No tenders needed for strategic defence equipment: Supreme Court upholds govt policy

By Rakesh Bhatnagar

Approving the decade-old policy of the union government that public tenders are not required for the purchase of strategically and critically important equipment used in defence equipment, the Supreme Court has ruled that “for such defense 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," a bench of Chief Justice T S Thakur and Justice R. Banumathi observed while allowing an appeal filed by the union government nine years ago challenging a Delhi High Court judgment that directed it to invite public tenders for submarine batteries, which are a lifeline for the high-cost submersible equipment.

The judgment delivered on Wednesday is a fallout of a dispute raised by one HBL Nife Power System Limited that claimed it had developed heavy duty battery for submarines without the supervision of defense authorities, thus its product ought to have been tested by government.

No tenders needed for strategic defence equipment: Supreme Court upholds govt policy

Supreme Court. File photo. AFP

The government had continued the supply of batteries by M/S Exide Batteries and HBL contested its decision saying the decision was discriminatory.

On its part the High Court in 2005 asked the Union of India to issue an advertisement in leading newspapers having wide circulation inviting tenders for the submarine batteries mentioning “the detailed technical specifications” and the appellants to consider all the products which meet the technical specifications and then select the best product “in accordance with law”.

There’s no gainsaying that this judgment by the High Court had hampered the process for refurbishing crucial tool like batteries for submarines.

But the apex court’s intervention may speed up purchase of critical equipments.

Seeking the scrapping of the judgment passed by High Court, the union government’s lawyer, additional solicitor general, Pinky Anand had argued that the government must ensure that the supplier has the necessary technical qualifications, infrastructure and capacity to develop the product. Pinky Anand also argued that in critical spare parts like submarine batteries, the government cannot put the life of its defence personnel and submarines worth several crores of rupees at risk simply because the respondent (NIFE POWER SYSTEMS LTD) claims to have the capability.

The High Court was not right in directing the government for issuing tenders for critical spare parts like submarine batteries without knowing whether the said product can withstand all the 13 quality tests and render reliable performance on board.

The defense procurement can be classified into two broad heads. First, common use items of generic or commercial specifications and these are available in open market. For example car batteries, spare parts of various vehicles etc. These items are procured by the Ministry of Defense by Open Tender Enquiry (OTE) i.e. by advertisements in the press and website. The second category is those materials which do not fall within the ‘common use’ category. These spares are ‘mission critical’ strategic defense products, which are procured only from those firms which are registered with Director General of Quality Assurance (DGQA) which functions under the Ministry of Defense.

Their suppliers must be registered with DGQA for the supply of that specific product. The defense ministry and DGQA have a very stringent procedure before registering any vendor for supplying the product.

Officials of the DGQA are posted at the factory of the supplier to ensure that the goods produced are absolutely in order. The DGQA inspectors examine every stage of production right from the sourcing of the raw materials by the vendor, as it is quite possible that the “vendor may purchase inferior quality material which may be difficult to detect in the final product”.

The importance of submarine batteries to a submarine cannot be underestimated as it is strategically vital equipment for submarines, the top court asserted.

Power to the submarine is provided by about 240 to 528 batteries, weighing about 800 kgs each, depending on the nature of submarine. The only source of power to a submarine when it dives beyond nine meters into sea is submarine batteries.

“If the batteries fail, submarine will be without power and it can have catastrophic consequences on men as also submarine would be lost”, judges stressed.

“If the country wishes to play a substantial role in the Indian Ocean and Arabian Sea, it must ensure high standards of defense power comparing with the neighboring countries and it should have modernized submarines”, the apex court underlined the importance of policy decision by the successive governments that there wouldn’t be public tenders for purchase of crucial defense equipment.

“The government cannot put the life of its defence personnel and submarine worth crores of rupees to risk simply because the respondent (HBL Nife) claims to have the capability and can supply submarine batteries”,  the judges said, allowing the government’s contention.

The court further said that for such defense critical spare parts like submarine batteries, there cannot be any open advertisement inviting tenders.

It also rejected HBL Nife’s claim that it had vested right simply because it has made huge investments to manufacture submarine batteries. Straightway, an RFP (request for proposal) cannot be issued to the respondent by ignoring the procedure for issuing a development indent and testing the batteries.

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Updated Date: Jan 22, 2016 21:16:52 IST