UNION OF !NOIA & ANR. versus HBL NIFE POWER SYSTEMS LTD.

Citation: [2016] 1 S.C.R. 576 · Decided: 20-01-2016 · Supreme Court of India · Bench: T.S. THAKUR · Disposal: Appeal(s) allowed

Judgment (excerpt)

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[2016] l S.C.R. 576 
UNION OF !NOIA & ANR. 
v. 
HBL NIFE POWER SYSTEMS LTD. 
(Civil Appeal No. 3193 OF 2006) 
JANUARY 20, 2016 
[T. S. THAKUR, CJI. AND R. BANUMATHI, J.] 
lender - In respect of purchase of essential defence supplies/ 
critical spare parts - Permissibility - Held: In respect of highly 
critical spare parts, the Government has a policy for issuance of 
the development indent, developing the source and registration with 
DGQA (Director General of Quality Assessment) - DGQA has a 
very stringent procedure before any vendor is registered with DGQA 
for supplying the product - An open advertisement inviting tenders 
can be issued only for purchase of common use items and not for 
purchase of defence critical spare parts like submarine batteries -
The High Court erred in directing issuing advertisement inviting 
tender without keeping in view the policy of the Government. 
Allowing the appeal, the Court 
HELD: 1. Defence Ministry/ DGQA (Director General 
Quality Assurance) has a very stringent procedure before any 
vendor is registered with DGQA for supplying the 'mission 
critical' strategic defence product. The product, though is 
manufac:tured by a private supplier, it is not as if the Government 
is totally associated with the production process of the product. 
Prior to grant of registration, the Government pays the vendor 
to 'develop' the product under its supervision for over a period 
of time. Officials of the DGQA are posted at the factory of the 
supplier to ensure that the goods so produced are absolutely in 
order. The inspectors of DGQA inspect every stage of production. 
Development of such products would require upto a maximum of 
three years, as the development process involves drawing up of 
detailed technical specifications and performance criteria based 
on which the firm has to prepare a detailed design for each and 
every component to meet the stringent military standards. [Para 
9] [581-H; 582-A-C] 
576 
UNION OF INDIA v. HBL NIFE POWER SYSTEMS LTD. 
2. The subject-matter of the present case is submarine 
batteries. The importance of submarine batteries to a submarine 
cannot be underestimated as it is strategically a vital equipment 
for submarines. DGQA therefore ensures that it is associated 
during the production of the batteries by the approved vendor 
and only those batteries which pass the thirteen tests are 
purchased by the Navy. Ministry of Defence/Navy authorities 
cannot accept the final product without being fully associated with 
the development of the product right from the stage of 
procurement of raw material to the stage of final product. As per 
the policy, RFP (Request for Proposal) could be issued only to a 
firm which is duly registered with DGQA for supply of the product 
after development of the product under the aegis of DGQA. 
Having regard to the requirements of a highly critical spare part 
like submarine batteries, the Government has framed the policy 
for issuance of the development indent, developing the source 
· and registration with DGQA. In the present writ petition, policy 
itself was not under challenge. (Para 10] (582-D, G-H; 583-B-C] 
3. The Government cannot put the life of, its defence 
personnel and submarine worth crores of rupees to risk simply 
because the respondent claims to have the capability and can 
supply submarine batteries. For such defence critical spare parts 
like submarine batteries, there cannot be any open advertisement 
inviting tenders. Advertisements are issued calling for tenders 
only for common use items which are normally available in the 
open market with a wide range of sources. Submarine batteries 
do not fall under this category of common use items. The 
respondent cannot claim any vested right to be issued a 
development indent or RFP or a supply order simply because it 
has made investments to manufacture submarine batteries. 
Straightway RFP caunot be issued to the respondent by ignoring 
the procedure for issuing a development indent and testing the 
batteries. [Para 11] [583-F-G] 
4. The High Court did not keep in view the policy of the 
Government in purchasing the critical spare parts for the defence 
and in particular, in developing submarine batteries under the 
aegis of the Defence Ministry and the High Court erred in 
directing the appellants to issue an advertisement giving details 
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SUPREME COURT REPORTS 
[2016] 1 S.C.R. 
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