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CJI Gogi, Justices Sanjay Kishan Kaul (Left) and KM Joseph (Right)
CJI Gogi, Justices Sanjay Kishan Kaul (Left) and KM Joseph (Right)
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Perception of individuals cannot be basis of inquiry: The Rafale judgment explained

Aditya AK

The Supreme Court today dismissed petitions calling for an investigation into the controversial Rafale Deal, by which the Indian government procured 36 fighter jets for Rs. 58,000 crore from French firm Dassault Aviation.

Amidst the clamour raised in the political scenario and in the media regarding the alleged irregularities of various aspects of the deal, the Bench of Chief Justice of India Ranjan Gogoi and Justices Sanjay Kishan Kaul and KM Joseph saw it fit not to interfere. The Bench notes in its judgment,

“Perception of individuals cannot be the basis of a fishing and roving enquiry by this Court, especially in such matters.”

So, what is the basis on which the Court has dismissed the concerns surrounding the Rafale Deal?

At the beginning of the judgment, the Court makes it clear that it is circumspect while interfering in matters of governmental decisions relating to defence procurement.

It quotes a couple of judgments dealing with judicial review of such decisions, holding,

“The tender is not for construction of roads, bridges, etc. It is a defence tender for procurement of aircrafts. The parameter of scrutiny would give far more leeway to the Government, keeping in mind the nature of the procurement itself.

…The scrutiny of the challenges before us, therefore, will have to be made keeping in mind the confines of national security, the subject of the procurement being crucial to the nation’s sovereignty.”

With this in mind, it goes on to deal with three aspects of the Rafale Deal that the petitions filed in the Supreme Court were largely based on – the decision-making process as regards the deal, pricing issues, and the appointment of the Indian Offset Partner (IOP).

The Process

Perception of individuals cannot be basis of inquiry: The Rafale judgment explained

With regard to the earlier deal entered into by the UPA government of procuring 126 Rafale jets at a lower price per aircraft, the Bench notes that there were unresolved issued between the Original Equipment Manufacturer (Dassault) and Hindustan Aeronautics Limited (HAL). This in turn affected the price of the jets.

“The aforesaid issues are stated to have been unresolved for more than three years. Such delay is said to have impacted the cost of acquisition, as the offer was with ‘inbuilt escalation’ and was influenced by EuroRupee exchange rate variations. The stalemate resulted in the process of RFP withdrawal being initiated in March 2015.”

Addressing the concerns raised by the petitioners that the requirements of the Inter-Governmental Agreement between India and France were not fulfilled, the Court held,

“We are satisfied that there is no occasion to really doubt the process, and even if minor deviations have occurred, that would not result in either setting aside the contract or requiring a detailed scrutiny by the Court…

…We cannot sit in judgment over the wisdom of deciding to go in for purchase of 36 aircrafts in place of 126. We cannot possibly compel the Government to go in for purchase of 126 aircraft. This is despite the fact that even before the withdrawal of RFP, an announcement came to be made in April 2015 about the decision to go in only for 36 aircrafts…”

Pricing

The Court notes that the government has not placed in the public domain details on the pricing of the deal, owing to concerns of national security. However, during the hearings, the details were submitted to the Court in a sealed cover. On perusing the documents, the Court held,

“Suffice it to say that as per the price details, the official respondents claim there is a commercial advantage in the purchase of 36 Rafale aircrafts. The official respondents have claimed that there are certain better terms in IGA qua the maintenance and weapon package. It is certainly not the job of this Court to carry out a comparison of the pricing details in matters like the present. We say no more as the material has to be kept in a confidential domain.”

With that, the issue of pricing is put to bed.

Perception of individuals cannot be basis of inquiry: The Rafale judgment explained

Offset Partner

Another concern raised by the petitioners was the appointment of Reliance Defence as the Indian offset partner (IOP) for the deal, despite having little or no experience in the arena.

The Court bought the argument of the Centre that it had no role to play in the selection of the IOP. It relies on a press release stating that Dassault is free to select the IOP, provided the company has not been barred by the Indian Defence Ministry.

“It is no doubt true that the company, Reliance Aerostructure Ltd., has come into being in the recent past, but the press release suggests that there was possibly an arrangement between the parent Reliance company and Dassault starting from the year 2012. As to what transpired between the two corporates would be a matter best left to them, being matters of their commercial interests, as perceived by them…

…We do not find any substantial material on record to show that this is a case of commercial favouritism to any party by the Indian Government, as the option to choose the IOP does not rest with the Indian Government.”

Thus, the Court dismissed the petitions, noting that the perception of individuals cannot be the basis of a “fishing and roving enquiry by the Court”.

At the end of the judgment, the Bench makes it clear that its views are from the standpoint of exercise of jurisdiction under Article 32 of the Constitution. What this perhaps means is that while the matter has come to an end as far as the Supreme Court is concerned, it is still open for investigative authorities to look into the deal.

Read the judgment:

Rafale-judgment.pdf
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