M/s. Jaykay Enterprises Limited vs The Union Of India & Ors.

This Writ Petition is filed by M/s. Jaykay Enterprises Limited, for declaring issuance of Tender ID-2025_DRDO_744823_1, Dated 17.12.2025 to Respondent No. 4 (L-1 Bidder / M/s. Apollo Micro Systems Limited) for the development and supply of PBMM-NG (Processor-Based Moored Mine - Next Generation) as illegal, arbitrary and violative of Articles 14, 19(1)(g) of the Constitution and consequently set aside the financial approval dated 22.01.2026 granted in favour of respondent no.4 and direct respondent no.2-Naval Science & Technological Laboratory and a committee comprising of technically qualified individuals to review the commercial viability of price quote of respondent no.4 and disqualify the bidders/industries who have underquoted.

The contents of the petition, in brief, are as follows:

The respondent nos.2 and 3 filed common counter affidavit and respondent no.2 independent counter and while denying the material averments of the petition contended that after the Expression of Interest (EOI), 19 firms qualified; RFP was issued to 19, and 12 responded and were qualified by the Techno-Commercial Evaluation Committee (TCEC), that price bids were opened in accordance with schedule through the designated portal/Video Conference with options for bidders to join in-person or online. That the Petitioner's pre-bid representations were duly received and responded to vide letter and email and all qualified bidders (including the Petitioner) submitted a written undertaking agreeing to supply contracted rates for subsequent development/production orders and having accepted these conditions during bidding, the Petitioner cannot challenge them now. That the Petitioner’s prior experience relates to a legacy system developed around 1999. PBMM-NG is technologically distinct, with advanced architecture and updated specifications. Prior experience gives no vested right to price protection or allocation. The Petitioner's demand for 50% of the tendered quantity has no legal or contractual basis. Execution will be monitored via milestone-based inspections under a Quality Assurance Plan (QAP) overseen by the Director General of Naval Armament Inspection (DGNAI). That there is no arbitrary action, mala fides, or constitutional violation under Article 14 or 19(1)(g). Further, the petitioner cannot seek for revaluation of the commercial bids by invoking writ jurisdiction. Accordingly, he prayed to dismiss the writ petition.

The respondent no.4 filed counter affidavit denying the material averments of the petition and contended that

Respondent No. 4 is a registered vendor/supplier for at least 6 out of 12 subsystems in the Sinker section and 4 out of 12 subsystems in the Floater section. The petitioner is not a registered supplier for any of these subsystems and must purchase them externally, demonstrating its inability to produce the article at a competitive rate. Under the tender terms, production is split in a 60:40 ratio between L-1 and L-2. The L-2 bidder agreed to supply at the L-1 rate, and bidders L-3 to L-6 raised no objections, further validating Respondent No. 4's price reasonableness.

The petitioner filed rejoinder to the counter affidavit filed by respondent nos.2 and 3 and contended that respondent Nos. 2 & 3 failed to address key material contentions in their counter affidavit, which legally amounts to an admission of those unaddressed facts. As per Clause 6.42(b) of the DRDO Procurement Manual-2025, which mandates that when a bid appears abnormally low, the procuring entity/CNC must Seek written clarifications and detailed price analyses regarding scope, schedule, and risk allocation, Reject the bid if the bidder fails to prove execution capability at the quoted price and require additional Security Deposit/Bank Guarantee if compelling circumstances exist. But, the respondents selectively relied on the Manual while omitting these mandatory ALB safeguards, accepting an unworkable bid mechanically and without application of mind. That respondent no.4 quoted Rs. 1.44 Crores (L-1) for the entire tender scope, but quotations from NSTL-approved suppliers for select critical components alone total Rs.3.84 Crores. The estimated cost of another deliverable (explosive-filled warhead shells) as per NSTL's own estimate is Rs.88 Lakhs. It is further the case of the petitioner that eight (8) out of twelve (12) bids were above Rs.6 Crores, ranging up to Rs.36.77 Crores. This distribution demonstrates that L-1 is a clear statistical anomaly and completely detached from market realities. Obtaining a simple undertaking from a bidder to perform at quoted rates does not discharge the authority's statutory obligation to evaluate financial feasibility. Awarding contracts on unrealistic bids inevitably leads to project delays, scope disputes, cost escalation, and litigation. That quality assurance by the Director General of Naval Armament Inspection (DGNAI) occurs post-award during manufacturing/inspection. Post-award inspection cannot rectify or substitute pre-award financial viability scrutiny during bid evaluation. Quality inspection by DGNAI cannot cure or legalize the defect of awarding a contract on an abnormally low and commercially unworkable bid. An unviable bid leads to delays, non-performance, and scope disputes.

The petitioner filed rejoinder to the counter affidavit filed by respondent no.4 and while denying the material averments of the petition contended that whether respondent no.4 possesses manufacturing facilities or has acquired certain companies is not the question in this writ petition, but whether the impugned bid is commercially realistic and capable of successful execution at the quoted price. It is further stated that respondent no.4 has failed to furnish any cogent explanation demonstrating how a project of such complexity requiring procurement from only registered sub-system vendors can be executed at the impugned meager bid value and the repeated reliance upon assertions of capability appears to be an attempt to deflect attention from the fundamental issue of commercial viability raised in the writ petition. The image contains a legal document (Counter Affidavit) filed on behalf of Proposed Respondent No. 5 (M/s ICOMM Tele Limited). Here is the transcribed content from the visible pages:

The petitioner filed I.A.No.2 of 2026 to permit it to implead M/s.ICOMM Tele Limited, Hyderabad as respondent no.5, since a proper and necessary party, submitting that the proposed respondent no.5 is L2 bidder and it agreed to match the bid of L1 and both L1 & L2 have to execute the work in the ratio of 60:40 as per Clause 3.2 (Deliverables) of the agreement.

M/s ICOMM Tele Limited-the proposed respondent no.5 filed counter to the above impleadment petition reporting no objection for being impleaded, as it is the L-2 bidder in the tender and its interests are directly affected by the writ proceedings and requesting leave of the Court to adopt the Counter Affidavit filed by Respondent No. 4. It is further stated in the counter that upon opening financial bids, Respondent No. 4 (M/s Apollo Micro Systems Limited) emerged as L1 and it emerged as L2. The Petitioner was ranked as L9, having quoted over eight times higher than the L1 bid. That the bidders ranked L2 to L8 raised no grievance regarding tender evaluation. Petitioner (L9) alone is attempting to challenge the outcome despite quoting an excessively high bid. The subject tender pertains to the Processor Based Moored Mine-Next Generation ("PBMM-NG"), a defense system for the Indian Navy. The tender contemplates a 60:40 allocation of deliverables between L1 and L2 bidders and that the writ petition is an attempt to frustrate a competitive tender outcome.

The impleadment petition was allowed permitting the petitioner to add the proposed respondent as respondent no.5 to the writ petition.

Heard Sri P.Veera Reddy, learned senior counsel, assisted by Sri Tagore Yadav Yaragorla, learned counsel for petitioner, Sri Challa Dhananjaya, learned Additional Solicitor General, assisted by Sri V.Venkata Naga Raju, learned Central Government counsel, Sri O.Manohar Reddy, learned senior counsel, assisted Sri D.Narendar Naik, learned counsel for Respondent No.4 and Sri S.V.Maruthi Sankar, learned counsel for respondent no.5.

Sri P. Veera Reddy, learned senior counsel for the petitioner, reiterating the writ affidavit and reply affidavit, contended that the procurement relates to the development and supply of a specialised, safety-critical and mission-critical defence system (PBMM-NG) and despite the sensitive nature of the procurement, the tender failed to prescribe any minimum benchmark price, cost floor or mechanism to identify and scrutinise abnormally low bids and consequently, the absence of safeguards rendered the financial evaluation process arbitrary and vulnerable to unrealistic under-quoting, thereby violating Article 14 of the Constitution.

Learned senior counsel submitted that the petitioner, through its subsidiary Allen Reinforced Plastics Ltd (ARPL), had successfully developed and supplied PBMM/PBEM under an earlier DRDO contract and the said systems successfully completed Sea Acceptance Trials (SATs) in June 2017 and NSTL itself acknowledged the petitioner's expertise, experience and know-how in moored mine integration, assembly, testing and trials. Therefore, the petitioner is an established and technically competent participant and not a new entrant.

Learned senior counsel submitted that the petitioner, during the pre-bid meeting, specifically pointed out the absence of any minimum price benchmark, but respondent no.2 had ignored those objections and proceeded without introducing any safeguard. He contended that NSTL permitted procurement of critical subsystems only from its approved supply chain vendors and the quotations obtained from NSTL-approved vendors for select components alone amounted to approximately Rs.3.84 Crores and the additional essential components were estimated at approximately Rs.2.64 Crores, besides the sinker section assembly alone would cost approximately Rs.1.22 Crores for seven units, thus, the minimum manufacturing cost of seven PBMM-NG units itself would exceed Rs.8.26 Crores, excluding other deliverables under the tender and therefore, Respondent No.4's quoted price was not commercially workable.

Learned senior counsel submitted that respondent No.2 circulated indicative prices showing that one explosive-filled warhead shell would cost approximately Rs.21.85 Lakhs and four such shells, forming part of the tender, alone would cost approximately Rs. 88 Lakhs. Therefore, NSTL's own estimates therefore disproved the feasibility of the accepted L-1 quotation.

Learned senior counsel submitted that the petitioner submitted its techno-commercial bid of Rs.13.99 Crores after obtaining quotations from NSTL-approved vendors. The bid reflected realistic market prices and actual manufacturing costs.

Learned senior counsel submitted that Financial Evaluation Process was Non-Transparent and during the financial bid opening on 22.01.2026, Respondent No.4 was declared L-1, without providing comparative financial evaluation statement, Price-loading worksheet and Evaluation methodology, though Clause 1(b) of Part VII of the DRDO Manual required preparation of a comparative statement before determining the L-1 bidder. The Non-compliance of the mandatory requirements renders the financial evaluation arbitrary.

Learned senior counsel submitted that the Accepted L-1 Bid is Abnormally Low and predatory, since respondent No.4 quoted only Rs.1.44 Crores for the entire tender, when individual components alone exceeded the total quoted amount. The bid is therefore, not commercially workable, predatory, irrational and incapable of execution. Acceptance of such a bid reflects complete failure to properly consider the matter.

Learned senior counsel submitted that the petitioner submitted detailed representations dated 22.01.2026 and 24.01.2026 highlighting the unviable nature of the L-1 bid. However, no action or response was received from Respondent No.2.

Learned senior counsel submitted that acceptance of unrealistic bid endangers national security and under-quoting in defence procurement inevitably results in project delays, contract failures, compromised safety and quality, repeated extensions, re-tendering and adverse impact on national security and MSMEs and therefore, price alone cannot be the determining factor in procurement of mission-critical defence systems.

Learned senior counsel submitted that Mandatory DRDO Procurement Manual was violated. Clause 6.42(b) of the DRDO Procurement Manual, 2025 mandates that whenever a bid appears abnormally low, the procuring authority must seek written clarifications, obtain detailed price analysis, examine execution capability, reject the bid if capability is not established and require additional security where necessary. However, respondent no.2/NSTL ignored these mandatory safeguards while accepting Respondent No.4's bid.

Learned senior counsel submitted that statistical distribution of bids shows L-1 was an Anomaly and abnormally low bid, since eight out of twelve financial bids ranged between Rs.6 Crores and Rs.36.77 Crores, but Respondent No.4's bid is of Rs.1.44 Crores stood completely outside the normal pricing range. Therefore, the L-1 bid was therefore a clear statistical anomaly detached from market realities.

Learned senior counsel submitted that obtaining an undertaking from bidders agreeing to execute work at quoted prices does not satisfy the statutory obligation to evaluate commercial feasibility and financial viability must be examined independently before awarding the contract.

Learned senior counsel submitted that post-award quality inspection cannot cure an invalid award and DGNAI quality inspection takes place only after the contract is awarded. Post-award inspection cannot substitute mandatory pre-award scrutiny of financial viability. An unviable bid inevitably leads to delays, disputes and non-performance regardless of subsequent quality inspections.

Learned senior counsel submitted that unlike Respondent No.4, which at least claims, though unconvincingly, to manufacture a majority of the tendered items in-house, the Respondent No.5 makes no such claim whatsoever and had placed no manufacturing capability, sourcing arrangement or costing basis of its own on record and that Respondent No.5 does not even figure in NSTL’s own list of designated/approved suppliers, meaning it was not even positioned to independently source components under the tender’s mandatory supply-chain. However, there is no explanation as to how Respondent No.5 arrived at its bid of Rs.1.69 crores, though it is not claiming any offsetting in-house manufacturing at all.

Learned senior counsel submitted that Respondent No.5 has not filed any separate counter affidavit and simply adopted the counter affidavit and its defence is entirely of Respondent No.4 even without a shred of independent material.

Learned senior counsel submitted that, as per Clause 6.10.1 of the DRDO Procurement Manual, the Earnest Money Deposit (EMD) shall be fixed at 2% to 5% of the estimated cost. In the present tender, the EMD was fixed at Rs.44.40 lakhs. Based on the permissible EMD percentages, this amount would correspond to Rs.22.20 crores at 2% EMD; Rs.14.80 crores at 3% EMD, Rs.11.10 crores at 4% EMD and Rs.8.88 crores at 5% EMD. Thus, the EMD of Rs.44.40 lakhs indicates that the estimated project cost could range from Rs.8.88 crores to Rs.22.20 crores, depending upon the percentage of EMD adopted.

Learned senior counsel submitted that mechanical exercise of clarification is not sufficient. Clause 15, Part (A) requires the Procuring Entity to seek clarification where necessary regarding the feasibility of Respondent No.4’s bid. The mere issuance of clarification letters cannot satisfy this obligation. In procurement involving public funds, national security and mission-critical equipment, the authority was required to apply its mind and determine whether Respondent No.4’s quoted price was realistic and whether was genuinely capable of performing the contract at that price. No material has been produced showing any reasoned feasibility assessment of Respondent No.4’s bid. The required proper consideration is therefore not shown.

Learned senior counsel submitted that Respondent No.4 had an adverse and directly relevant track record. NSTL was not dealing with an unknown bidder. In an earlier limited tender, Tender ID No. 2019_DRDO_510835_1, Respondent No.4 had committed to a 12-month delivery period, despite the Petitioner having informed NSTL that the timeline was not feasible. Respondent No.4 secured the contract on that commitment but subsequently failed to deliver within the promised period. Thus, NSTL had first-hand knowledge that Respondent No.4 had previously made an unrealistic commitment to secure a contract and later failed to perform it.

Learned senior counsel submitted that Respondent No.4 had again submitted an abnormally low and apparently unworkable bid in the present tender. In these circumstances, NSTL ought to have exercised heightened caution and invoked its power under Clause 15 to seek clarification. Instead, no meaningful scrutiny was undertaken.

Learned senior counsel submitted that the tender required selection of the best acceptable bid, not mechanical acceptance of L-1. Clause-4 requires selection of the “best acceptable” bid, and not merely the lowest-priced bid and therefore, L-1 cannot automatically be treated as the successful bidder. The present procurement concerns mission-critical defence equipment, where considerations of technical capability, operational readiness, safety, public expenditure and national security are material. Therefore, the authority was required to undertake a qualitative assessment of whether the lowest-priced bid was actually capable of faithful performance. A purely mechanical L-1 approach defeats the requirement of a meaningful procurement evaluation.

Learned senior counsel submitted that comparative statement cannot substitute for an independent viability assessment. Comparative ranking by price does not establish bid viability. The comparative statement relied upon by Respondent Nos.2 and 3 merely ranks the bidders according to price. Even if such a comparative statement was prepared under the applicable procurement provisions, it does not establish that Respondent No.4’s quoted price was economically realistic or technically capable of supporting performance. The independent viability examination required under Clause 6.42(b)(ii) is a separate obligation and cannot be replaced by a mere price comparison.

Learned senior counsel submitted that Clause 6.42(b)(ii) required specific scrutiny of Respondent No.4’s abnormally low bid. The absence of a fixed percentage threshold does not eliminate the ALB safeguard. Respondent Nos.2 and 3 selectively rely upon Clause 6.42(b)(i), which does not prescribe a fixed percentage threshold for identifying an abnormally low bid. However, Clause 6.42(b)(ii) separately empowers the CNC/Procuring Entity to seek a written analysis and clarification where the quoted price raises a material concern regarding the bidder’s capability, and permits rejection where capability is not showed.

Learned senior counsel submitted that there is no document showing: any meaningful clarification sought from Respondent No.4; any proper feasibility analysis; any price-build-up examination; or any reasoned determination that Respondent No.4 could perform at the quoted price. A general assertion that the 2025 TCEC/CNC procedure was followed cannot substitute for proof that the specific ALB safeguard under Clause 6.42(b)(ii) was actually applied. The bidder’s undertaking to perform at the quoted rate also cannot substitute for the Procuring Entity’s independent duty to examine feasibility before award.

Learned senior counsel submitted that NSTL’s power to reject an unworkable bid became a duty in the present circumstances. Clause 30 cannot be treated as an unfettered discretion. Clause 30, Part II(A) gives the Government discretion to reject any or all bids. However, that discretion is not unfettered and must be exercised consistently with fairness, transparency and public interest. Here, Respondent No.4’s bid was on the face of it unworkable and substantially below the Respondents’ own disclosed cost of approximately Rs.14.5 crore. Once such a fundamental viability concern arose, the authority was required at least to consider rejection under Clause 30. The failure even to consider this safeguard is further evidence of failure to properly consider the matter. He contended that respondent no.4’s own recent contract price shows the unrealistic nature of the present bid. Respondent No.4’s recent executed price provides a direct benchmark. In a tender concluded in September 2025 for the sinker section assembly, Respondent No.4 was itself declared L-1 and supplied the component to NSTL at approximately Rs.20 lakh per unit, excluding tax. The Petitioner was L-2 in that tender and had matched Respondent No.4’s L-1 rate. Therefore, Rs.20 lakh was not merely an internal estimate; it was Respondent No.4’s own recently accepted and executed price for the same component. The present tender requires seven sinker section assemblies. At Respondent No.4’s own recent rate: Rs.20 lakh × 7 = Rs.1.40 crore. This for only one component. Yet Respondent No.4 has quoted approximately Rs.1.44 crore for the entire PBMM-NG system, together with the other deliverables, including: warhead shells; mine test systems/fixtures; and technical services.

Learned senior counsel submitted that Respondent No.4’s present total bid is only approximately Rs.4 lakh more than the cost of seven sinker section assemblies at Respondent No.4’s own recent executed rate, leaving an apparent impossibility as to how the entire remaining system and services could be supplied within the balance amount. This provides a powerful objective basis for treating the bid as abnormally low and requiring detailed scrutiny.

Learned senior counsel submitted that Respondent No.4’s claimed technical experience was not adequately substantiated. Technical capability cannot rest on unsupported assertions. Respondent No.4’s claims of technical capability are not supported by adequate development, completion or acceptance documentation from the relevant authorities. The burden was on Respondent No.4 to substantiate the specific technical experience and capability relevant to this mission-critical procurement. Further, Respondent No.4’s claimed sinker/floater experience appears to relate to a different “underwater article” project, rather than showed successful completion and acceptance of the present type of system. The material relied upon therefore does not establish that Respondent No.4 possessed the specific proven capability necessary to execute the present contract at its quoted price.

Learned senior counsel submitted that the mandatory pre-award procedure was not complied with before declaring Respondent No.4 as L-1. The declaration of Respondent No.4 as successful L-1 preceded the mandatory scrutiny. A complete reading of the counters filed by Respondent Nos.2 and 3 shows that Respondent No.4 was declared the successful L-1 bidder upon completion of evaluation, and only later was Respondent No.5/L-2 called upon to match Respondent No.4’s quoted price. This sequence is important because the mandatory scrutiny concerning the viability of Respondent No.4’s bid had to occur before Respondent No.4 was declared successful L-1.

Learned senior counsel submitted that respondent nos. 2 & 3 themselves admitted that their Evaluation Committee considered Respondent No.4’s price to be low. In the document titled “Response to Query of the Hon’ble Court” dated 21.07.2026, Respondent Nos.2 and 3 stated that during the evaluation process the Committee observed that the price quoted by the L-1 bidder was low in comparison with the estimated cost. This a significant admission. Once the Evaluation Committee itself considered Respondent No.4’s price to be low, the obligation under Clause 6.42(b)(ii) to undertake a proper capability/viability assessment became particularly relevant. Despite this admission, Respondent Nos.2 and 3 proceeded to declare Respondent No.4 as L-1.

Learned senior counsel submitted that Respondent No.5/L-2 could not lawfully be called upon to match an unworkable bid. The subsequent matching process could not cure the defect. Despite recognising that Respondent No.4’s price was low, Respondent Nos.2 and 3 declared Respondent No.4 successful L-1 and called upon Respondent No.5/L-2 to match the same price. This contrary to the purpose of Clause 6.42(b)(ii), which contemplates rejection where the bidder is unable to demonstrate capability to perform at the offered price. The procurement process cannot use another bidder’s willingness to match an allegedly unworkable price as a substitute for the mandatory examination of whether the original L-1 bidder could perform at that price.

Learned senior counsel submitted that no reasonable/benchmark price was worked out before opening the price bid. Clause 6.39.3 of the DRDO Procurement Manual requires a reasonable/benchmark price to be worked out before opening of the price bid, particularly in the Limited Bid Method, to ensure objectivity and transparency. The Respondents have admittedly failed to demonstrate compliance with this mandatory requirement. The absence of a properly determined benchmark price undermines the transparency and objectivity of the evaluation and further strengthens the case that the process was arbitrary.

Learned senior counsel submitted that the commercial negotiation stage cannot cure a defect that existed before declaration of L-1. Later procedural stages cannot later validate the defective evaluation. The flow-chart relied upon by the Respondents does not cure the defect. The initial stages preceding issuance of the RFP are not in dispute. The material defect arose at the Commercial Negotiation Committee stage, when Respondent No.4 had already been declared successful L-1 and Respondent No.5/L-2 was called upon to match its bid. The Commercial Negotiation Committee stage therefore cannot later cure the failure to comply with Clauses 6.39.3 and 6.42(b)(ii) before declaration of Respondent No.4 as successful L-1.

Learned senior counsel submitted that post-award quality checks cannot cure an abnormally low bid. Viability must be examined before award, not discovered through execution Respondent No.4’s reliance upon post-award quality checks is misplaced. Post-award checks can verify compliance during execution, but they cannot later establish that an abnormally low bid was viable at the time of evaluation. If post-award checks were treated as sufficient, bidders could quote unworkable prices and leave the Procuring Entity to discover the problem only during execution. That would render the pre-award safeguards under Clauses 6.39.3 and 6.42(b)(ii) largely meaningless and could result in avoidable failure, rejection and re-procurement, wasting public time and resources. The DRDO procurement framework requires viability to be examined before declaration of L-1.

Learned senior counsel submitted that Respondent No.4’s high net worth does not establish its ability to perform at the quoted price. Net worth is not a substitute for price-specific capability assessment. Respondent No.4’s submission that its substantial net worth means that it will not default, or can afford to suffer a loss, does not answer the issue under Clause 6.42(b)(ii). The question is not whether Respondent No.4 possesses sufficient financial strength to absorb a loss. The relevant question is whether Respondent No.4 can actually perform the contract at the offered price. A bidder’s large net worth may demonstrate financial strength, but it does not establish that the quoted price is economically realistic or sufficient to execute the required contract. Indeed, Respondent No.4’s assertion that it is willing to suffer a loss does not answer the price-specific capability concern; rather, it highlights the very issue requiring scrutiny is whether the quoted price genuinely reflects the cost and capability required for performance.

Therefore, he prayed to allow the writ petition, granting the reliefs as prayed for.

Whereas Sri Challa Dhananjaya, learned Additional Solicitor General for respondent nos. 2 and 3 submitted that Tender Process was conducted fairly and in accordance with procedure and under the Expression of Interest (EOI), 19 firms were found qualified and the Request for Proposal (RFP) was issued to all 19 qualified firms. Out of them, 12 firms submitted bids and were declared technically qualified by the Techno-Commercial Evaluation Committee (TCEC).

Learned Additional Solicitor General submitted that the financial bids were opened in accordance with the prescribed schedule through the designated e-procurement portal and Video Conference, with bidders having the option to participate either physically or virtually.

Learned Additional Solicitor General submitted that the petitioner's pre-bid representations and objections were duly received. Respondent Nos.2 and 3 replied to the representations through official letters and email communications. Therefore, it cannot be alleged that the petitioner's objections were ignored.

Learned Additional Solicitor General submitted that all technically qualified bidders, including the petitioner, furnished written undertakings agreeing to execute subsequent development and production orders at the contracted rates. Having voluntarily participated in the tender process and accepted all tender conditions without protest, the petitioner is estopped from challenging those conditions after the financial bids were opened.

Learned Additional Solicitor General submitted that the petitioner's previous experience pertains to a legacy PBMM system developed around 1999. PBMM-NG is a technologically advanced system with updated architecture and specifications. Therefore, the petitioner's prior experience does not confer any vested right, preferential treatment, price protection or entitlement to allocation of the contract.

Learned Additional Solicitor General submitted that the petitioner's request for allocation of 50% of the tender quantity has neither contractual nor legal basis. The tender conditions contain no provision permitting allocation based on previous experience or past participation.

Learned Additional Solicitor General submitted that execution of the contract will be monitored through milestone-based inspections. The entire manufacturing and inspection process will be supervised by the Director General of Naval Armament Inspection (DGNAI) to ensure compliance with quality standards.

Learned Additional Solicitor General submitted that the tender process does not suffer from arbitrariness, mala fides or failure to properly consider the matter. There is no violation of Article 14 or Article 19(1)(g) of the Constitution of India. Therefore, he submitted that the writ petition is liable to be dismissed.

On the other hand, Sri O.Manohar Reddy, learned senior counsel for Respondent No.4 reiterating the counter affidavit and written submissions, contended that the petitioner's challenge to the tender on the ground that it did not prescribe a minimum cost floor is legally untenable. Framing tender conditions and evaluating prices fall within the exclusive domain of the executive. Courts should interfere only where mala fides, arbitrariness or violation of statutory provisions is established. Defence procurement involves national security and operational readiness; therefore, judicial restraint is justified.

Learned senior counsel submitted that an unsuccessful bidder cannot invoke writ jurisdiction merely because it disagrees with the commercial decision of the tendering authority.

Learned senior counsel submitted that respondent No.4 has been operational since 1985, incorporated in 1997 and became a public limited company in 2018. It has over 40 years of experience in defence systems with a turnover of approximately Rs.500 Crores during 2024–25. It has completed nearly 700 defence systems and over 30 defence projects. It successfully completed sea trials of the MIGM project and was declared the production agency for the Indian Navy.

Learned senior counsel submitted that existing infrastructure enabled competitive pricing. Respondent No.4 independently developed the Moored Mine system under a No Commitment-No Cost (NC-NC) basis. It has already executed developmental contracts relating to major sections of PBMM-NG, including the Sinker section and Floater section. By acquiring 100% stake in IDL Explosives Ltd, it secured direct access to required explosive components. Since PBMM-NG is derived from the MIGM project, Respondent No.4 already possessed the necessary Bill of Materials (BOM), test rigs and testing systems. Using existing infrastructure instead of developing everything afresh substantially reduced production costs. Internal R&D funding enabled it to offer competitive pricing without compromising quality.

Learned senior counsel submitted that the petitioner is comparatively a new entrant in the defence sector. Its subsidiary, Allen Reinforced Plastics Pvt. Ltd. (ARPPL), was historically a sick industry engaged mainly in FRP shell manufacturing. ARPPL failed to supply the Sinker section for PBMM-NG despite securing the contract. Respondent No.4 successfully completed the same work within time. ARPPL also failed to supply FRP shells meeting required pressure standards for the MIGM project, compelling Respondent No.4 to step in and complete the supply.

Learned senior counsel submitted that whenever Respondent No.4 emerged as L-1, the petitioner allegedly issued legal notices to pressure authorities into splitting the work. The petitioner repeatedly requested direct allocation of 50% of the tender quantity through letters dated 20.12.2025 and 22.01.2026. The tender conditions contain no provision permitting quota allocation based on previous experience. The petitioner's conduct shows an attempt to bypass competitive tendering.

Learned senior counsel submitted that the petitioner was admittedly ranked L-9. Being shortlisted at the EOI stage does not create any vested right to secure the contract. A rival bidder has no legal right to challenge the commercial viability of the successful bidder's quotation. Viability of the quoted price is a matter exclusively between the successful bidder and the procuring authority.

Learned senior counsel submitted that financial bids were opened strictly in accordance with Part VII of the tender conditions. Once Respondent No.4 emerged as the lowest evaluated bidder and its techno-commercial bid was found compliant, acceptance of its bid became mandatory. Neither the tender conditions nor the DRDO Procurement Manual mandated minimum benchmark price, cost floor or abnormally low bid safeguards. Therefore, the absence of such provisions cannot invalidate the tender.

Learned senior counsel submitted that the technology relied upon by the petitioner was developed around 2005. Internal assessments indicate that most vintage PBMM technology has become obsolete. Past association with NSTL does not create any legitimate expectation in future procurements.

Learned senior counsel submitted that allegation of Under-Quoting is Baseless. Financial bid was submitted bona fide and strictly in accordance with the tender conditions. Objections raised during the pre-bid meeting regarding minimum pricing do not establish illegality.

Learned senior counsel submitted that Petitioner's Cost Estimates Cannot Be Treated as Market Benchmark. Quotations obtained by the petitioner from suppliers merely reflect its own procurement costs. They do not account for in-house manufacturing, design efficiencies, integration capability, overhead optimization or indigenous value addition. Therefore, the petitioner's estimate of Rs.7.70 Crores cannot be treated as the minimum manufacturing cost. Indicative price break-ups circulated by NSTL were never intended to operate as mandatory price floors.

Learned senior counsel submitted that respondent No.4 enjoys Greater In-House Manufacturing Capability and it is a registered supplier for 6 of the 12 subsystems in the Sinker section and 4 of the 12 subsystems in the Floater section. Whereas, the petitioner is not a registered supplier for these subsystems and must procure them externally, resulting in higher costs.

Learned senior counsel submitted that under the tender conditions, production is to be shared in a 60:40 ratio between L-1 and L-2. Respondent No.4 was L-1 and Respondent No.5, M/s. ICOMM Tele Limited, was L-2 and agreed to match the L-1 price. Bidders ranked L-3 to L-6 also raised no objection. The fact that Respondent No.5 agreed to match the L-1 rate can, by itself, establish the commercial reasonableness of Respondent No.4’s quotation.

Learned senior counsel submitted that Non-Disclosure of Internal Evaluation Records does not invalidate the tender. Comparative statements and evaluation worksheets are internal administrative documents prepared under Clause 1(b) of Part VII and the Procurement Manual. Their non-disclosure to unsuccessful bidders does not render the tender process illegal, arbitrary or lacking transparency.

Learned senior counsel submitted that respondent No.4 possesses extensive experience, established infrastructure and in-house manufacturing capability enabling legitimate competitive pricing. The allegations of under-quoting, future non-performance and commercial impossibility are speculative and unsupported by evidence. Therefore, the writ petition is liable to be dismissed.

In support of his contention that courts do not sit as Appellate Bodies, that terms of invitation to tender and price evaluations fall within the executive's domain and are not open to judicial interference unless mala fides or arbitrariness is proven, learned senior counsel relied on the decisions of the Hon’ble supreme Court in Tata Cellular v. Union of India ^{11.. (1994) 6 SCC 651} , Jagdish Mandal v. State of Orissa^{22.(2007) 14 SCC 517}, Air India Ltd. v. Cochin International Airport^{33.. (2000) 2 SCC 617}, Afcons Infrastructure Ltd. Nagpur Metro Rail Corpn. Ltd.^{44.. (2016) 16 SCC 818}, Silppi Constructions Contractors v. Union of India ^{55.. (2020) 16 SCC 489} , Raunaq International Ltd., v. I.V.R.Construction Ltd.,^{66..(1999) 1 SCC 492} Tata Motors Ltd., v. Brihan Mumbai Electric Supply & Transport Undertaking (BEST)^{77.. 2023 SCC OnLine Sc 671}and Prabha Shukla v. State of UP^{88.. 2022 SCC OnLine All 3}.

In support of his contention that courts cannot substitute their own judgment for that of the employer in tender matters, learned senior counsel relied on N.G. Projects Ltd. v. Vinod Kumar Jain^{99.. (2022) 6 SCC 127}.

Sri S.V.Maruthi Sankar, learned counsel for respondent no.5 adopted the submissions made by learned senior counsel for respondent no.4.

In reply, learned senior counsel for Petitioner submitted that judicial review is squarely attracted on the present facts where national security and public interest is involved. He contended that Respondent No.4's reliance on Tata Cellular (1994) 6 SCC 651, Air India v. Cochin International Airport (2000) 2 SCC 617, Michigan Rubber (2012) 8 SCC 216, Afcons Infrastructure (2016) 16 SCC 818, Montecarlo Ltd. v. NTPC (2016) 15 SCC 272, Silppi Constructions (2020) 16 SCC 489 and Jagdish Mandal to urge blanket restraint is incorrect and the same authorities carves out and preserves intervention where the decision-making process is arbitrary, irrational, mala fide, or in breach of the tender's own conditions.

Learned senior counsel for petitioner submitted that in Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517 para 33, the Court held that an unduly/freakishly low rate on a substantial component entitles, indeed obligates, the procuring authority to consider its effect and reject the tender on that ground alone, since 'unduly low and unworkable rate is a ground for rejection of tenders'; the Court expressly recognised under-quoting to secure a contract followed by disputes as 'not uncommon' modus operandi that authorities are duty-bound to guard against. The Respondents have done precisely the opposite of what this binding precedent mandates.

Learned senior counsel for petitioner submitted that Sterling Computers Ltd. v. M&N Publications, (1993) 1 SCC 445 [paras 18-19] confirms that judicial review examines whether the 'decision-making process' was reasonable, rational and not arbitrary or violative of Article 14; once the procedure is found to violate Article 14, courts cannot decline interference merely by invoking executive 'latitude' in contractual matter, precisely the position here, where the mandatory Cl.15/Cl.6.42(b)(ii) safeguards were simply never applied.

Learned senior counsel for petitioner submitted that in Banshidhar Construction (P) Ltd. v. Bharat Coking Coal Ltd^{1010.. (2024) 10 SCC 273}, [paras 21, 29-30] confirms that even in mega/infrastructure projects, and even where an agreement has already been executed with the successful bidder, courts will set aside a selection found to be arbitrary, illegal or discriminatory, rejecting the very argument.

Learned senior counsel for petitioner submitted that in Writer Business Services (P) Ltd. v. UIDAI^{1111..2025 SCC OnLine Del 6483} [para 48] holds that there is no complete bar or prohibition on a constitutional Court's judicial review in contractual matters despite the restraint line of authority, wherever there is a violation of contract conditions or perverse/mala fide action, and upheld the rejection of a bid precisely on the ground that it was abnormally low, confirming ALB scrutiny as a judicially recognised, enforceable safeguard.

Learned senior counsel for petitioner submitted that in Gita Rani Jana v. State of West Bengal ^{1212.. 2023 SCC OnLine Cal 1062} [paras 5-6] illustrates the threshold: a rate merely 25-30% below the benchmark was held to be abnormally low warranting Tender Committee scrutiny and, on failure of such scrutiny, a direction for fresh evaluation. A fortiori here, where, on the Respondents' own admitted project cost of Rs.14.5 Crore, the L-1 bid is over 90% below the benchmark, the case for interference is manifold stronger.

Learned senior counsel for petitioner submitted that in Monarch Infrastructure (P) Ltd. v. Ulhasnagar Municipal Corpn^{1313..(2000) 5 SCC 287}, [paras 10-11] confirms that while Government retains freedom to reject even the highest bid in public interest, courts will interfere wherever State action is arbitrary or contrary to public interest, the mirror-image failure here being NSTL's refusal even to consider rejecting/scrutinising a bid that is on the face of it unworkable.

Learned senior counsel submitted that Union of India v. HBL Nife Power Systems Ltd^{1414..(2016) 12 SCC 242}, [para 14] cautions that 'the Government cannot put the life of its defence personnel and [assets] worth crores of rupees to risk simply because the [bidder] claims to have the capability', the heightened public interest in defence procurement thus reinforces, rather than dilutes, the need for scrutiny. Respondent No.4's reliance on DGNAI's post-award inspection role is no answer: DGNAI operates only after contract award, at the product-testing stage, and cannot later supply the viability assessment that ought to have preceded financial approval of a fundamentally under-priced bid for a mission-critical underwater defence system, a concern only sharpened by the Respondents' own admission that the project cost is Rs.14.5 Crore against an L-1 bid of Rs.1.44 Crore.

Learned senior counsel submitted that in Integral Trading and Logistics v. Board of Trustees of Visakhapatnam Port Authority^{1515.. 2026 SCC OnLine AP 1622}, a coordinate Bench of this Hon'ble Court, upheld the annulment of a tender where the L-1 bidder had quoted a royalty of merely 0.01% of the authority's estimate for a 15-year O&M contract, holding that "such a negligible rate raises serious concerns regarding revenue, financial sustainability, operational efficiency, and risk allocation," and that a public authority "cannot place its assets at such commercial and operational risk merely on the basis of the Petitioner's claim that it has 'taken into consideration various factors' while quoting the rate" (para 13), applying an ALB safeguard worded in terms materially identical to Clause 6.42(b)(ii) of the DRDO Procurement Manual relied upon here. If a bid at 0.01% of the estimate justified annulment even before award, the challenged L-1 bid here, at 9.93% of the Respondents' own now-admitted project cost of Rs.14.5 Crore, for a defence-critical underwater weapons system, falls squarely within the same category of concern, and this coordinate Bench ruling confirms that scrutiny of such abnormally low bids is squarely within the province of Article 226 review.

The learned senior counsel for petitioner, in conclusion, submitted that the Petitioner did not ask this Hon'ble Court to sit in appeal over a technical or commercial evaluation; the challenge is confined to the Respondents' failure to apply the mandatory ALB safeguards the procurement framework itself prescribes, a pure question of process and legality, squarely within the scope of judicial review under every one of the authorities cited by the Respondents themselves.

Perused the material available on record, considered the submissions made by learned counsel for the parties and also the written versions submitted by both the parties.

Article 14 does not confer upon an unsuccessful bidder a right to have the tender awarded to it. Nor does Article 14 permit the Court to invalidate every commercial decision with which a bidder disagrees. However, State action in contractual matters remains subject to the requirement of non-arbitrariness. Where relevant material is ignored, where a mandatory procurement process is not followed, or where a decision is unsupported by consideration of material circumstances, judicial review may be attracted.

The petitioner challenged the tender for not prescribing a minimum benchmark price or cost floor. The material placed on record itself states that the DRDO Procurement Manual follows a case-by-case approach to abnormally low bids and does not prescribe an automatic normative percentage below the estimated cost for treating a bid as an ALB. The DRDO PM,2025 states that price reasonableness is to be considered by the Negotiation Committee/CNC in applicable cases or by the Head of the Procuring Entity in other cases. The very rationale reflected in the material is that a rigid mathematical threshold may exclude a genuinely efficient bidder. Therefore, the Court cannot hold that the tender is invalid merely because it did not prescribe a fixed minimum price.

Clause 6.42(b) of the DRDO Procurement Manual, 2025 deals with consideration of Abnormally Low Bids. For convenience the same is extracted below:

The case-by-case approach necessarily requires proper consideration to the circumstances of the individual bid. Respondent No.4 has furnished an explanation before this Court as to why it could quote a lower price. It relies upon its existing infrastructure, in-house manufacturing, earlier development work, BOM, test rigs, test systems and access to explosive components.

Clause 6.10.1 of the DRDO Procurement Manual, 2025 states that EMD will be a fixed amount between 2% and 5% of the estimated cost of the proposed procurement, suitably rounded off. In the present tender, the EMD was fixed at Rs.44.40 lakhs. Therefore, as rightly contended by learned counsel for petitioner, based on the permissible EMD percentages, this amount would correspond to Rs.22.20 crores at 2% EMD; Rs.14.80 crores at 3% EMD, Rs.11.10 crores at 4% EMD and Rs.8.88 crores at 5% EMD. Thus, the EMD of Rs.44.40 lakhs indicates that the estimated project cost could range from Rs.8.88 crores to Rs.22.20 crores, depending upon the percentage of EMD adopted.

This Court should first consider the limits of judicial review in tender matters. In Tata Cellular, Air India, Jagdish Mandal, Afcons Infrastructure, Silppi Constructions and N.G. Projects, the Supreme Court consistently recognises that evaluation of tenders is primarily a commercial and technical function. The Court does not substitute its assessment for that of the tendering authority and ordinarily defers to the expertise of the authority that framed the tender. At the same time, those decisions preserve judicial review where the decision-making process is arbitrary, irrational, mala fide, perverse, discriminatory or contrary to the governing tender conditions.

Sterling Computers Ltd. v. M. & N. Publications Ltd., explains the boundary with particular clarity: judicial review is concerned principally with the fairness, rationality and legality of the decision-making process. Executive latitude in contractual matters does not extend to a process that is inconsistent with Article 14. The present examination must therefore remain confined to whether the prescribed procurement process was actually followed, and not to which bidder offered the better commercial model.

Banshidhar Construction (P) Ltd. v. Bharat Coking Coal Ltd. reiterates that public authorities retain freedom in contractual matters, but that freedom operates within the requirements of fairness, equality, transparency and absence of arbitrariness. Thus, restraint does not prevent the Court from examining a material procedural failure affecting the integrity of the tender process.

The same approach is reflected in Writer Business Services Pvt. Ltd. v. Unique Identification Authority of India. The availability of Article 226 jurisdiction in contractual matters is limited but not excluded where the action is contrary to the governing conditions or is perverse or mala fide. The significance of that principle here is confined to process: the Court is not re-pricing the tender but examining whether the prescribed scrutiny of an exceptionally low bid was undertaken.

The authorities concerning public interest also require the Court to balance competing considerations. Monarch Infrastructure (P) Ltd. v. Ulhasnagar Municipal Corporation emphasises that public interest is paramount but that State action in awarding contracts must remain free from arbitrariness. Raunaq International Ltd. v. I.V.R. Construction Ltd., Ramniklal N. Bhutta v. State of Maharashtra, Pratibha Nema v. State of M.P. referred to in Prabha Shukla’s case and the principles noticed in Prabha Shukla v. State of U.P. caution that judicial intervention should not unnecessarily impede projects of public importance and that a real and substantial grievance, rather than a merely technical one, should ordinarily be shown.

National High Speed Rail Corporation Ltd. v. Montecarlo Ltd. and N.G. Projects Ltd. further emphasise caution where interference may delay projects of public importance. That caution is fully applicable here. It does not, however, relieve the procuring authority from complying with the procedure governing the evaluation of bids. Public interest includes both timely procurement and a reliable, lawful and rational procurement process.

In the present tender, the absence of a fixed minimum price or automatic percentage threshold does not, by itself, invalidate the tender. Clause 6.42(b)(i) of the DRDO Procurement Manual, 2025 adopts a case-by-case approach and expressly avoids a rigid mathematical test for an Abnormally Low Bid. The Court therefore rejects the challenge to the extent that it proceeds merely on the absence of a prescribed cost floor.

That conclusion does not end the matter. Clause 6.42(b)(ii) addresses the distinct situation in which the bid, considered with the other elements of the offer, appears so low as to raise a material concern regarding the bidder’s ability to perform at the offered price. The provision contemplates written clarification, detailed price analysis concerning the scope, schedule and allocation of risks and responsibilities, and an assessment of the bidder’s capability. If that capability is not established, the bid may be rejected.

The structure of Clause 6.42(b) is therefore important. The absence of a fixed numerical threshold does not authorise mechanical acceptance of every very low quotation. It places the emphasis upon the circumstances of the particular bid and upon a reasoned assessment by the competent authority. The question before this Court is consequently whether the circumstances in this case were sufficient to call for such scrutiny and, if so, whether the record shows that it occurred.

The material placed before the Court was sufficient to require consideration under Clause 6.42(b)(ii). The petitioner relied upon quotations from NSTL-registered suppliers for critical components aggregating approximately Rs.3.84 crores, additional component costs of approximately Rs.2.64 crores, the recently accepted price of approximately Rs.20 lakhs for a Sinker Section assembly, and NSTL’s indicative figure of approximately Rs.21.85 lakhs for each explosive-filled warhead shell.

On the petitioner’s material, seven Sinker Section assemblies alone, at the recent rate relied upon, would account for approximately Rs.1.40 crores, while the accepted quotation of Respondent No.4 was approximately Rs.1.44 crores for the entire tendered scope. The Court does not treat these figures as establishing the correct market price or as conclusively proving that Respondent No.4 could not perform the contract. They are, however, objective circumstances capable of raising the material concern contemplated by Clause 6.42(b)(ii).

The comparative financial bids furnish an additional circumstance. The petitioner placed before the Court that eight of the twelve bids exceeded Rs.6 crores and extended to approximately Rs.36.77 crores. The Court does not convert this distribution into an automatic test for an Abnormally Low Bid. Read together with the component quotations and the procuring authority’s own indicative figures, however, the disparity called for an identifiable examination of the feasibility of Respondent No.4’s quotation.

Respondent No.4 has offered a plausible commercial explanation for its lower price, referring to existing infrastructure, in-house manufacturing, prior development work, the Bill of Materials, test rigs and testing systems, and access to explosive components. These are legitimate matters which may explain a lower quotation. The Court does not decide whether those efficiencies were commercially sufficient. The relevant question is whether the competent authority independently considered them in the manner required by Clause 6.42(b)(ii) before accepting the bid.

This Court also takes note of the distinction between Respondent No.4 and Respondent No.5. Respondent No.4 was the L-1 bidder and relies upon its established supplier status, manufacturing capability and existing infrastructure to explain its price. Respondent No.5 was the L-2 bidder. Respondent No.5 did not plead any comparable in-house manufacturing capacity or other independent advantage of the kind pleaded by Respondent No.4. Respondent No.5 has also not placed comparable material before the Court, sourcing arrangement, component-wise costing or other objective basis for its quotation of approximately Rs.1.69 crores. The material placed before the Court further indicates that Respondent No.4 is a supplier of some of the relevant items/subsystems as per the NSTL supplier list, whereas Respondent No.5 does not figure in that list. Respondent No.5's willingness to match the L-1 price therefore cannot, by itself, demonstrate the viability of Respondent No.4's quotation.

The sequence of events is equally material. The record shows that Respondent No.4 was treated as L-1 and, thereafter, Respondent No.5 was treated as L-2 and called upon to match the L-1 rate. Where the original quotation had raised the level of concern contemplated by Clause 6.42(b)(ii), the assessment of Respondent No.4's capability at that price had to precede the final acceptance of that quotation as the successful L-1 bid. A subsequent matching exercise by Respondent No.5, the L-2 bidder, cannot later perform that pre-award assessment.

The official respondents submitted the relevant technical and commercial material to the Court in sealed covers. The Court perused the sealed-cover material. Since the material is confidential, its contents cannot be disclosed in this order. However, confidentiality does not remove the requirement to follow the procedure prescribed by the DRDO Procurement Manual, 2025 for dealing with an Abnormally Low Bid (ALB).

On perusing the sealed-cover material, the Court finds that it does not show adherence to the procedure prescribed under the DRDO Procurement Manual, 2025 for dealing with an ALB. In particular, it does not show that the required pre-award scrutiny as per 6.42(b)(ii), including meaningful clarification, detailed price analysis and assessment of the bidder’s ability to perform the contract at the quoted price, was completed before Respondent No.4 was declared L-1. The record further shows that further clarification was sought only after Respondent No.4 had been declared L-1 and Respondent No.5 had been treated as L-2/matching bidder. Such later clarification could not take the place of the scrutiny that was required before the L-1 decision.

This finding does not mean that Respondent No.4 is incapable of performing the contract or that its quotation is necessarily impossible. The finding is limited to the procedure followed and to what is shown by the record. A bidder’s price break-up or explanation is not, by itself, the procuring authority’s assessment. The record should show that the authority considered the explanation and reached its own conclusion about the bidder’s capability and the viability of the quoted price.

The respondents have stated that clarification was obtained and considered. But the record placed before the Court must show what was considered and what conclusion was reached. When a quotation is exceptionally low and raises an ALB concern, the pre-award assessment should be clear from the record.

The undertakings given by the bidders to perform the work at their quoted rates do not change this position. An undertaking only records the bidder’s commitment. It does not amount to an independent assessment by the procuring authority that the work can actually be completed at that price. Likewise, the Quality Assurance Plan and DGNAI supervision operate during execution. They cannot replace the pre-award financial and commercial scrutiny required by Clause 6.42(b)(ii).

The principle in Jagdish Mandal v. State of Orissa, particularly the reasoning concerning an unduly low and potentially unworkable rate, is consistent with this approach. The Supreme Court did not make the Court the assessor of commercial workability; rather, it recognised the tender committee’s responsibility to examine the effect of an exceptionally low rate upon performance and to take a rational decision. That decision therefore supports restraint by the Court while simultaneously underscoring the need for the competent authority itself to undertake the requisite scrutiny.

Gita Rani Jana v. State of West Bengal illustrates, on its own facts, that a substantial departure from the relevant tender benchmark may warrant scrutiny by the Tender Selection Committee. The decision is not applied as a numerical formula to the present tender. Its relevance lies in the proposition that a materially low rate calls for an informed examination by the authority entrusted with evaluation.

Union of India v. HBL NIFE Power Systems Ltd. assumes particular significance because the present procurement concerns a defence-critical system. The principle emerging from that decision is that the State’s responsibility extends beyond obtaining a low price; it must ensure that prescribed procedures and technical safeguards are meaningfully observed before exposing defence personnel and valuable defence assets to avoidable risk.

The coordinate Bench decision in Integral Trading and Logistics v. Board of Trustees of Visakhapatnam Port Authority, W.P. Nos.5630, 5639 and 5646 of 2026, as placed before this Court, likewise shows the relevance of financial sustainability and operational risk when an exceptionally low rate is offered in public procurement. The decision does not require the Court to determine the correct price in the present case; it reinforces the need for the public authority to address the material risks disclosed by an unusually low quotation.

The authorities relied upon by Respondent No.4, including Silppi Constructions, Afcons Infrastructure, N.G. Projects, Raunaq International and National High Speed Rail Corporation, remain fully applicable on the question of judicial restraint. They caution the Court against substituting its own commercial or technical judgment, particularly where expert evaluation is involved and intervention may prejudice public projects. They do not, however, authorise the omission of a material pre-award safeguard prescribed by the procurement framework.

The Court is conscious that the procurement concerns national security and that unnecessary interference may delay the project. That consideration reinforces the need for a sound process. In a defence procurement of this nature, public interest is served not merely by selecting the lowest numerical quotation but by ensuring, through the prescribed procedure, that the selected bidder can perform the entire scope at the offered price.

The Court therefore does not agree with the petitioner’s broader submission that the tender was invalid merely because it contained no fixed minimum price. Nor does the Court accept that the petitioner’s own cost estimate establishes the correct price or confers any entitlement to the contract. The petitioner’s material is relevant only to the extent that it showed circumstances requiring the competent authority to undertake the ALB scrutiny contemplated by Clause 6.42(b)(ii).

The petitioner’s previous experience in PBMM/PBEM does not create a vested right to the contract, nor does it justify the claimed allocation of fifty per cent of the tendered quantity. In the absence of a corresponding tender condition, those claims cannot be granted. The Court’s conclusion rests on the procurement process and not on any comparative assessment of the petitioner and Respondent No.4.

The Court also finds that non-furnishing of internal comparative statements or price-loading worksheets to the petitioner, considered by itself, does not invalidate the tender. What is important is whether the internal record shows that the authority applied the governing procedure. The present defect lies not in the non-disclosure of an otherwise valid internal document, but in the absence of sufficient material showing the main ALB scrutiny required before acceptance of the L-1 quotation.

The respondents’ reliance on Respondent No.4’s experience, infrastructure, financial strength and ability to absorb a loss cannot substitute for the required price-specific assessment. Those matters may properly be considered by the competent authority in determining capability, but the relevant question under Clause 6.42(b)(ii) is whether the bidder has showed its ability to perform the particular contract at the particular price offered.

The Court therefore finds that the essential question is one of process rather than commercial preference. The governing framework entrusted the competent authority with the responsibility of examining an exceptionally low bid where material concern arose as to capability. That responsibility had to be discharged and reflected in the pre-award record before the L-1 position was finalised.

The present case therefore falls within the limited area in which judicial review is justified. The Court is not substituting its own price, choosing the successful bidder, or determining that Respondent No.4 cannot perform. It is only requiring the procurement authority to complete the scrutiny which its own framework contemplates and to reach a reasoned decision on the basis of that scrutiny.

The Court is satisfied that the respondents have not shown, on the present record, due compliance with the pre-award ALB procedure before treating Respondent No.4 as the successful L-1 bidder. The failure is important because the review was specifically meant to check if the very low price would have any adverse effect on performance.

Once that pre-award process is found deficient, the subsequent matching of the L-1 rate by Respondent No.5, post-award quality controls, and the financial strength or asserted capabilities of Respondent No.4 cannot later validate the earlier decision. Those matters may be considered by the competent authority in a fresh and lawful evaluation.

In summary, this Court observed that the procurement concerned a highly specialized, safety-critical and defence-sensitive PBMM-NG system, and that the L-1 bid of Respondent No.4, at Rs. 1.44 crore, was exceptionally low compared with the petitioner’s cost assessment and the indicative component costs; however, this Court held that the absence of a fixed minimum price or cost floor did not by itself invalidate the tender, nor did the petitioner’s own estimate establish the correct price or give it any right to the contract. The petitioner’s prior experience and claim for 50% of the quantity were also found insufficient in the absence of a corresponding tender condition. This Court further observed that non-disclosure of internal comparative statements or price-loading worksheets, by itself, did not invalidate the tender. Nevertheless, under Clause 6.42(b)(ii), the competent authority was required to undertake a specific pre-award “Abnormally Low Bid” (ALB) scrutiny to determine whether the unusually low price would affect the bidder’s ability to perform the contract, and the record did not satisfactorily establish that this scrutiny had been carried out. This Court while holding that Respondent No.4’s experience, infrastructure or financial strength could not substitute for the required price-specific assessment, and that judicial review was justified only to correct this procedural deficiency, not to determine the commercially correct price or select a bidder.

The respondents shall remain at liberty to proceed further in accordance with the tender conditions and the DRDO Procurement Manual, 2025. In doing so, the competent authority shall undertake such clarification, detailed price analysis, capability assessment and consequential ranking as the governing framework requires, and shall record a reasoned decision on the viability of the concerned bid or bids.

Nothing in this order shall be understood as directing acceptance of the petitioner’s quotation, conferring any right upon the petitioner to the contract, or requiring allocation of any particular share of the tendered quantity. The competent authority shall remain free to take an independent decision in accordance with law after following the prescribed procedure.

The relief granted is thus confined to correction of the decision-making process. The Court expresses no final opinion on the commercial merits of Respondent No.4’s quotation as well as that of respondent No.5, their technical capability, or the correctness of the petitioner’s cost estimates. Those matters are for the competent authority to assess in accordance with the governing procurement framework.

The Court has also kept in view the caution in National High Speed Rail Corporation v. Montecarlo and the public-interest principles noticed in Raunaq International and Ramniklal N. Bhutta that the procurement may be proceeded with without avoidable delay, but expedition cannot displace the pre-award scrutiny required by the governing rules and also the observations of N.G. Projects Limited v. Vinod Kumar Jain that even if there is an error or flaw in the evaluation of a public tender, the court should not stop the project, instead, the court's proper course of action is to relegate the aggrieved party to a civil court to claim damages for any actual loss suffered, ensuring that vital public work is not held hostage by litigation.

The result follows from the limited finding that the record does not satisfactorily establish completion of the material ALB exercise. The Court therefore does not enter upon the disputed factual assertions concerning the comparative capabilities, past performance or internal commercial efficiencies of the parties except to the extent necessary to identify the missing procedural assessment.

The petitioner has sought complete cancellation of the tender and disqualification of bidders allegedly guilty of under-quoting. Such relief cannot be granted. This Court has not found Respondent No.4's bid to be inherently invalid. Nor has the Court found that the petitioner's costing represents the only possible legitimate cost. This Court has also not found that the tender was invalid merely because no fixed cost floor was prescribed. Nevertheless, this Court finds that the issue of the unusually low L-1 price and L-2’s matching with such low price, without any evidence as to its in-house capabilities and manufacturing ability, requires a reasoned consideration by the competent authority under the applicable procurement framework before the financial approval is allowed to stand.

For the foregoing reasons, the writ petition succeeds to the limited extent stated above. The tender decision is interfered with because the pre-award ALB scrutiny required by Clause 6.42(b)(ii) has not been satisfactorily shown on the record.

Accordingly, the writ petition is disposed of with a direction to the respondent authorities to evaluate the bids of L-1 & L-2 strictly in accordance with the procedure envisaged under Clause 6.42(b)(ii) of the DRDO PM, 2025. If, upon such evaluation, it is found that L-1 and L-2 have withstood scrutiny and satisfy all the prescribed requirements, the issuance of Tender ID-2025_DRDO_744823_1 dated 17.12.2025 in favour of Respondent Nos. 4 & 5 shall be permitted to stand, along with the financial approval dated 22.01.2026. In the event that the said requirements are not satisfied, the respondent authorities shall proceed with the governing procurement framework. There shall be no order as to costs.

The pending miscellaneous applications, if any, shall stand closed.