SUDHANSU MOHANTY | 17 DECEMBER, 2018
Court satisfied that procedures were ‘broadly followed’
To someone who has spent a lifetime in the intricate world of defence procurement, with its accompanying pitfalls and humongous expenditure of public money, and has fought every conceivable battle to protect public money, and ensure financial and intellectual honesty, the Supreme Court’s judgment on the Rafale deal is lacerating.
With due respect to the Honourable Bench, one wonders how the highest court of the land could go so egregiously wrong on a matter that bristles with every conceivable wrong, and challenges in a way the very foundation of the rule of law.
The Hon’ble Bench starts off with a wrong premise in Para 4, remarking that ‘Things remained quiet until sometime in the month of September 2018, when certain newspapers reported a statement claimed to have been made by the former President of France, Francois Hollande, to the effect that the French Government were left with no choice in the matter of selection of Indian Offset Partners and the Reliance Group was the name suggested by the Government of India. This seems to have triggered off the writ petitions under consideration.’
The fact is, there was serious disquiet not only when the intergovernmental agreement or IGA was signed on September 23, 2016, but much before, and also during the period when the IGA was under construction following the announcement by PM Modi in April 2015 to ex post carry out the direction.
Now to Para 9 of the judgment on the tender, which holds inter alia that: ‘The triple ground on which such judicial scrutiny is permissible has been consistently held to be “illegality”, “irrationality” and “procedural impropriety”.’
These then become the litmus test and prism to view the three broad areas of concern examined in the judgment, namely (i) the decisionmaking process, (ii) the difference in pricing, and (iii) the choice of the Indian offset partner or IOP.
The decisionmaking process is dealt with in Paras 16 to 23, which are the crucial part of the judgment – and doubtless where the Hon’ble Court could have examined the issue threadbare. But it is here that the most remarkable observations have been made.
Para 20 of the judgment refers to the petitioners seeking questions about the ‘Letter of Comfort’ replacing ‘Sovereign Guarantee’. This is an extremely serious issue – but the judgment contains no further resolution or orders on it.
‘Sovereign Guarantee’ or its inadequate replacement ‘Letter of Comfort’ can’t be glossed over because it involves taxpayers’ money, and the lack of a sovereign guarantee from the French government may jeopardise public funds. But sadly nothing on this is forthcoming in the judgment.
To come to Para 22, I would have appreciated it if the Court had judged the process of acquisition as an appellate authority in all its aspects, rather than judging a few aspects and observing:
‘We have studied the material carefully... 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… there is a financial advantage to our nation…
‘Broadly, the processes have been followed. 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 aircrafts in place of 126.’ (Emphasis added)
‘This is despite the fact that even before the withdrawal of RFP, an announcement came to be made in April 2015 about the decision to go in only for 36 aircrafts. Our country cannot afford to be unprepared/ underprepared in a situation where our adversaries are stated to have acquired not only 4th Generation, but even 5th Generation Aircrafts, of which we have none. It will not be correct for the Court to sit as an appellate authority to scrutinize each aspect of the process of acquisition.’
In the Defence Ministry’s acquisition wing the Defence Procurement Procedure (DPP) is considered sacred, and deemed a Bible where no transgressions are permitted. One wonders if the processes can be only ‘broadly followed’ or permit ‘minor deviations’.
Likewise, Para 25 on pricing boggles the mind:
‘The pricing details have, however, been shared with the Comptroller and Auditor General and the report of the CAG has been examined by the Public Accounts Committee. Only a redacted portion of the report was placed before the Parliament, and is in public domain… The pricing details are stated to be covered by Article 10 of the IGA between the Government of India and the Government of France, on purchase of Rafale Aircrafts, which provides that protection of classified information and material exchanged under the IGA would be governed by the provisions of the Security Agreement signed between both the Governments on 25th January, 2008. Despite this reluctance, the material has still been placed before the Court to satisfy its conscience.’
These remarks stand out because there is no information in the public domain or in the affidavit filed by the respondent. How, when, and wherefrom this information has been captured, recorded, and contained in the judgment ought to have been clearly referenced.
Now that the government has made an application to the Supreme Court to correct the ‘grammar’ error that inadvertently crept in based on the secret note submitted to the Hon’ble Bench, it raises suspicion if some other information contained therein (and not shared with the petitioners) hasn’t influenced the judgment.
Para 26 too bristles with contradictions. The Hon’ble Court is indeed very right in observing that ‘it is certainly not the job of this Court to carry out a comparison of the pricing details in matters like the present.’
But going by the same logic I wish the judgment didn’t contain such lines as:
‘We have examined closely the price details and comparison of the prices of the basic aircraft along with escalation costs as under the original RFP as well as under the IGA. We have also gone through the explanatory note on the costing, item wise… Suffice it to say that as per the price details, the official respondents claim there is a commercial advantage in the purchase of 36 Rafale aircrafts. The official respondents have claimed that there are certain better terms in IGA qua the maintenance and weapon package.’
The contradictions here, in the process of arriving at the judgment, are so obvious, so palpable, and so glaring, that sadly its very moral foundation seems shaken to the core.
Para 28 of the judgment must not be overlooked either. To quote inter alia:
‘The complaint of the petitioners is that the offset guidelines contemplate that the vendor will disclose details about the Indian Offset partner however, in order to help the business group in India in question, an amendment was carried out in paragraph 8 of the Offset Guidelines that too with retrospective effect.
‘By virtue of the said amendment it is contended that cloak of secrecy is cast about the Offset partner and the vendor is enabled to give the details at a much later point of time. It is contended, however, that other provisions of the Offset Guidelines remain unamended, and, therefore, Government cannot pretend ignorance about the Indian Offset partner as has been done in the affidavit filed.’ (Emphasis supplied)
As I have said elsewhere, amending the Offset Guidelines is not morally right and it shouldn’t have been done, because it brings no added benefit to the government. Hypothetically speaking, if the foreign vendor makes a company with no credibility and no experience in defence production its Indian partner, the public ultimately is the loser.
In the Third Ramnath Goenka Memorial Lecture in July 2018 the incumbent Chief Justice of India Ranjan Gogoi said that ‘independent judges and noisy journalists are democracy’s first line of defence… Reports of the death of democracy are greatly exaggerated. But, the least bad system of government ever devised is in trouble. It needs defenders.’
He added, ‘I agree but will only suggest a slight modification in today’s context – not only independent judges and noisy journalists, but even independent journalists and sometimes noisy judges.’
Para 33 of the Rafale judgment, in asserting that ‘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’, seems to be a complete negation of what Chief Justice Gogoi (who authored this judgment) said only a few months ago.
What is more disturbing is the fact that while the words of a former President of France are not acceptable to the apex court, the credence of ‘categorical denial of the statements made in the Press, by both the sides’ on matters relating to offsets is deemed beyond question.
How fair it was to say that the “perception of individuals cannot be the basis of a fishing and roving enquiry by this Court, especially in such matters’, it is best left for the Hon’ble Bench’s conscience to satisfy itself, and for the citizens of this country to mull and judge.
I would be remiss if I too didn’t hearken to my conscience to say that the Hon’ble Court has, among several other issues, completely overlooked a very, very important aspect: the transfer of technology, and indigenous licensed production in India.
This is too glaring an issue to be ignored – costly in terms of monetary value and technical knowhow, and one which will haunt the country for years to come.
It strikes at the very heart and soul of a resurgent India.
(The views expressed in this article are personal to the writer)