of 2021
(Under Article 32 of The Constitution of India)
[2025] 2 S.C.R. 731

Lifecare Innovations Pvt. Ltd. & Anr. v. Union of India & Ors.

Appearances for Parties
Advs. for the Petitioners:
V Giri, Anil Kaushik, Sr. Advs., Abhishek Mishra, Mrs. Shashi
Sharma, Rajat Rana, Rahul Narang, Rajinder Singh .
Advs. for the Respondents:
K.M Nataraj, A.S.G., Ms. Garima Prasad, Sr. A.A.G. Vanshaja
Shukla, Apporv Kurup, Amit Kumar B, Mayank Pandey, Amrish
Kumar, Vinayak Sharma, Amit Sharma-(ii), B.K Satija, Vikrant
Narayan Vasudeva, Rohit Lochav, Vishnu Shankar Jain, Ms. Mani
Munjal, Ms. Marbiang Khongwir, Mukesh Kumar Maroria, Apoorv
Kurup, Mayank Pandey, Vinayak Sharma, Amit Sharma-ii, Annirudh
Sharma Ii, Ms. Vanshaja Shukla, Satyakam, G.M. Kawoosa, Ms.
Palak Mittal, Pashupathi Nath Razdan, Ketan Paul, Ms. Ujala
Singh, Ms. Vanshika Dubey, Ms. Bhavya Pathania.

Judgment / Order of the Supreme Court

Judgment

Pamidighantam Sri Narasimha, J.

1. The petitioner before us, a Micro Enterprise, and its founder Dr.
Jitendra Nath Verma, raise two important questions. The first question
relates to the ‘right’ of Micro and Small Enterprises1 to supply 25%
of goods and services to be procured by the Government and its
instrumentalities under its Procurement Policy. The second issue
relates to the legality of ‘minimum turnover clauses’ prescribed
in the Notice Inviting Tenders2 issued by the Government and its
instrumentalities. Determination of these questions required us to
consider the ‘rights’ and duties flowing out of Section 11 of the Micro,
Small and Medium Enterprises Development Act, 2006,3 prescribing
a Public Procurement Policy for Micro and Small Enterprises (MSEs)
Order 2012 4 and this consideration led us to examine the legal status
of the Procurement Order 2012.

1 Hereinafter referred to as the “MSE(s)”.
2 Hereinafter referred to as ‘NIT’.
3 Hereinafter referred to as the “MSMED Act/Act”.
4 Hereinafter referred to as the “Procurement Order 2012”
732 [2025] 2 S.C.R.

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1.1 Having examined the legal regime concerning the promotion
and development of MSEs, we have come to the conclusion
that the Procurement Order 2012 has the force of law and is
enforceable. While the Act and the Procurement Order 2012
do not create an ‘enforceable right’ for an individual MSE,
the statutory authorities and administrative bodies created
thereunder are impressed with enforceable duties. They are
accountable and subject to judicial review. We have also
explained how the scope of judicial review in these matters
should transcend the standard power of judicial review to issue
writs of mandamus to perform the statutory duty and proceed to
examine whether the duty bearers, the authorities and bodies
are constituted properly and whether they are functioning
effectively and efficiently. By ensuring institutional integrity we
achieve our institutional objectives.
1.2 Having considered the establishment of the National Board
for MSMEs, Advisory Committee, Facilitation Council under
the statute, and in particular, the establishment of the Review
Committee and the Grievance Cell under the Procurement Order
2012, we have issued specific directions to address the issues
arising for consideration and issue necessary guidelines for
the effective implementation of the Procurement Order 2012.
2. Brief facts: The brief facts necessary for the disposal of the case
are as follows. The first Petitioner is a Micro Enterprise under Section
7 of the MSMED Act, 2006, and operates in the pharmaceuticals
and medical biotechnology sector. More specifically, the Enterprise’s
business involves the manufacturing, development and marketing of
healthcare products. The second petitioner, the founder and managing
director of the enterprise, is a specialist in the application of ‘Liposome
Technology’ for healthcare, a technology utilised for delivering drugs
to the human body. Put simply, this involves enveloping a drug in a
bubble made of fats or lipids, which can be dissolved and absorbed
directly into the specific site of the body targeted for treatment.
Pertinent in the context of this petition is the company’s production
of a nano-drug called ‘Liposomal Amphotericin B Suspension in
Saline-Fungisome’ (‘LAmB’), which is a special form of medication
to treat serious fungal infections. The Enterprise claims that LAmB
is the only medication in India that treats fungal infection effectively
and generates the least amount of toxicity in the kidney compared
[2025] 2 S.C.R. 733

Lifecare Innovations Pvt. Ltd. & Anr. v. Union of India & Ors.

to other medications formulated and sold by other players in the
field. The petitioners state that the Government of India has also
recognised LAmB as a critical life-saving drug, and recently, the drug
proved instrumental in treating patients suffering from mucormycosis
amid the rise of COVID-19.
3. The Enterprise claims that it has attempted to participate in several
public procurement processes to supply the drug it manufactures.
However, it continuously faces disqualification from participation in the
procurement process evolved by the Central and State Governments
and their instrumentalities. The cause for such disqualification is the
presence of mandatory minimum turnover clauses, requiring the
participants to meet a certain financial threshold in terms of past
sales or revenues generated for participation. This requirement
disadvantages enterprises such as petitioners since their turnover is
bound to be lower than that of their competitors for two reasons. First
is obvious, the enterprise would qualify as a Micro Enterprise only
when its turnover is lower. Secondly, the turnover of the Enterprise
is also bound to be low since it only deals in specialised areas of
medical technology and drugs. In contrast, many of its competitors
get to factor in their revenue for multiple drugs that they deal in.
4. The petitioners sought exemptions from the said minimum turnover
requirement, but the concerned authorities have not granted the same.
Consequently, the Enterprise cannot participate as the difference
between the required turnovers and the company’s turnovers is often
huge. In real terms, while the enterprise’s average turnover ranges in
the band of Rs. 6-7 crores, the NIT issued by Post Graduate Institute
of Medical Education & Research, Chandigarh (PGIMER), in 2017
required the bidders to have a minimum turnover of Rs. 20 crores
in the three years preceding the NIT and a cumulative turnover of
Rs. 200 crores in the same three years.
5. Previously, the Enterprise had filed a writ petition5 before the High
Court of Punjab and Haryana, challenging the NIT issued by PGIMER,
Chandigarh in 2017. Similar contentions were raised before the
High Court, but the writ petition was dismissed by an order dated
05.04.2017. The petitioners filed a Special Leave Petition6 against

5 CWP No. 2268/2017.
6 SLP (C) No. 14026/2017.
734 [2025] 2 S.C.R.

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the dismissal order, and this Court issued notice on 09.05.2017,
which is pending disposal.
6. By this petition under Article 32 of the Constitution, the petitioners
seek wider directions for all States and their instrumentalities to;
a) consider the bids of MSEs irrespective of the minimum turnover
clauses in the tenders notification, b) in the alternative, to quash the
NITs being contrary to the 2012 Policy7, c) direct the respondents to
withdraw or cancel their orders rejecting the Enterprise’s bid and,
further, d) direct the respondents that any minimum turnover clauses
should be confined to revenues received from specific drugs and e)
such other orders as deemed necessary.
7. Submissions: Mr. V. Giri, Ld. Senior Counsel for the petitioners
submitted that the prescription of such minimum turnover clauses
is arbitrary and violative of Articles 14 and 19 of the Constitution
because such clauses bear no rational nexus with the object of
procuring safe and efficacious medicines. It was submitted that the
worth of medicines ultimately procured through the tender is much
below the turnovers of many participants. It is also submitted that
turnover is not an accurate indicator of the manufacturing capability
of the participating bidders, and there is no empirical data to show
that turnover has a direct bearing on the manufacturing capability of
pharmaceutical companies. Similarly, the turnover of a pharmaceutical
company is no indicator of the efficacy of the pharmaceutical
products. Such clauses, therefore, serve no purpose except for
unjustly preventing smaller market players with specialised drugs
from participating in government tenders. The issue of proportionality
of the threshold set by such minimum turnover clauses has been
the subject of the circular dated 26.04.2007 issued by the Central
Vigilance Commission, where it was stipulated that there should be
a nexus between the turnover clause and the value of the product
sought. He would submit that this proportionality is totally lacking
in the tenders where the petitioners have attempted to participate.
8. It is also submitted that the restriction on the participation of
petitioners due to the minimum turnover clause violates the
Procurement Order 2012 issued by the Government of India under
Section 11 of the Act. While it is mandatory for every government,
its ministry, department or instrumentality to procure 25% of their

7 Notification dated 23.03.2012 as modified by the notification dated 09.11.2018.
[2025] 2 S.C.R. 735

Lifecare Innovations Pvt. Ltd. & Anr. v. Union of India & Ors.

supplies from MSEs, by prescribing minimum turnover clauses, they
are circumventing the mandate, thereby defeating the very purpose
and object of the policy.
9. Mr. K. M. Natraj, Ld. Additional Solicitor, assisted by Ms. Vanshaja
Shukla, Advocate, representing Union of India, submitted that the
policy notifications relied upon by the petitioners had been complied
with. Year-wise statistics evidencing Government of India procurement
from MSMEs is produced evidencing compliance. It is also submitted
that the petitioners’ claim pertains to specific conditions of a tender,
which is purely contractual in nature, and as such invocation of
judicial review is impermissible in law. In any case, the learned ASG
would submit that there is no arbitrariness in the specification of
the mandatory minimum turnover clause in NIT as the government,
or its instrumentalities are entitled to assess the capability of the
supplier, which is essential, particularly for procurement of drugs.
Similar arguments were advanced by other counsels representing
other respondent States and Public Sector undertakings.
10. Issues: The following two questions arise for our consideration:
1. Does the MSMED Act, coupled with the Procurement Preference
Policy, 2012 mandate procurement of 25 percent of goods and
services by the government, and its instrumentalities from the
Micro and Small Industrial Enterprises? and
2. Is the prescription of mandatory minimum turnover clause in NITs
violative of articles 14 and 19 of the Constitution, provisions of
the MSMED Act and the Procurement Preference Policy, 2012?
11. Recognition of MSMEs in India and the enactment of the Micro,
Small and Medium Enterprises Development Act, 2006.8
From post-modernism to meta-modernism, economies have
witnessed a shift from Industries to Enterprises. These enterprises are
alluded to as the backbone of emerging economies. Recognising the
significant contribution of enterprises, the United Nations observed9:
“MSMEs help reduce levels of poverty through job creation
and economic growth; they are key drivers of employment,

8 Hereinafter referred to as the “Act”.
9 ‘2024 Theme: MSMEs and the SDGs’ (United Nations) <https://www.un.org/en/observances/micro-
small-medium-businesses-day> (2024)
736 [2025] 2 S.C.R.

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decent jobs and entrepreneurship for women, youth and
groups in vulnerable situations. They are the majority of
the world’s food producers and play critical roles in closing
the gender gap as they ensure women’s full and effective
participation in the economy and in society”.
12. In the recent judgement of this court in NBCC (India) Ltd. v. State
of West Bengal,10 this Court noted the historical importance of
cottage and small industries for our country and also their real-time
contribution as under:
“1. The old value of ‘Small is beautiful’11 has not lost its
relevance. Recognising the contribution of micro, small
and medium enterprises towards economic development,
the United Nations declared June 27th as MSME day.
MSMEs are said to be the backbone of many economies,
including India. This resonates with the statement of the
father of our nation, Mahatma Gandhi, declaring that the
‘salvation of India lies in cottage and small scale industries’.
The Parliament enacted the Micro, Small and Medium
Enterprises Development Act, 20062 for facilitating the
promotion and development of the enterprises by creating
certain rights and duties and establishing a Board, Advisory
Committee, and Facilitation Council. Importantly, the Act
provided a mechanism for dispute resolution.
[…]
8.2…Statistics indicate that MSMEs provide employment
to 62% of the country’s workforce, contribute 30% to
India’s GDP,12 and account for around 45% of India’s total
exports13. The Indian MSME sector is projected to grow to
$1 trillion by 202814. Moreover, MSMEs play a crucial role
in promoting rural development, women’s employment,

10 2025 SCC Online 73.
11 E.F. Schumacher, ‘Small Is Beautiful: A Study of Economics as if People Mattered’ (1973).
12 ‘Contribution Of MSMEs to the GDP’ (Press Information Bureau) <https://pib.gov.in/PressReleaseIframe
Page.aspx?PRID=2035073> (July 22, 2024).
13 ‘The MSME Revolution: Transforming India’s Economic Landscape’ (Press Information Bureau) <https://
pib.gov.in/PressReleasePage.aspx?PRID=2087361> (Dec 23, 2024).
14 ‘MSMEs: The Backbone of India’s Economic Future’ (Invest India) <https://www.investindia.gov.in/team-
india-blogs/msmes-backbone-indias-economic-future> (June 28, 2024).
[2025] 2 S.C.R. 737

Lifecare Innovations Pvt. Ltd. & Anr. v. Union of India & Ors.

and inclusive growth. 19.5% of total MSMEs15 and 70%
of informal micro-enterprises are owned by women16.
There is undoubtedly a global consensus regarding the
indispensable importance of MSMEs”.
13. The first statutory recognition of MSMEs, measures for their
protection, promotion and grant of special benefits was through
the Interest on Delayed Payments to Small Scale and Ancillary
Industrial Undertakings Act, 1993.17 The 1993 Act was repealed by
the comprehensive and promising regime under the present Micro,
Small and Medium Enterprises Development Act in 2006, which
not only created different classes of enterprises under Section 7,
but also established an Advisory Committee to advise the Central
government regarding the classification of enterprises, a National
Board for MSMEs under Section 3, the functions of which are provided
in Sections 5 and 6, inter alia to deal with, “factors affecting the
promotion and development of micro, small and medium enterprises
and review the policies and programmes of the Central Government”
and to “make recommendations on matters referred to it by the
Central Government which are necessary or expedient for facilitating
the promotion and development and enhancing the competitiveness
of the micro, small and medium enterprises”. Section 9 of the Act
enables the Central Government to adopt measures that may be
necessary for the promotion, development, and enhancement of the
competitiveness of MSMEs. Section 10 speaks of progressive credit
facilities for these MSMEs. Section 11 is the provision for procurement
preference policy. Section 11 is important for our consideration.
Under this provision, the Central or State governments notify the
preference policies with respect to the procurement of goods and
services produced and provided by micro and small enterprises by its
ministries, departments, aided institutions, or public sector enterprises.
Section 11 is reproduced hereinbelow for ready reference:
“Section 11. Procurement preference policy.—
For facilitating promotion and development of micro
and small enterprises, the Central Government or the

15 ‘Women-led Enterprises’ (Lok Sabha Digital Library) <https://eparlib.nic.in/bitstream/123456789/
2502792/1/AU3648.pdf> (Aug 10, 2023).
16 ‘’Participation of Females in MSMEs’ (Lok Sabha Digital Library) <https://eparlib.nic.in/bitstream/
123456789/2974207/1/AU1128.pdf> (Feb 8, 2024).
17 Repealed by MSMED Act, 2006 Act.
738 [2025] 2 S.C.R.

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State Government may, by order notify from time to
time, preference policies in respect of procurement of
goods and services, produced and provided by micro
and small enterprises, by its Ministries or departments,
as the case may be, or its aided institutions and public
sector enterprises.”
14. Section 11 is the executive power vested in the Central and State
Governments to formulate policies for achieving the purpose and
object of the Act. In fact, the statement of objects and reasons of
the Act declares that:
“Added to this, a growing need is being felt to extend policy
support for the small enterprises so that they are enabled
to grow into medium ones, adopt better and higher levels
of technology and achieve higher productivity to remain
competitive in a fast globalisation area. Thus, as in most
developed and many developing countries, it is necessary
that in India too, the concerns of the entire small and
medium enterprises sector are addressed and the sector
is provided with a single legal framework. As of now, the
medium industry or enterprise is not even defined in any law.
2. In view of the above-mentioned circumstances, the
Bill aims at facilitating the promotion and development
and enhancing the competitiveness of small and medium
enterprises and seeks to-
(a) provide for statutory definitions of “small enterprise”
and “medium enterprise”.
…
(g) empower the Central and State Governments to
notify preference policies in respect of procurement
of goods and services, produced and provided by
small enterprises, by the Ministries, departments and
public sector enterprises;
…”
15. In exercise of power under Section 11, the Central Government,
through its Ministry of Micro, Small and Medium Enterprises, notified
[2025] 2 S.C.R. 739

Lifecare Innovations Pvt. Ltd. & Anr. v. Union of India & Ors.

the Public Procurement Policy for Micro and Small Enterprises
(MSE’s) Order 2012.
16. Clauses 2, 3, 5, 8, 11, 12 and 13 of the Procurement Order 2012
are relevant for our purpose, and they are extracted hereinbelow
for ready reference:
“Cl. 2. Short title and commencement. –
(1) This Order is titled as ‘Public Procurement Policy
for Micro and Small Enterprises (MSEs) Order, 2012’.
(2) It shall come into force with effect from 1st April
2012.
Cl. 3. Mandatory procurement from Micro and Small
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 per cent, 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.
(3) After a period of three years i.e. from 1st April
2015, overall procurement goal of minimum of 20
per cent shall be made 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.
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Cl. 5. Reporting of targets in Annual Report. ─
(1) The data on Government procurements from Micro
and Small Enterprises is vital for strengthening the
Policy and for this purpose, every Central Ministry or
Department or Public Sector Undertaking shall report
goals set with respect to procurement to be met from
Micro and Small Enterprises and achievement made
thereto in their respective Annual Reports.
(2) The annual reporting shall facilitate in better
understanding of support being provided by
different Ministries or Departments or Public Sector
Undertakings to Micro and Small Enterprises.
Cl. 8. Annual Plan for Procurement from Micro and
Small Enterprises on websites:-
The Ministries or Departments or Public Sector
Undertakings shall also prepare Annual Procurement
Plan for purchase and upload the same on their
official website so that Micro and Small Enterprises
may get advance information about requirement of
procurement agencies.
Cl. 11. Reservation of specific items for procurement. ─
To enable wider dispersal of enterprises in the
country, particularly in rural areas, the Central
Government Ministries or Departments or Public
Sector Undertakings shall continue to procure 358
items (Appendix) from Micro and Small Enterprises,
which have been reserved for exclusive purchase
from them. This will help in promotion and growth
of Micro and Small Enterprises, including Khadi and
village industries, which play a critical role in fostering
inclusive growth in the country.
Cl. 12. Review Committee. –
(1) A Review Committee has been constituted under
the Chairmanship of Secretary, Ministry of Micro,
Small and Medium Enterprises, for monitoring and
review of Public Procurement Policy for Micro and
[2025] 2 S.C.R. 741

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Small Enterprises vide Order No. 21(1)/2007-MA
dated the 21st June 2010 (Annexure).
(2) This Committee shall, inter alia, review list of 358
items reserved for exclusive purchase from Micro and
Small Enterprises on a continuous basis, consider
requests of the Central Ministries or Departments or
Public Sector Undertakings for exemption from 20
per cent target on a case to case basis and monitor
achievements under the Policy.
Cl. 13. Setting up of Grievance Cell. –
In addition, a ‘Grievance Cell’ will be set up in
Ministry of Micro, Small and Medium Enterprises for
redressing grievances of Micro and Small Enterprises
in Government procurement. This cell shall take up
issues related to Government procurement raised
by Micro and Small Enterprises with Departments
or agencies concerned, including imposition of
unreasonable conditions in tenders floated by
Government Departments or agencies that put Micro
and Small Enterprises at a disadvantage.”
17. Clause 3 of the policy sets annual goals of procurement from MSEs
from the financial year 2012-13 itself. The object of the said clause
is to achieve an overall procurement of a minimum of 25 percent of
total annual purchases of products and services from MSEs within
a period of 3 years18. Sub-clause (3) clarifies that after a period
of 3 years, commencing from 2015, the overall procurement goal
“shall be made mandatory”. The consequence of non-compliance
with the mandate is contemplated under sub-clause (4), where the
ministries, departments and public sector undertakings that fail to
meet the annual goal are obligated to justify with reasons and are
made answerable to the Review Committee.
18. The Review Committee. We have already extracted hereinabove
clause 12(2) under which the Procurement Order 2012 establishing
a Review Committee to; i) review the list of 358 items reserved for

18 The 20 percent requirement as per 2012 policy was subsequently amended by notification dated
09.11.2018 increasing the minimum procurement to 25 percent.
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micro and small enterprises, ii) consider exemptions and iii) monitor
achievements. Clause 12(1) also recognises a committee constituted
vide Order No. 21(1)/2007-MA dated 21.06.2010 as the Review
Committee, and this notification is a part of the Procurement Order
2012; it is an Annexure to the Policy document. The relevant portion
of the notification indicating the composition and functions of the
Review Committee is as under:
“ORDER
Subject: Constitution of a Committee for monitoring and
review of the Public Procurement Policy for Micro and
Small Enterprises
Pending approval of the new Public Procurement Policy
for Micro and Small Enterprises (MSEs), a Committee
is hereby constituted for looking into the applicability of
some of the provisions of the proposed Policy in respect
of select Central Ministries/Departments. The Committee
will be chaired by the Secretary, Ministry of Micro, Small
and Medium Enterprises.
2. The composition of the Committee will be as follows:

(i) Secretary, Ministry of MSME : Chairman

(ii) Secretary, Planning Commission : Member

(iii) Secretary, Department of : Member
Public Enterprises

(iv) Director General (Supplies and Disposals), : Member
Department of Commerce,
Ministry of Commerce and Industry

(v) Additional Secretary and Development : Member
Commissioner (MSME) Secretary

The Committee will undertake the following functions:
(i) Consider the requests of the Central Ministries/
Departments/PSUs for exemption, on a case to case basis,
from the 20% target;
[2025] 2 S.C.R. 743

Lifecare Innovations Pvt. Ltd. & Anr. v. Union of India & Ors.

(ii) Review the list of 358 items (as per Appendix) reserved
for exclusive purchase from the MSEs based on the
feedback received from the Central Ministries/Departments/
PSUs;
(iii) Review the grievances received from MSEs regarding
Government procurement, including imposition of
unreasonable conditions in the tenders floated by the
Government Departments/PSUs: and
(iv) Suggest special measures to be taken by the Central
Ministries/Departments for enhancing their procurements
from MSEs.”
19. Following the enactment, the constitution of the National Board for
MSMEs (Section 3), the Advisory Committee (Section 7(2)) and
the Facilitation Council (Sections 20 & 21) on the one hand and
notification of the Procurement Preference Policy (under Section
11), followed by the constitutions of the Review Committee (Clause
12) and the Grievance Cell (Clause 13) are statutory and executive
bodies established to realise the purpose and object of the Act. The
planning, promotion and development (Section 9) of the MSEs and
the procurement preference policy (Section 11) are to be declared
and notified by the Central or State Governments. Procurement
Order 2012 also prescribes that Annual Plans (Clause 7) and Annual
Reports (Clause 4) are to be prepared and uploaded for transparency
and public information.
20. The existing legal regime of public procurement from micro and small
enterprises can now be identified as mandating;
(a) Initially setting annual goals of procurement for a period of 3
years (Clause 3) and thereafter mandating yearly procurement
of a minimum of 25 percent of procurement by the ministries,
departments, and public sector undertakings (Clause 3(3)).
(b) 358 items appended to the Procurement Preference Policy 2012
are reserved for exclusive procurement from MSEs.
(c) Requiring the ministries, departments and public sector
undertakings to prepare an Annual Procurement Plan (Clause
8) for purchase and to upload the same on their official website.
This is to subserve the purpose of the MSEs to get advanced
information about the requirements of procuring agencies.
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(d) The requirement of Annual Reporting (Clause 5) of government
procurement is necessary for the collection of data, necessary
for assessment and strengthening the policy. For this purpose,
ministries, departments and public sector undertakings are
mandated to report achievement of goals set with respect to
procurement prescribed in their respective annual plans.
(e) The policy recognises a pre-existing committee constituted by
Order No. 21(1)/2007-MA dated 21.06.2010 as the Review
Committee under Clause 12. This Review Committee is
mandated to consider the requests of the ministries, departments
or public sector undertakings for exemption from the 25 per
cent target on a case-to-case basis. The Review Committee
is also tasked with the duty of monitoring achievements under
the policy.
(f) Yet another important feature of the policy is the constitution of
the Grievance Cell under clause 13. The grievance cell, inter
alia, will take up the issues raised by the MSEs with respect
to government procurement. Clause 13 specifically provides
that the mandate of the grievance cell shall include redressal
of “imposition of unreasonable conditions in tenders floated by
the Government Departments or agencies that put Micro and
Small Enterprises at a disadvantage”.
21. Having considered the provisions of the Act and the MSE Procurement
Preference Policy, 2012, we are of the opinion that there is no
mandatory minimum procurement ‘right’ of an individual MSE.
However, there is certainly a statutory foundation for the Procurement
Preference Policy, 2012, having force of law as it ‘encapsulates a
mandate and discloses a specific purpose’.19 Clause 3 of the policy
mandating procurement of 25 per cent of supply from MSEs is
simply the statutory duty of the bodies constituted under the Act and
the Policy. The significance of creation and establishment of these

19 Gulf Goans Hotels Co. Ltd v. Union of India, (2014) 10 SCC 673 “…a government policy may acquire
the ‘force of ‘law’ if it conforms to a certain form possessed by other laws in force and encapsulates a
mandate and discloses a specific purpose”; Bennett Coleman & Co. v. Union of India (1972) 2 SCC 788
“What is termed ‘policy’ can become justiciable when it exhibits itself in the shape of even purported
‘law’. According to Article 13(3)(a) of the Constitution, ‘law’ includes ‘any Ordinance, order, bye-law, rule,
regulation, notification, custom or usage having in the territory of India the force of law’. So long as policy
remains in the realm of even rules framed for the guidance of executive and administrative authorities it
may bind those authorities as declarations of what they are expected to do under it.”
[2025] 2 S.C.R. 745

Lifecare Innovations Pvt. Ltd. & Anr. v. Union of India & Ors.

statutory and administrative bodies is not difficult to conceive. If
these institutions and bodies work effectively and efficiently, it is but
natural that the purpose and object of the legislation will be achieved
in a substantial measure. It is, therefore, necessary to ensure that in
the functioning of these bodies, there is efficiency in administration,
expertise through composition, integrity through human resources,
transparency and accountability, and response-ability through regular
review, audits and assessments.
22. While exercising judicial review of administrative action in the
context of Statutes, laws, rules or policies establishing statutory or
administrative bodies to implement the provisions of the Act or its
policy, the first duty of constitutional courts is to ensure that these
bodies are in a position to effectively and efficiently perform their
obligations. This approach towards judicial review has multiple
advantages. In the first place, while continually operating in the
field with domain experts, these bodies acquire domain expertise,
the consequence of which would also be informed decision-making
and consistency. Further, the critical mass of institutional memory
acquired by these bodies will have a direct bearing on the systematic
development of the sector and this will also help handling polycentric
issues. Thirdly, while continuously being on the field, and having
acquired the capability of making real-time assessments about the
working of the policies, these bodies will be in a position to visualize
course correction for future policymaking.
23. Shifting the focus of judicial review to functional capability of these
bodies is not to be understood as an argument for alternative remedy,
much less as a suggestion for judicial restraint. In fact, this shift
is in recognition of an important feature of judicial review, which
performs the vital role of institutionalizing authorities and bodies
impressed with statutory duties, ensuring they function effectively
and efficiently. The power of judicial review in matters concerning
implementation of policy objectives should transcend the standard
power of judicial review to issue writs to perform statutory duty and
proceed to examine whether the duty bearers, the authorities and
bodies constituted properly and also whether they are functioning
effectively and efficiently. By ensuring institutional integrity we achieve
our institutional objectives. Further, effective and efficient performance
of the institutes can reduce unnecessary litigation.
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24. Having had the experience of having micro-managed issues
concerning our forest wealth, this court in In Re: T.N. Godavarman
Thirumulpad v. Union of India 20 recognised the importance of
environmental rule of law and the need to strengthen the statutory
and administrative bodies concerning forest. The relevant portion of
the order is extracted below:
“27. The above referred bodies, authorities, regulators,
and officers are constituted with persons having expertise
in the field. They have the requisite knowledge to take
appropriate decisions about contentious issues of the
environment, forests, and wildlife, and also to ensure
effective implementation of environmental laws. These
bodies constitute the backbone of environmental
governance in our country. They need to function with
efficiency, integrity, and independence. As dutybearers,
they are also subject to accountability.
28. We may ask a simple question – how effectively
are these environmental bodies functioning today? This
question has a direct bearing on the protection and
restoration of ecological balance.
29. As environmental governance through these bodies
emerges, the obligation of the constitutional courts is
even greater. Hitherto, the constitutional courts focused
on decisions and actions taken by the executive or private
persons impacting the environment and ecology because
the scrutiny by regulators was felt to be insufficient.
Their judgment, review, and consideration did not inspire
confidence and therefore, the Court took up the issue
and would decide the case. In this process, a large
number of decisions rendered by this Court on sensitive
environmental, forest, and ecological matters constitute
the critical mass of our environmental jurisprudence. This
Court would continue to exercise judicial review, particularly
in environmental matters, whenever necessary.
30. We, however, seek to emphasise and reiterate
the importance of ensuring the effective functioning of
these environmental bodies, as this is imperative for the

20 2024 INSC 78.
[2025] 2 S.C.R. 747

Lifecare Innovations Pvt. Ltd. & Anr. v. Union of India & Ors.

protection, restitution, and development of the ecology.
The role of the constitutional courts is therefore to monitor
the proper institutionalisation of environmental regulatory
bodies and authorities.”
25. Returning to the MSMED Act and the Procurement Order 2012, we
must focus on the functioning of the bodies created and established
thereunder. We hold that these bodies are accountable, and their
function is subject to judicial review. For disposal of this case, we
are equally considered with the effective functioning of these bodies.
26. Ms. Vanshaja Shukla, representing the Union of India, has brought
to our notice the statistics indicating the percentage of public
procurement from micro and small enterprises to demonstrate that
the mandate clause 3 of the 2012 policy is fully complied with. The
extract of the relevant data is as follows21:
Financial Total Procurement from MSEs
Years Procurement (Rs. in crores)
(Rs. in crores)
2019-20 1,31,460.68 29.69% Rs. 39,037.13
(152 CPSEs) (No. of MSEs Benefitted-
1,57,770)
2020-2021 139,419.81 29.21% Rs. 40,717.67
(161 CPSEs) (No. of MSEs
Benefited-1,77,594)
2021-2022 165,383.04 32.52% Rs. 53,778.58
(162 CPSEs) (No. of MSEs
Benefited-2,27,049)
2022-2023 174,316.30 37.13% Rs. 64,721.65
(166 CPSEs and (No. of MSEs
2 Departments) Benefited-2,36,433)

2023-2024 1,70,930.01 43.71% Rs. 74,717.24
(151 CPSEs and (No. of MSEs Benefitted-
1 Department) 2,58,413)

21 Response to Starred Question No. 44, Rajya Sabha (06 Feb, 2023); Counter Affidavit filed by Union of
India (latest figures as of 04.02.2025).
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27. While the above data makes it clear that the Central Government and
its instrumentalities seem to have complied with the policy requirement
of procuring 29.69% from MSEs in the year 2019-2020, 29.21% for
the year 2020-2021, 32.52% for the year 2021-2022, 37.13% for
the year 2022-2023, and 43.71% for the year 2023-2024, it is not
clear as to whether the said procurement includes procurement of
some of the 358 items that have been reserved exclusively for MSEs
under clause 11 of the Procurement Policy. A holistic reading of the
procurement policy, incorporating clauses 3, mandating 25 percent
from MSEs and clause 11 reserving 358 items for procurement from
MSEs, gives us an impression that these mandates are independent
of one another. The specific grievance of the petitioner is that the
data supplied by the Union includes even the items contemplated
under clause 11. We have before us the performance and audit report
conducted on the working of the Review Committee.22 In the report of
the Comptroller and Auditor General of India,23 it was thus observed:
“d) Clause 3(4) of the Policy envisaged that the CPSEs
which fail to meet the annual procurement target from MSEs
shall substantiate with reasons to the Review Committee
headed by Secretary, Ministry of MSME. A scrutiny of
the minutes of the Review Committee meetings revealed
that none of the CPSEs which had failed to achieve the
procurement targets had furnished reasons to the Review
Committee”.
28. We are of the opinion that the Review Committee, specifically
entrusted with this duty, should resolve this issue. Under sub-clause
(2) of clause 12, the Review Committee is specifically entrusted with
the twin duties of (i) reviewing the 358 items exclusively reserved for
MSEs and (ii) considering the request of the ministries, departments
and public sector undertakings for exemption from 25% on a case-
to-case basis. The Review Committee also has the obligation to
‘‘monitor the achievements of the policy’’. As the Review Committee
is entrusted with reviewing and monitoring the performance of the

22 Report No. 18 of 2018, ‘Compliance with Provisions of Public Procurement Policy, 2012 For Micro and
Small Enterprises’, (CAG, 2018) <https://cag.gov.in/uploads/download_audit_report/2018/Chapter_7_
Impact_of_IND-AS_of_Report_No_18_of_2018_-_Compliance_Audit_on_General_Purpose_
Financial_Reports_of_Central_Public_Sector_Enterprises_of_Union_Government__.pdf>, hereinafter
referred to as the ‘CAG’.
23 Ibid.
[2025] 2 S.C.R. 749

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sector, we are of the opinion that this body, comprising domain
experts, must examine this issue, take an appropriate decision and
ensure its implementation.
29. In view of the above, we direct the respondents, in particular the
Review Committee constituted under clause 12 of the Procurement
Preference Policy 2012, to examine this issue of mandatory
procurement of 25 per cent of goods and services by the Government,
its departments and instrumentalities from the MSEs under clause
3 of the Policy and notify whether the said procurement would be
independent of the 358 items reserved for procuring from MSEs and
take such action as is necessary for compliance of the Procurement
Order 2012 and upload its decisions for the purpose of clause 5 of
the Policy. The necessary action shall be taken within 60 days from
our order.
RE: 2. Is the prescription of mandatory minimum turnover clause in
NITs violative of articles 14 and 19 of the Constitution, provisions
of the MSMED Act and the Procurement Preference Policy, 2012?
30. The second issue concerns the grievance of the petitioner that the
decisions of the ministries, departments or their instrumentalities in
prescribing “minimum turnover clauses” undermine implementation
of the Procurement Order 2012, thereby defeating the very purpose
and object of the Act.
31. On the broader issue as to whether ‘minimum turnover clauses’ could
be violative of Articles 14 and 19 of the Constitution, it is to be seen
that the two most relevant criteria for framing suitable conditions in
NIT relate to the ‘capacity’ and ‘capability’ of the bidder. In Association
of Registration Plates v. Union of India,24 this Court had an occasion
to examine a tender clause which read, “The tenderers/bidders of
the joint-venture partners together must have had a minimum annual
turnover equivalent to INR 30 crores in the immediately preceding
last year. At least 25% of this turnover must be from the licence
plate business. Certificate confirming and the certification of this
minimum 25% turnover being from licence plate business will have
to be provided duly attested by a chartered accountant/any bank to
be attached in support of fulfilment of this condition”. Rejecting the

24 (2005) 1 SCC 679; Krishnan Kakkanth v. Govt. of Kerala, (1997) 9 SCC 495, Ugar Sugar Works Ltd. v.
Delhi Administration (2001) 3 SCC 635; M.R.F. Ltd. v. Inspector Kerala Govt., (1998) 8 SCC 227
750 [2025] 2 S.C.R.

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submission that the said clause violated articles 14 and 19 of the
Constitution, the Court thus observed:
“35…The insistence of the State to search for an
experienced manufacturer with sound financial and
technical capacity cannot be misunderstood. The relevant
terms and conditions quoted above are so formulated to
enable the State to adjudge the capability of a particular
tenderer who can provide a fail-safe and sustainable
delivery capacity.
38…Unless the action of tendering authority is found to
be malicious and a misuse of its statutory powers, tender
conditions are unassailable. On intensive examination
of tender conditions, we do not find that they violate the
equality clause under Article 14 or encroach on fundamental
rights of the class of intending tenderers under Article 19
of the Constitution.
43. …Article 14 of the Constitution prohibits the Government
from arbitrarily choosing a contractor at its will and pleasure.
It has to act reasonably, fairly and in public interest in
awarding contract. At the same time, no person can
claim a fundamental right to carry on business with the
Government. All that he can claim is that in competing
for the contract, he should not be unfairly treated and
discriminated, to the detriment of public interest.”
(emphasis supplied)

32. Courts approach is also based on the idea that the executive should
have greater latitude in selecting contractors and prescribing eligibility
requirements.25
33. However, the law as applicable for procurement through MSEs stands
on a different footing. This is for the reason that there is a statutory
prescription for notifying a procurement preference policy (Section 11),
and in furtherance of such a statutory prescription, the Preference
Policy 2012 has been notified mandating procurement of a minimum

25 See, generally, Tata Cellular v. Union of India, (1994) 6 SCC 651; Monarch Infrastructure (P) Ltd. v.
Commissioner, Ulhasnagar Municipal Corporation, (2000) 5 SCC 287.
[2025] 2 S.C.R. 751

Lifecare Innovations Pvt. Ltd. & Anr. v. Union of India & Ors.

of 25 per cent from the Micro and Small enterprises. Although it is
generally permissible for the government, and its instrumentalities
to provide minimum turnover criteria wherever “public safety, health,
critical security equipment, etc.”,26 are involved, it must be ensured
that such prescriptions do not defeat the Procurement Order 2012. It is
necessary to lay down clear guidelines for ministries, departments, and
instrumentalities. In fact, it has not been the stand of the Government
that the commercial freedom to prescribe minimum turnover clauses
on the one hand and the policy to promote MSEs on the other are
competing interests or that they have to balance these values. The
Procurement Order 2012 declares the procurement preference
obligations of the State and therefore statutory and executive authorities
are bound to implement the same. Minimum turnover clauses cannot
undermine or override the Procurement Preference Policy 2012.
34. While referring to the Procurement Order 2012, we have already
indicated that under Clause 13, the Ministry is to set upon the
‘Grievance Cell’. By order dated 18.11.2013, the central government
constituted the Grievance Cell, the composition as well as the function
of the Grievance Cell are evident from the office order extracted
herein below;
“OFFICE ORDER
18.11.2013
Subject: Constitution of Grievance Cell for redressing
difficulties of MSEs under Public Procurement Policy for
Micro and Small Enterprises.
Under the provision of Section-13 of new Public Procurement
Policy for Micro and Small Enterprises (MSEs), a Grievance
Cell is hereby constituted for redressing difficulties of
MSEs under Public Procurement Policy for Micro and ‘
Small enterprises.
2. A Grievance Cell will be functional under the supervision
of Director (MA), O/o DC(MSME), looking after (MA) with
following contact details:

26 ‘Relaxation of Norms for Start-ups in Public Procurement regarding Prior Experience - Prior Turnover
criteria’, <relaxsation_of_nhttps://dpe.gov.in/sites/default/files/relaxsation_of_norms.pdf> (Sept 20,
2016).
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i) Name of Grievance Shri U.C. Shukla
Cell In-charge
ii) Telephone No. +91-11-23063363
iii) Fax No. +91-11-23060536
iv) E-mail umeshshukla.msme@gmail.com

3. The Grievance Cell will be for redressing grievances
of MSEs in Government procurement. This cell shall take
up issues related to Government procurement raised by
Micro and Small Enterprises with Department or Agencies
concerned, including imposition of unreasonable conditions
in tenders floated by Government Departments or Agencies
that put Micro and Small Enterprises at a disadvantage.”
35. The Grievance Cell is specifically mandated to take up issues
relating to the imposition of unreasonable conditions in tenders
floated by Government departments or agencies that put MSEs at a
disadvantage. This will certainly include the prescription of minimum
turnover clauses. The functioning of the Grievance Cell has come
under the scrutiny of the Comptroller and Auditor General of India27,
which has suggested improvement in the functioning of this body in
the following terms:
“Clause 13 of the Public Procurement Policy Order, 2012
envisages setting up of a Grievance Cell in Ministry of
MSME for redressing grievances of MSE in Government
Procurement. The function of the Cell was to take up issues
related to Government Procurement raised by MSE with
Departments or agencies concerned.
Scrutiny of records revealed that the total of 2253
grievances had been received in DC (MSME) during the
last five years (250: Internet Grievance Monitoring System
(IGMS), 193: Centralised Public Grievance Redress
and Monitoring System (CPGRAM) and 1810: letters).

27 Report No. 18 of 2018, ‘Compliance with Provisions of Public Procurement Policy, 2012 For Micro and
Small Enterprises’, (CAG, 2018) <https://cag.gov.in/uploads/download_audit_report/2018/Chapter_7_
Impact_of_IND-AS_of_Report_No_18_of_2018_-_Compliance_Audit_on_General_Purpose_
Financial_Reports_of_Central_Public_Sector_Enterprises_of_Union_Government__.pdf>, hereinafter
referred to as the ‘CAG’.
[2025] 2 S.C.R. 753

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However, only three of these grievances were routed
through Grievance Cell.
Moreover, the DC (MSME) had not maintained the details
of grievances received from Office of Prime Minister of
India and by e-mail. In respect of redressal of grievances
received through IGMS portal, it was noticed that in cases
of complaints which were forwarded to the concerned
CPSEs, the action taken by concerned CPSEs on the said
complaints could not be ascertained as the same were
not uploaded on the portal.
DC (MSME) stated (October 2017) in reply that the
complaints which were required to be dealt by the
Grievance Cell were placed before it for taking a decision.
All the complaints could not be dealt by Grievance Cell
since some of the complaints were routine in nature. The
reply is not acceptable as audit observed that some of the
grievances that were not routed through the Grievance
Cell though serious in nature.
Recommendation: DC (MSME) should maintain
information on final outcome of complaints/grievances”.
(emphasis supplied)

36. Mr. Giri also brought to our notice circular No. 14/4/07 dated
26.04.2007 issued by the CVC referring to certain irregularities or
lapses. This circular may not be in the context of the difficulties faced
by MSEs but is indicative of the general practices adopted by procuring
agencies, which militate against a healthy procurement policy. The
relevant portion of the circular issued by CVC is as follows: -
“3. i) For a work with an estimated cost of Rs.15 crores to
be completed in two years, the criteria for average turnover
in the last 5 years was kept as Rs. 15 crores although
the amount of work to be executed in one year was only
Rs.7.5 crores. The above resulted in prequalification of
a single firm.
ii) One organization for purchase of Computer hardware
kept the criteria for financial annual turnover of Rs. 100
crores although the value of purchase was less than Rs.
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10 crores, resulting in disqualification of reputed computer
firms.
iii) In one case of purchase of Computer hardware, the
prequalification criteria stipulated was that the firms should
have made profit in the last two years and should possess
ISO Certification. It resulted in disqualification of reputed
vendors including a PSU.
iv) In a work for supply and installation of A.C. Plant,
retendering was resorted to with diluted prequalification
criteria without adequate justification, to favour selection
of a particular firm.”
37. We had indicated to Mr. Giri, that the purpose and object of
entertaining this Writ Petition under Article 32 of the Constitution is
not so much to enquire into the individual grievance of the petitioner
than to examine the nature of the rights created by the Procurement
Order 2012 and the remedies available to the stakeholders, and to
declare with clarity, certainty the scope of judicial review for effective
implementation of the Policy.
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;
[2025] 2 S.C.R. 755

Lifecare Innovations Pvt. Ltd. & Anr. v. Union of India & Ors.

(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.

Result of the case: Writ petition disposed of.

†
Headnotes prepared by: Nidhi Jain