HC upholds reservations in PSU contracts, says necessary for economic upliftment

The petitioner was challenging the validity of eligibility criteria in the 2018 tender allotment for fuel transport across the state from BP’s plant in Manmad

The Bombay High Court on Tuesday upheld the 1994 guidelines that provide reservation to Scheduled Caste (SC), Scheduled Tribe (ST), and Micro and Small Enterprises (MSE) applicants in road transport contracts offered by public sector oil marketing companies such as Bharat Petroleum (BP).

Mumbai, India - September 03, 2021: Bombay High Court at Fort, in Mumbai, India, on Friday, September 03, 2021. (Photo by Anshuman Poyrekar/Hindustan Times) (Anshuman Poyrekar/HT PHOTO)

A division bench of Chief Justice Alok Aradhe and Justice Sandeep Marne was hearing a petition filed by Nashik-based Patil Roadlines, which was awarded a contract in 2018, challenging the validity of eligibility criteria in the 2018 tender allotment for fuel transport across the state from BP’s plant in Manmad.

The tender conditions required eligible bidders from the general category to possess a minimum of five lorries, out of which they must own three. MSE vendors got a relaxation to own two of the three lorries. The tender also granted relaxation to applicants from the SC and ST category, who were required to possess two lorries and own one. Patil Roadlines challenged the reservation policy of relaxing lorry ownership rules for MSE, SC and ST applications because it put unreserved bidders at a disadvantage. He also challenged the conditions that provided a 15% reservation for the SC category and 7.5% for the ST category.

The court observed that, under Article 46 of the Constitution of India, the state is empowered to promote the educational and economic interests of the weaker sections of the society with special care, and, in particular, of the communities that come under SC and ST. The court further observed that BP, as a public sector undertaking, had formulated the guidelines in line with Article 46

“The provision for reservation for a select class of entrepreneurs for their social and economic upliftment towards the fulfilment of constitutional objectives is an affirmative action taken by the state. Apart from social reservations, provisions are made for giving economic impetus to various classes of entrepreneurs like micro, medium and small enterprises, women entrepreneurs, etc.,” the court observed while dismissing the plea.