The Hon’ble Supreme Court on the 14th of December, 2018 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. Below is a small summary of the Order along with the reasoning. The paragraph numbers provided in the brackets refer to the paragraph number of the Order.

List of petitions: 

  1. Writ Petition (Crl) 225 of 2018; Sri Manohar Lal Sharma vs N Modi and Ors. Relief sought: Registration of FIR, Court-monitored investigation and quashing of Inter-Governmental Agreement (IGA).
  2. Writ Petition (Civil) 1205 of 2018; Shri Vineet Dhanda vs Union of India and ors.
  3. Writ Petition (Crl) 291 of 2018; Shri Sanjay Singh vs Union of India and ors. Relief sought: Investigation as to how Reliance was offered Indian Offset Partner tag, registration of FIR and quashing of IGA.
  4. Writ Petition 298 of 2018; Shri Yashwant Singh and ors vs CBI and others. Relief sought: Registration of FIR by CBI on information submitted by them under the Prevention of Corruption Act, 1988 and court-monitored investigation.

After the preliminary hearing, the Court determined three Key Issues:

a) Decision-making process,
b) Difference in pricing,
c) Change in IOP.

Primarily opinion on the scope of judicial review in such matters:
The Court held that as per established precedence, the Court was not to utilize its power of judicial review even if there was a procedural error which led to the violation of private rights as private interests could not be protected under judicial review. A tender being a commercial decision is not open to judicial review merely for it being a bad decision, as it is not open for the Court to determine or inform what is a good or a bad commercial deal, under judicial review. There was no set standard for judicial review of commercial tenders, and in the current case, the challenges were scrutinized only from the preview of national security. (Para: 7-11)

a) Decision-Making Process:

The Court determined that broadly the process had been followed. The Court also noted that minor procedural discrepancies DID take place. The Court did not deny that the 3 essential requirements needed for entering an Inter-Governmental Agreement were NOT meet. The Court and the Government of India agreed that India did not receive a Sovereign Guarantee from France, which is normally a part of an IGA, but only received a non-binding Letter of Comfort. Nevertheless, the SC upheld that in a broad sense, while irregular, the procedure wasn’t illegal or against national interests in a manner to justify a full judicial review. (Para: 20 – 22)

b) Price Difference:

The Prices were submitted to the Court in a sealed cover. The SC held that the Government had stated that certain terms of the IGA were commercially better than the previous agreement. The Court held that it is NOT the job or duty of the Court to carry out price comparisons and look into financial details of policy decisions unless there is something illegal per se. And the Court would not comment on the price aspect apart from maintaining that it should be confidential. (Para: 26)

Hours after the Order copy was publically available on the Supreme Court website, Para 25 was what raised quite a few eyebrows. Para 25 essentially stated that the Government had provided the Controller and Auditor General (CAG) with all price details, who had furnished a report to the Parliamentary Affairs Committee (PAC), which was provided to the Supreme Court in a sealed cover.

On the evening after the order came out, PAC Chairman Mallikarjun Kharge said that the committee has not been given any report by the CAG, and so there was no question of it having discussed the report. Kharge said he even spoke to the office of the CAG, which confirmed the fact that its report on the Rafale deal is not yet ready.

So important question being raised now is what was shown to the Supreme Court by the Government if the CAG informed the PAC Chairman that it’s Final Report isn’t ready yet?

3) Indian Offset Partner(IOP):

In Para 32 the Hon’ble presumably made a minor error due to an unfortunate confusion between Reliance named companies. The 2012 deal was between Dassault and Mukesh Ambani’s Reliance, Reliance Aerospace Technologies Ltd, which traces its origins to an earlier company called Reliance Gas Marketing. In May 2012, this company changed its name to Reliance Aerospace.

The current deal is with Anil Ambani’s Reliance Defense. The two Reliance companies are completely separate legal entities. The Ambani companies had split in 2006 and their Companies have no legal relationship between each other.

That aside, the Court understood and stated that Reliance Defense is NOT the official offset partner yet. As per the DPP, the Original Equipment Seller can inform the Government about who is the Offset Partner (Indian Offset Partner), when it comes to discharging the offset (which will be from end 2019). So the scope of Government review into Offset Partner is only AFTER Dassault officially submits Reliance Defense as the IOP. Till an official submission is made, the Government cannot act based on mere press releases and hence the question of investigating the Government for Dassault choosing Reliance does not arise at this stage. (Para 32-33)

All views of the Court are from the primary standpoint of the exercise of jurisdiction of the Court under Article 32. All material before the Court were either newspaper reports or speculations, and as such were not sufficient to merit a judicial exercise of the Supreme Court’s powers under Article 32. The Court is a judicial organ, it could not, should not, and would not investigate and dig into a matter on its own. (Para 34)

Read the full Order here.

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