On the Rafale Question:‘Circumspection’ in the Court

From a reading of the recent judgement passed on December 14, 2018 by the Supreme Court on the Rafale matter involving Medium Multi-Role Combat Aircraft (“MMRCA”), it is clear that the Court has held its hand largely on account of its having been a Defence-related transaction. This led the Court to circumscribe the scope of judicial review in the petitions before it and to state at the end of the judgement that the matter had been looked at only from the perspective of the Writ Jurisdiction under Article 32 of the Constitution. It follows that the judicial remedy of filing suits in respect of the contro-versy, or raising the matter in parliamentary or other appropriate institutional forums has not been closed.

There were four petitions before the Court. Some of the petitioners appear to have created the impression that they were challenging the very procurement of aircraft. It is this that seems to have led the Court into the discussion with certain Air Force officers on the need for induction of such aircraft.

Yet this was not the crux of the issue. The Court itself recorded in paragraphs 13 and 14 of its judgement:

“On 31st October, 2018, the Court in its order had recorded that in none of the writ petitions the suitability of the fighter jets and its utility to the Indian Air Force had been called into question. Rather what was doubted by the petitioners is the bona fides of the decision-making process and the price/cost of the equipment at which it was proposed to be acquired. Pursuant to the order dated 10th October, 2018, a note in sealed cover delineating the steps in the decision-making process was submitted to the Court and by order dated 31st October, 2018 this Court had directed that such of the information which has been laid before the Court, which can legitimately be brought into the public domain, be also made available to the petitioners or their counsels. Details with regard to the induction of the Indian Offset Partner (IOP), if any, was also required to be disclosed. The Court also directed that the details with regard to pricing; the advantages thereof, if any, should also be submitted to the Court in a sealed cover.”

So far as the present writer is concerned, there were five prime issues before the Court. These issues concerned why the public sector Hindustan Aeronautics Limited (HAL) was cut out of the deal, why a greenhorn private company of a particular businessman was brought in, why the number of planes involved was reduced from more than 120 to less than 40, whether the price variations were reasonable and what process was followed.

On the first question the Court observes in paragraph 32:

“As far as the role of HAL, insofar as the procurement of 36 aircrafts is concerned, there is no specific role envisaged. In fact, the suggestion of the Government seems to be that there were some contractual problems and Dassault was circumspect about HAL carrying out the contractual obligation, which is also stated to be responsible for the nonconclusion of the earlier contract.”

On the second question the Court acknowledges the fact but relies on a press release referring apparently to an earlier Reliance Company:

“It is no doubt true that the company, Reliance Aerostructure Ltd., has come into being in the recent past, but the press release suggests that there was possibly an arrangement between the parent Reliance company and Dassault starting from the year 2012. As to what transpired between the two corporates would be a matter best left to them, being matters of their commercial interests, as perceived by them.”

The Court continues in Paragraph 33: 

“Once again, it is neither appropriate nor within the experience of this Court to step into this arena of what is technically feasible or not.”

And it takes this formalist view about the greenhorn Indian Offset Partner that:

“We do not find any substantial material on record to show that this is a case of commercial favouritism to any party by the Indian Government, as the option to choose the IOP does not rest with the Indian Government.”

On the third question, of the number of aircraft, the Court notes in Paragraph 22, obviously relying essentially on the Government version:

“It is also a fact that the long negotiations for procurement of 126 MMRCAs have not produced any result, and merely conjecturing that the initial RFP could have resulted in a contract is of no use. The hard fact is that not only was the contract not coming forth but the negotiations had come practically to an end, resulting in a recall of the RFP. We cannot sit in judgment over the wisdom of deciding to go in for purchase of 36 aircraft in place of 126. We cannot possibly compel the Government to go in for purchase of 126 aircraft.”

Yet it also implicitly accepts in its narration of facts that the HAL was still in the picture when the new deal was entered into. The Court records in paragraph 3 the official stand that:

“A process of withdrawal of the Request for Proposal in relation to the 126 MMRCA was initiated in March 2015. On April 10, 2015 an Indo-French joint statement, for acquisition of 36 Rafale Jets in flyaway condition through an Inter-Governmental Agreement (hereinafter referred to as “IGA”), was issued and the same was duly approved by the DAC. The Request for Proposal for the 126 MMRCA was finally withdrawn in June 2015.”

The Court does not specify what is meant by “A process of withdrawal of the Request for Proposal ....initiated in March 2015.” But it accepts that the RFP was actually withdrawn only in June 2015 while the new deal was announced earlier, in April 2015.

On the last two questions, that is, of pricing and the process of decision-making, the Court, explaining the kind of circumscribed scrutiny being made by it, recorded in paragraph 12:

“The Court had also indicated that it was so proceeding in the matter in order to satisfy itself of the correctness of the decision-making process. It was also made clear that the issue of pricing or matters relating to technical suitability of the equipment would not be gone into by the Court.”

And it concludes in paragraph 22:

“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.”

Conclusion

So the Court implicitly accepts that there may have been deviations which it describes as minor and yet of which no detailed scrutiny would be required by the Supreme Court. What these deviations were might, however, have been usefully underscored for the benefit of future litigants in such defence-related cases.

 The Court’s order does not touch upon the matters it has specifically excluded.

And even though it accepts implicitly that HAL was in the picture in April 2015 when the Indo-French announcement of a new deal was made, the HAL version does not appear to have come on record. The Court has taken a formalist view to exclude a possible Government role in the induction of a private party as the Indian Offset Partner. In paragraph 33 the Court suggests that any material with regard to favouritism was either not ‘on record’ or was not ‘substantial’. But the insubstantiveness of the material, if any, does not appear to have been discussed.

The drastic reduction in the number of aircraft also appears to remain unexplained.

 Finally, in paragraph 34, the Court qualifies its entire judgement with the following caveat:

“We, however, make it clear that our views as above are primarily from the standpoint of the exercise of the jurisdiction under Article 32 of the Constitution of India which has been invoked in the present group of cases.”

As mentioned above, from this one may conclude that the judicial remedy of filing suits in respect of the controversy, or raising the matter in parliamentary or other appropriate institutional forums has not been and cannot be closed.

The author, a writer and lawyer, is an Advocate in the Supreme Court of India.