On 14 December 2018, the Supreme Court of India dismissed all the writ petitions filed against the Rafale deal.
The bench, comprised of CJI Ranjan Gogoi and Justices Sanjay Kishan Kaul and KM Joseph, unanimously held that they “find no reason for any intervention by this Court on the sensitive issue of purchase of 36 defence aircraft by the Indian Government.” As a result, they have not ordered a probe into the deal, as requested by the petitioners.
The court’s verdict dealt with the three broad challenges raised against the deal. Here are the relevant sections which form the basis for the court’s dismissal of these challenges.
Challenge 1: The Correct Procedure Wasn’t Followed for the Deal
Court’s View: “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.”
Challenge 2: The Pricing of the Deal is Excessive, Indicating Corruption
Court’s View: “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.”
Challenge 3: The Offset Contract Process was Manipulated to Benefit Anil Ambani’s Reliance
Court’s View: “In this process, the role of the Government is not envisaged and, thus, mere press interviews or suggestions cannot form the basis for judicial review by this Court, especially when there is categorical denial of the statements made in the Press, by both the sides.”
It should be noted that the decision of the court is based more on the limitations of its powers of judicial review, rather than an assessment of the merits of the deal. This attempt to be circumspect when it comes to judicial review is not a bad approach, as it ensures there is no overreach by the judiciary.
However, the manner in which the court has arrived at some of its conclusions is problematic, as it seems to ignore certain important arguments raised during the hearings, takes government statements at face value despite evidence to the contrary, and some passages in the judgment even appear to contradict each other.
Moreover, despite saying that issues at play in this case were beyond the scope of judicial review, the judges have still ended up making statements about them on merits, for instance on the offsets issue.
It’s a case of having one’s cake and eating it for the court to say it cannot examine the issue since the government wasn’t involved, and yet say that there is no material on record to show commercial favouritism.
Here are the unanswered questions we have left after reading the verdict.
Why did the Supreme Court, without any proof, accept the government’s claim that negotiations between Dassault and HAL on the original deal were going nowhere, despite a public statement made by the CEO of Dassault at the time which directly contradicted this?
In paragraph 18 of the judgment, the Supreme Court has accepted the government’s affidavit that there were unresolved issues between HAL and Dassault, and so the original 126 aircraft deal was not forthcoming, hence the need for the new deal announced by the Prime Minister in April 2015.
However, it is a matter of public record that Dassault CEO Eric Trappier on 25 March 2015 said in the presence of the IAF chief and the HAL chairman that:
“...you can imagine my great satisfaction to hear…from HAL Chairman that we are in agreement for the responsibilities sharing… I strongly believe that contract finalisation and signature would come very soon.”
If the process to withdraw the RFP was indeed initiated in March 2015, why did the Foreign Secretary instead inform the press that the negotiations were still continuing in April 2015? Did the government submit any actual proof that the withdrawal was initiated in March 2015?
The Court has accepted the government’s submission that the process to withdraw the old RFP was initiated in March 2015. However, this was never mentioned in any of the government’s statements on the Rafale matter previously. Furthermore, on 8 April 2015, then Foreign Secretary S Jaishankar had told the press that:
“In terms of Rafale, my understanding is that there are discussions under way between the French company, our Ministry of Defence, the HAL which is involved in this. These are ongoing discussions.”
On what basis did the Supreme Court hold that the CAG had prepared a report on the Rafale deal and sent a redacted version to the Public Accounts Committee of Parliament, given PAC members claim they have not received any such report?
In paragraph 25 of the judgment, the judges have written that the CAG saw the pricing details for the Rafale deal, and then submitted a report to the Public Accounts Committee (PAC) of Parliament. According to the judges, “a redacted portion of the report was placed before the Parliament, and is in public domain.”
However, three members of the PAC have come forward today to say that the PAC never received the CAG report, including PAC chairman Mallikarjun Kharge. Kharge made his comments at a press conference alongside Rahul Gandhi, who then asked when this took place. According to The Wire, Congress MP Rajeev Gowda, and BJD MP Bhartruhari Mahtab also say they are not aware of the PAC receiving a copy of the report. So why did the judges believe it was submitted to them?
Since even this redacted version of the CAG report is not in the public domain as alleged, one of the key reasons why the apex court was satisfied itself that it didn’t need to look into the pricing of the deal, appears to have arisen out of incorrect facts.
Given the absence of a sovereign guarantee from France, and the absence of any reasoning to address this in the judgment, on what basis did the Supreme Court hold that an Inter-Governmental Agreement (IGA) was in fact entered into?
In paragraph 20 of the judgment, the Supreme Court has acknowledged that the petitioners had questioned whether the deal was an IGA or not, since France had only provided a ‘Letter of Comfort’, not a ‘Sovereign Guarantee’.
This was important since the government could only deviate from the requirements for tenders and RFPs for commercial deals under the relevant Defence Procurement Procedure (DPP) if it was entering into an IGA – something the court itself seems to acknowledge when it notes that in paragraph 22 that “Broadly, the processes have been followed.”
The court, however, just moves past this objection without addressing why the arguments raised in the petitions and during hearings were incorrect.
Why did the apex court conflate Mukesh Ambani’s Reliance and Anil Ambani’s Reliance companies, two entirely separate business entities, despite the judgment already recognising that they weren’t from the same business group?
When analysing the offset policy issue, in paragraph 30, the judgment notes that when Dassault was selected for the original 126 MMRCA deal in 2012, it entered into a partnership pact with Reliance Industries (which belongs to Mukesh Ambani), which the judges expressly state to be “Another business group”, with reference to Anil Ambani’s Reliance.
Despite this, in paragraph 32 of the judgment, the court says that even though Anil Ambani’s Reliance Aerostructure Limited was only incorporated earlier that year, there “was possibly an arrangement between the parent Reliance company and Dassault starting from the year 2012.”
This was an argument the government’s lawyers had sought to raise in court and had been roundly contested because it was clearly factually incorrect, and yet the judges appear to have contradicted themselves to accept it.
Why did the judges disregard the media reports that indicated the new deal was structured to benefit Anil Ambani’s group without an investigation into the allegations, including French reports from April 2015 about the deal being restructured to favour Anil Ambani, and the interview with former French President Francois Hollande in September 2018?
At the end of the day, the main prayer in all petitions was for a further investigation into the matter, given the information which had come to light, including what had been reported in the media. The judges have held that “mere press interviews or suggestions cannot form the basis for judicial review”, simply because there has been a categorical denial of the allegations in the press by the Modi government and Dassault.
However, without a formal investigation, how can the issues raised in the press be countered?
It seems unreasonable that the apex court considers the denials of the very parties accused of corruption sufficient to dismiss allegations that were extremely serious.
A 17 April 2015 article from a French website cited by the petitioners alleges the old deal was cancelled because the Prime Minister wanted to involve Anil Ambani in the defence sector – this was well before the issue even became political.
The statement may or may not be true, but after President Hollande’s interview which appears to corroborate it, at least it appears to require further investigation to put it to bed. A judicial review could then have followed after the findings arrived at by the investigation.
You can read the full judgment of the Supreme Court here:
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