Rafale: Supreme Court reserves verdict on review plea

New Delhi: The Supreme Court on Friday reserved its verdict in the petition seeking review of the December 14, 2018, judgment that had declined to order a CBI or a SIT probe into the alleged irregularities in the deal to procure 36 Rafale aircraft from the French company, Dassault aviation.

A Bench of Chief Justice Ranjan Gogoi and Justices Sanjay Kishan Kaul and K.M. Joseph reserved orders after the conclusion of arguments from Prashant Bhushan, one of the petitioners, along with former Union ministers Yashwant Sinha and Arun Shourie, as well as attorney general K.K. Venugopal for the Centre.

Mr Bhushan argued that the December 14 judgment proceeded on the wrong basis that the petitioners were seeking cancellation of the deal, failing to consider that the petitioners were actually praying for a court-monitored probe into the alleged irregularities and corruption in it. He drew the attention of the court to a document — purported to be a note from the ministry of defence — regarding “eight last-minute changes” that were approved by the Defence Acquisition Council.

He argued that based on this document, the Cabinet Committee on Security met in September 2016 to drop standard clauses in the deal pertaining to use of undue influence, agents/agency commission and access to books of accounts of industrial suppliers, which are usually included in procurement deals to ensure transparency and probity. The fact that standard anti-corruption clauses were unusually dropped from the agreement by itself points to the need for criminal investigation, he argued.

He said the benchmark price was fixed at 5 billion euros, but in the final deal the price increased by 55.6 per cent above the benchmark. The sovereign guarantee clause was dropped despite objections from members of the Indian negotiating team. He also submitted that around the time of the deal, Anil Ambani had met the French defence minister and had produced a film for his wife; Mr Ambani was also given a huge tax exemption. All these aspects require a probe to see if there was any quid pro quo in the offset partner selection, he argued.

Rejecting the arguments, the attorney general urged the court not to venture into areas pertaining to defence deals as they cannot be easily subjected to judicial review. He said so far as the price is concerned, it is covered under Article 10 of the inter-government agreement. Pricing under Article 10 was not supposed to be discussed in public domain.

When Justice K.M. Joseph asked why no action was taken as per the Lalithakumari decision on the petitioners’ complaint, the AG replied that no prima facie case was made out. On a query from Justice Joseph about lack of transfer of technology in Rafale deal, unlike previous deals, AG replied that the court can’t decide technical aspects of the deal.

When Justice Joseph wanted to know whether the concerns shared by three members who expressed dissent, the AG said there were further meetings and all the concerns by them were addressed and finally it was they who prepared a note for the Cabinet Committee on Security for approval.    

The AG also made it clear that monitoring of the progress by PMO of the government-to-government process relating to Rafale deal could not be construed as interference or parallel negotiations by the Prime Minister’s Office.

He said that access to all files, notings, letters etc. related to the deal, including pricing details, has been made available to the CAG who has given its report concluding that the price of 36 Rafale is 2.86 per cent lower than the audit aligned price, apart from additional benefits which would accrue because of change from firm and fixed pricing to non-firm price.

As to the internal file noting wherein various views and legal advice rendered by different agencies at different stages of the procurement process have been reflected/recorded, it was submitted “that these are incomplete file notings containing views expressed by various functionaries at different times and not the final decision of the competent authority of the Union government”.

Seeking dismissal of the review petition, the AG submitted that the waiver of sovereign/bank guarantee in government-to-government agreements/contracts is not unusual. He pointed out that in contracts concerning Russian Federation contracts signed with Rosoboron Export of Russia, the requirement of bank guarantees is waived off in view of the assurance provided through a “Letter of Comfort” from the government of the Russian Federation. Similarly, in foreign military sales (FMS) cases with the US government, no bank guarantee/sovereign guarantee is provided for contracts signed between the Government of India and the US government.