On 14th December 2018, the Supreme Court held that it will not order a court monitored investigation of the Government's purchase of 36 Dassault Rafale fighter jets. The Court was entertaining the matter because a set of petitioners -- advocate ML Sharma, lawyer Vineet Dhanda, AAP MP Sanjay Singh and politician Yashwant Sinha -- had argued that the deal suffered from procedural irregularities.
CJI Gogoi authored the unanimous judgment.
Regarding the Supreme Court's scope of judicial review, CJI Gogoi announced that it varies depending on the subject matter of the case. He emphasised that, in this instance, the Court's scope of judicial review is severely restricted because the matter pertains to a defence procurement contract. He stressed that the Rafale procurement deal is a vital national security matter, hence the ambit of the Court's scrutiny is restricted to assessing only if the government acted illegally, irrationally and/or with procedural impropriety
CJI Gogoi stressed that the Court’s investigation of the deal could have ramifications on India's national security and sovereignty. Drawing on British jurisprudence, the Court quoted from ‘Applications for Judicial Review, Law and Practice’ by Grahame Aldous and John Alder: ‘here are however, certain areas of governmental activity, national security being the paradigm, which the courts regard themselves as incompetent to investigate beyond the initial decision as to whether the government’s claim is bona fide.’
Respecting its limited powers of judicial review, the Court focused its attention on three issues: (i) the decision making process (ii) price variation and (iii) the Indian Offset Partner (IOP).
On the decision making process that that led the Government to buy only 36 jets instead of 126
The previous agreement was between the UPA government and Dassault for the purchase of 126 Jets. The Court found that the previous deal could not be concluded because of unresolved issues between Dassault and HAL, the then Indian Offset Partner. The Court noted that inconclusive talks for the purchase of the jets led to the Request for Purchase (RFP) being withdrawn in March 2015. It was under these circumstances that the present government entered into Inter-Governmental Agreement (IGA) for the purchase of 36 Rafale Jets. The Court recognized that the new deal between the NDA government and Dassault was an entirely fresh procedure.
The Court appeared satisfied that the government had undertaken sufficient negotiations with the French Government before entering into a contract for buying the 36 jets. The Court noted submissions by Indian Air Force personnel.
In paragraph 22 of its judgment, the Court observed that ‘we have also had the benefit of interacting with senior Air Force Officials who answered Court queries in respect of different aspects, including that of the acquisition process and pricing. 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 setting aside the contract or requiring a detailed scrutiny by the Court.’ The Court concluded that it is beyond its scope of judicial review to scrutinize the government for purchasing 26 aircrafts instead of 126.
On the escalation in Procurement Prices for the Jets
The petitioners had contended that the large escalation in the procurement price of the jets merited judicial scrutiny. The Court observed that it was disinclined to go into the pricing issue. Nevertheless, it went through the pricing details submitted by the government to the Court in a ‘sealed cover’, in order to satisfy the ‘conscience of the court’.
The Court accepted the government's claim that sharing the cost details for the jets could affect ‘national security’ and, further, would violate Article 10 of the Inter-Governmental Agreement signed between India and France.
In paragraph 26, the Court expressed its inability to investigate the reasons for the price escalation. It accepted the government’s narrative that the new deal is commercially advantageous, as it offers a better weapons package and terms of maintenance.
On Reliance Defence as the Indian Offset Partner (IOP)
The Court held that choosing Reliance Defense as the offset partner was the prerogative of Dassault Aviation as per the Defence Offset Guidelines under Defence Procurement Policy 2013 (DPP). The Court stated that the Indian Government had no direct say in Dassault’ selection of an IOP. The Court saw the choice of an IOP as a private contract between two companies. It observed, '…DPP 2013 envisages that the vendor/OEM [Dassault] will choose its own IOPs [Reliance Defence]. In this process, the role of the Government is not envisaged…' (para 33).
The Court side-lined the allegations made by Former French President François Hollande that the Indian Government had put pressure on Dassault to choose Reliance as an offset partner. The Court stated that all parties (Dassault, Reliance and the Indian government) have clarified that President Hollande’s allegations are false.
It touched upon the amendment made to Paragraph 8 of the Defence Offset Guidelines, which prevented disclosure about the Offset Partner. Note that the amendment was applied by the government retrospectively. This amendment brought by the government conceals the terms and conditions for choosing an Offset Partner from the public domain. Questioning the need to introduce this singular amendment to the Defence Offset Guidelines, the petitioners alleged corruption and collusion between Dassault, Reliance Defense and the Government. The Court raised the issue but chose not to dwell upon the need for nor the intention behind the amendment.
In paragraph 33, the Court observed 'it is neither appropriate nor within the experience of the court to step into this arena of what is technically feasible or not'.
The Court dismissed the petition for seeking a judicial probe into the Rafale Deal. It remains unclear if the Court has foreclosed the possibility of future judicial probes with this judgment.