# Lifecare Innovations Pvt. Ltd. & Anr v. Union of India & Ors - **Citation:** 2025 INSC 269 - **Court:** Supreme Court of India - **Decided:** 2025-02-25 - **Bench:** Pamidighantam Sri Narasimha, Sandeep Mehta - **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/lifecare-innovations-pvt-ltd-anr-v-union-of-india-ors-38778 - **Pages:** 29 ## Headnote 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. Supreme Court Reports 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 authoritiesNational 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. ## Text _Characters 0–39,436 of 62,266. This is a partial read: ask again with offset=39436 for what follows._ [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. Supreme Court Reports 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 authoritiesNational 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-indiablogs/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. Supreme Court Reports 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. Supreme Court Reports 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) (2024) 736 [2025] 2 S.C.R. Supreme Court Reports 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) (July 22, 2024). 13 'The MSME Revolution: Transforming India's Economic Landscape' (Press Information Bureau) (Dec 23, 2024). 14 'MSMEs: The Backbone of India's Economic Future' (Invest India) (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) (Aug 10, 2023). 16 ''Participation of Females in MSMEs' (Lok Sabha Digital Library) (Feb 8, 2024). 17 Repealed by MSMED Act, 2006 Act. 738 [2025] 2 S.C.R. Supreme Court Reports 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 subcontracts 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. 740 [2025] 2 S.C.R. Supreme Court Reports 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 Lifecare Innovations Pvt. Ltd. & Anr. v. Union of India & Ors. 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. 742 [2025] 2 S.C.R. Supreme Court Reports 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 Public Enterprises : Member (iv) Director General (Supplies and Disposals), Department of Commerce, Ministry of Commerce and Industry : Member (v) Additional Secretary and Development Commissioner (MSME) : Member 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. 744 [2025] 2 S.C.R. Supreme Court Reports (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.