SC Reaffirms MSME Status Cannot Be Claimed By A Mere Intermediary: Cloudthat Technologies Private Limited V. Thoughtsol Infotech Private Limited & Ors.

BRIEF FACTS

The judgment, Cloudthat Technologies Pvt. Ltd. v. Thoughtsol Infotech Pvt. Ltd.¹ affirmed the ruling pronounced by the Allahabad High Court in Thoughtsol Infotech Pvt. Ltd. v. Union of India.² The ruling constitutes an important exposition of the law governing procurement preference given to Micro, Small and Medium Enterprises (“MSMEs”) in public tenders. In this matter, the Directorate General of Hydrocarbons issued a tender on 22 March 2024 for the hiring of cloud services for the upgradation of the National Data Repository onto a cloud platform. Thoughtsol Infotech Pvt. Ltd. (“Thoughtsol”) emerged as the lowest bidder in the financial evaluation. However, the contract was awarded to Cloudthat Technologies Pvt. Ltd. (“Cloudthat”) on the basis that it was a registered Micro and Small Enterprise eligible for procurement preference under the Public Procurement Policy for Micro and Small Enterprises (2012), which permits such enterprises to be awarded the