Getting ERROR: Directory '.' is not installable. Neither 'setup.py' nor 'pyproject.toml' found even if setup.py file available

I tried to run my unit testcases through pre-commit (pre-push stage). But I’m not able to install local directory in virtualenv. Getting an error like “Directory ‘.’ is not installable. Neither ‘setup.py’ nor ‘pyproject.toml’ found” even if setup.py file available.

Here is my .pre-commit-config.yaml

repos:
  - repo: https://github.com/psf/black
    rev: stable
    hooks:
      - id: black
        language_version: python3.6
        stages: [commit]
  - repo: https://github.com/pre-commit/pre-commit-hooks
    rev: v2.3.0
    hooks:
      - id: flake8
        stages: [commit]
  - repo: local
    hooks:
      - id: unittests
        name: unittests
        entry: python -m tests.initiate
        language: python
        language_version: python3.6
        additional_dependencies: ['--trusted-host' ,'pypi.org' ,'--trusted-host' ,'files.pythonhosted.org']
        stages: [commit]

And finally, here’s the error I’m getting from pre-commit:

git -c diff.mnemonicprefix=false -c core.quotepath=false --no-optional-locks commit -q -F C:\Users\xxxxx\AppData\Local\Temp\1t5bmasv.vpz
[INFO] Installing environment for local.
[INFO] Once installed this environment will be reused.
[INFO] This may take a few minutes...

An unexpected error has occurred: CalledProcessError: Command: ('C:\\Users\\xxxxx\\.cache\\pre-commit\\reposrc_pe7u\\py_env-python3.6\\Scripts\\pip.exe', 'install', '.', '--trusted-host', 'pypi.org', '--trusted-host', 'files.pythonhosted.org')
Return code: 1
Expected return code: 0
Output: (none)
Errors: 
    ERROR: Directory '.' is not installable. Neither 'setup.py' nor 'pyproject.toml' found.

Check the log at C:\Users\xxxxx/.cache\pre-commit\pre-commit.log

I have debugged the pre-commit code and changed pre_commit/languages/python.py#L171 for verification.

prefix, ('pip', 'install', Path.cwd())+ additional_dependencies

After this change, again I ran pre-push then the code in local directory installed in C:\Users\xxxxx\.cache\pre-commit\reposrc_pe7u\py_env-python3.6\lib\python3.6\site-packages

Can anyone please guide me on this. Please provide a solution