J&K High Court Upholds Validity of Composite SIT Tenders; MSMED Act Not Applicable to RDSS Contracts

The appellants, all registered Micro and Small Enterprises under the MSMED Act, challenged three e-NITs issued by the Power Development Department for electrification projects under the Revamped Distribution Sector Scheme (RDSS). They claimed that several items included in these composite contracts were part of the 358 items reserved exclusively for Micro and Small Enterprises under the Public Procurement Policy of 2012.

They contended that the respondents were mandatorily required to procure these reserved goods from MSMEs and to ensure that at least 25% of annual purchases were sourced from MSEs.  The writ court dismissed the petition, prompting the present appeal.

Issue Before Court: Whether composite Supply Installation Testing (SIT) contracts issued under the RDSS could be subjected to the MSMED Act and the Public Procurement Policy of 2012, and whether the reserved items could be carved out from the composite tender for exclusive MSME procurement.

HC Ruled: The High Court upheld the dismissal of the writ petition. It held that the RDSS contracts were fundamentally turnkey projects, requiring a single contractor to undertake supply, installation, testing, commissioning, and quality assurance as a single integrated package. As composite contracts combine procurement with on-site execution, they do not fall within the scope of MSME-exclusive procurement obligations under Section 11 of the MSMED Act or the 2012 Policy.

The Court further held that neither the judiciary nor the tendering authority can artificially split turnkey contracts to accommodate MSME reservations, especially when the tender terms strictly follow RDSS guidelines and standard bid documents. The Court found no arbitrariness or mala fides in issuing composite e-NITs. Although it disagreed with the writ court‘s view on locus, it ultimately dismissed the appeal on the merits.

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