Rafale Fighter Jet Deal
Manohar Lal Sharma v Narendra Damodardas Modi
In 2018, the court in a unanimous judgment decided not to order a court monitored investigation of the Union government's purchase of Rafale fighter aircraft. In 2019, it rejected to review its judgment.
Petitioner: Manohar Lal Sharma; Vineet Dhanda, Yashwant Sinha, Sanjay Singh
Lawyers: Prashant Bhushan; Manohar Lal Sharma; Vineet Dhanda
Respondent: Narendra Damodardas Modi, Prime Minster; Union of India; Central Bureau of Investigation
Lawyers: Attorney General K K Venugopal; ASG Tushar Mehta
Does the decision-making process that led the Union Government to purchase only 36 instead of 126 aircraft, suffer from irregularities?
Does the Rafale Fighter Jet Deal suffer from pricing irregularities, considering that the per unit cost of the new deal is higher than what was earlier negotiated under the UPA government?
Did the Union Government propose Reliance Defence Ltd as Dassault Aviation’s Indian Offset Partner without the approval of the Minister of Defence, as required by Clause 8.6 of the Defence Offset Guidelines?
Does the Rafale Fighter Jet Deal qualify as an inter-governmental agreement between India and France?
In 2007, the Ministry of Defence issued tenders for the purchase of 126 fighter aircraft, in line with the procedure set out in the Defence Procurement Procedure (DPP). In particular, the Union would purchase 18 from abroad in ‘fly-away’ condition, while 108 would be manufactured in India by Hindustan Aeronautics Limited (HAL) via a ‘tranfser of technology’ from a foreign company. After an extensive selection process, the Union selected the French company Dassault. Dassault manufactures the Rafale twin-engine fighter aircraft. By 2015, price negotiations were in their final stage.
However, in March 2015 Prime Minister Narendra Modi and the President of France announced a new deal for the purchase of only 36 Rafale fighter aircraft. The Ministry of Defence subsequently announced that the tender for 126 aircraft had been withdrawn. The new deal included a 50% offset clause, which required Dassault (and the other foreign companies involved, such as Thales and Safran) to invest 50% of the contract value back into India via the purchase of Indian goods and services. In October 2016, Dassault and Anil Ambani’s Reliance Group announced a joint venture – Dassault Reliance Aerospace Ltd (DRAL) – with Dassault specifying that intends to invest $115 million to partially fullfil its offset obligation.
In 2018, multiple litigants — advocate ML Sharma, lawyer Vineet Dhanda, AAP MP Sanjay Singh and politician Yashwant Sinha — filed petitions in the Supreme Court, claiming that the Rafale Fighter Jet Deal suffers from serious procedural irregularities. They brought forward such concerns as:
- Did Prime Minister Modi make a decision to go ahead with the deal without the approval of the Cabinet Committee on Security?
- Was Reliance Defence made Dassault Aviation’s Indian Offset Partner without the approval of Minister of Defence, as required by the Defence Offset Guidelines? Further, was Hindustan Aeronautic Limited (HAL), the previously proposed Offset partner, improperly removed?
- Is the deal in fact an inter-governmental deal between India and France? And if it is, does this allow the Central government to forego disclosing the details of the deal, in violation of the Comptroller and Auditor General’s (Duties, Powers and Conditions of Service) Act?
- Does the deal suffer from pricing irregularities? The price per aircraft from the first deal to the second deal, approximately doubled.
On November 14th 2018, the court reserved judgment. One month later on December 14th, the court dismissed the plea for a court monitored investigation. The court observed that it found no irregularity in the decision making process, pricing or selection of an off-set partner. The court reached its conclusion on the basis of evidence produced by the State in sealed covers.
On February 21st 2019, the court agreed to hear a review petition challenging the judgment, filed by Yashwant Sinha, Arun Shourie and Prashant Bhushan. These review petitioners allege that the judgment rests on incorrect factual claims made by the government.
On March 14th 2019, the Court reserved order on the review petitions with regards to the limited question of whether leaked documents could be placed on the record. On April 10th 2019, the court held that the classified documents could be placed on the record, dismissing the Union’s objection.
On May 10th 2019, the court reserved judgment in the review petitions. On November 14th, it dismissed the review petitions, emphasising that it had limited scrutiny of defence contracts under its Article 32 jurisdiction.