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Union of India & Anr. v. HBL Nife Power Systems Ltd.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 3193 of 2006)Decided 20 Jan 2016
Civil Appeal No. 3193 of 2006
Chief Justice T.S. Thakur · Justice R. Banumathi

Background

The case concerned procurement of submarine batteries for the Indian Navy, a "mission critical" defence item that under government policy could only be sourced from vendors registered after a multi-year development and testing process supervised by the Defence Ministry's quality-assurance wing (DGQA). The respondent company wanted to be treated as an alternative supplier and sought a direction for open tenders, and the Delhi High Court had ruled in its favour, directing the Union of India to advertise and invite open tenders for the batteries. The Union of India appealed, arguing that critical defence spares cannot be procured through open tender like ordinary commercial items.

Decision Breakdown

The Supreme Court held that the High Court had failed to appreciate the government's settled two-track procurement policy: common-use items go through open tender, while mission-critical strategic items like submarine batteries can only be sourced from vendors developed and registered through the DGQA's rigorous, multi-year supervised process. Since the respondent had not been registered through that process and the policy itself had never been challenged in the writ petition, the High Court had no basis to direct an open advertisement/tender for submarine batteries. The Court noted that lives of defence personnel and the safety of submarines could not be risked merely because a private firm claimed capability without completing the mandated development and testing process. The impugned High Court order was set aside and the appeal was allowed, with no order as to costs.

Lesson Learnt

Courts will generally defer to government policy choices on how to procure specialised, safety-critical defence equipment, and will not force open tendering where the government has a reasoned, unchallenged policy requiring supervised development and certification of suppliers first.

Official source (sci.gov.in)View Judgment (PDF)

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