EOU Licence from DoC Not Equivalent to DPIIT Licence for Defence Tenders: Delhi HC dismisses Bidder’s Challenge [Read Order]
Although both licenses may be linked back to the same parent statute, the court stated that they are not equivalent and are subject to different requirements and policy considerations.
The Delhi High Court, recently has dismissed a batch of writ petitions filed by bidders confirming that EOU ( Export oriented Unit) Licence from DoC ( Department of Commerce ) not equivalent to DPIIT licence for Defence Tenders.
In the petitions filed by MKU Limited, which had participated in multiple Army tenders for ballistic helmets, bullet-proof jackets and night-vision equipment. But the company was declared technically non-compliant as it held an industrial licence issued by the DoC for EOUs, and not a licence issued by the Department for Promotion of Industry and Internal Trade (DPIIT), as required under the tender conditions.
The petitioner, holding an industrial licence granted by the DoC submitted that since both DoC and DPIIT function under the Ministry of Commerceand Industry, the licences were legally the same. Therefore they’ve satisfied the tender requirements.
The counsel of the petitioner, Adv. Madhavi Divan, Senior Advocate said that neither the Industries (Development and Regulation) Act, 1951 nor the Defence Acquisition Procedure (DAP) 2020 contemplated two different classes of industrial licences. The tendering authority had arbitrarily introduced a distinction not found in the RFP.
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According to the petitioner, DoC acts as a delegate of DPIIT for EOUs. Therefore the licence issued by DoC must be deemed to be one issued by DPIIT.
However, the Union of India refuted the petitioner's claims, claiming that licenses granted to EOUs and those granted by DPIIT to non-EOU businesses function in different regulatory jurisdictions.
The respondents stated the differences in the licensing process, committee composition and security vetting, particularly the involvement of senior Ministry of Home Affairs officials in DPIIT-issued defence licences, which was absent in the EOU licensing route.
Although both licenses may be linked back to the same parent statute, Chief Justice Devendar Kumar and Justice Tushar Rao Gedela Upadhyaya stated that they are not equivalent and are subject to different requirements and policy considerations.
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The rejection of MKU's bids was determined to be neither arbitrary nor unlawful because the tenders specifically called for a defense industrial licence issued by DPIIT, which MKU acknowledged not having.
Thus, the Delhi High Court dismissed the petitions, confirming that in defense bids, an EOU license from the DoC cannot be used in place of a DPIIT defense license when the conditions itself required the same.
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