A Shocking And Disappointing Judgement

The judgement of the Supreme Court dismissing our petition seeking an independent court monitored investigation into the Rafale deal is as shocking as it is disappointing. We had gone to court after making a detailed complaint to the CBI pointing out the following:

 

The Prime Minister signed an agreement for 36 Rafale jets on 10th April 2015 without any such requirement of 36 jets given by the Air Force headquarters and without the approval of the Defence Acquisition Council (DAC), which are the mandated first steps for any defence procurement.

 

The Air Force had in fact been asking for at least 126 fighter jets which had been approved by the DAC, tenders had been issued, 6 companies had applied, two were short-listed and finally Dassault was selected as the lowest tender. The tender was on the basis that 126 fighters would be procured out of which only 18 would be bought in a ready-to-fly condition and the remaining would be manufactured in India by HAL with transfer of technology by Dassault.

 

By 25th March, the tender negotiations had been virtually completed with Dassault. The CEO of Dassault in the presence of top officials of IAF and HAL had said that the contract negotiations were 95% complete and that the deal would be inked soon. There was nothing to suggest that the deal had run into rough weather. However on 10th April the Prime Minister unilaterally signed a 36 aircraft deal with the French President, all to be purchased in a ready-to-fly condition. Thus 126 was reduced to 36, transfer of technology and ‘Make in India’ was knocked out and a clause for offset partners was brought in. Exactly at this time Anil Ambani registered a new company Reliance Defence, and Dassault entered into a partnership with this company which was to get the bulk of the offset contract from this deal. The then French President Hollande also confirmed later in an interview that the choice of Reliance Defence, a brand new company with no credibility or experience in defence manufacturing, was made by the Indian government and the French had nothing to do with it.

 

It thereafter transpired that the benchmark price of 36 Rafale aircrafts was fixed by three senior officials in the price negotiating committee, at 5.2 billion euros. However this price was unilaterally increased by the cabinet committee on security headed by the Prime Minister to 8.2 billion euros and the contract was finally awarded for 7.2 billion euros. The per aircraft cost for the 36 aircraft deal comes to around Rs 1,650 crore. This can be contrasted with the price mentioned by the then Defence Minister Parrikar himself in an interview immediately after 10th April 2015, where he said that the 126 aircrafts in the earlier deal would have cost around Rs 90,000 crore, which is about Rs 715 crore per aircraft.

 

It was on these facts which were all documented in the complaint to the CBI, that we sought a court monitored investigation (when the CBI did not register an FIR on our complaint which is mandatory as per law).

 

The Court’s judgement today does not even address the documented facts stated in our petition or  deal with our main prayer seeking an investigation. On the contrary, it proceeds on the basis that we were challenging the contract itself and uses the facts stated by the government either in the short open affidavit filed or perhaps facts claimed in the sealed cover handed only to the court which was never shared with us. In fact some of the facts mentioned in the court judgement are not only not on record but are patently incorrect.

 

The Court mentions in para 25 that “The pricing details have, however, been shared with the Comptroller and Auditor General (hereinafter referred to as CAG), and the report of the CAG has been examined by the Public Accounts Committee (hereafter referred to as PAC). Only a redacted portion of the report was placed before the Parliament, and is in public domain.”

 

All the facts mentioned above are neither on record nor factually correct. The CAG judgment has not been submitted to the Public Accounts Committee and no portion of the CAG report has been placed before Parliament or placed in the public domain. Obviously this factually incorrect statement must be based on some communication (not on record and unknown to us) made by the government to the court. That the court has relied on such communication which is factually incorrect on 3 counts shows how dangerous it is for the court to rely on statements made in a sealed cover (not subject to scrutiny or verification) and give its judgement on that basis.

 

It is astounding that the court has stated such a patently incorrect fact in its short judgement. The court has also mentioned in the same para that the Chief of the Indian Air Force had communicated his reservation regarding the disclosure of the pricing details which would adversely affect national security. This alleged fact was also not on record and it is not understood as to where and how the court got this. The court has also mentioned that Air Force officials were examined by the court on the acquisition process and pricing. This is also factually incorrect as the only question asked of the Air Force officials by the court and the only questions they answered was about whether the Rafale aircraft belonged to the 3rd, 4th and 5th generation and when did the last acquisition take place. They were neither questioned, nor did they say anything, on the acquisition process or on pricing. At least this did not happen during court proceedings.

 

On the acquisition process, the court obligingly accepts the government claim that the acquisition process in the earlier 126 aircraft deal got stuck and was not going ahead, which is why the new deal of 36 aircrafts had to be made. The court does not even deal with the facts mentioned by us completely shredding this claim of the government, where we had annexed a video of the CEO of Dassault of 25th march 2015 saying that the negotiations was 95% complete and the deal would be inked soon. He had also said that Dassault would remain complaint to the RFP and that they were happy and satisfied with HAL. The Court also does not deal with the specific issue of violation of the procurement procedure raised by us, that the PM signed the 36 aircraft deal with the French government on 10th April, before any requirement given by the Air Force for 36 aircrafts and before DAC okaying the need to buy 36 aircrafts without any transfer of technology or ‘Make in India’.

 

The fact as we showed is, that no procedure was followed. The Prime Minister unilaterally announced a new deal and the CCS rubber stamped these with retrospective effect. The Court takes a dangerous step: in condoning the total disregard of procedures, the court cites clause 75 which says, “any deviation from the prescribed procedure will be put up to DAC through DPP for approval”. Were this to become the norm for subsequent judicial examination, wrong doers in control of governments would have a carte blanche. They could do what they want—as the PM did in this instance—and then have it retrospectively rubber stamped by DAC etc.

 

On the issue of price the court says that,  “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. 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.”

 

The Court does not even refer to or deal with the facts disclosed by us about the sudden increase of the benchmark price from 5.2 billion to 8.2 billion euros, despite the objections of three relevant official experts in the price negotiating committee who were subsequently transferred out. It however curiously mentions a CAG report on this issue which fact was never stated and is nonexistent.

 

On the issue of offset contracts to Ambani’s Company the court says that this was to be decided by Dassault which was already in negotiation with Reliance since 2012. This despite the fact that the Reliance Company with which Dassault was once discussing, was a completely different company of Mukesh Ambani and had nothing to do with the new company of Anil Ambani incorporated at the time of the 2015 deal. The court also overlooks the specific provisions of the DPP and the offset guidelines pointed out by us which requires every offset contract to be approved by the Raksha Mantri himself.

 

On this basis the court concludes that there is no reason for any intervention by the Court on the sensitive issue of purchase of 36 aircrafts by the Indian government. It says that “perception of individuals cannot be the basis of a fishing and roving enquiry by the Court.”

 

The Court overlooks the fact that we were not seeking any enquiry by the court but only an independent investigation by the CBI or SIT. The law on this has been laid down in a Constitution bench of the Supreme Court in Lalita Kumari’s case which says that if allegations made in a complaint are of a criminal offence, an FIR must be registered and investigation must be made. The allegations in the complaint by us were of huge commissions being given to Ambani’s company through the guise of offset contracts in a deal which was contrived to ensure that such commissions would be paid.

 

It is in these circumstances that we say that we are shocked and disappointed by the court’s judgment. However, since the court has not examined nor said that it was examining the facts in detail, and has dismissed the petition only on the basis of its perception of its own jurisdiction under article 32 of the Constitution, this judgment can by no means be considered to be the Supreme Court’s clean chit to this deal. As mentioned in our complaint, all the facts and circumstances show that this was an unholy deal which has compromised national security, plundered our public exchequer and will bleed our public sector defence company HAL. This contrived deal has been struck only for the purpose of giving large commissions to Anil Ambani’s company in the guise of offset contracts. The Supreme Court’s judgment is thus by no means a clean chit to the government on this deal. The Courts judgment is in line with earlier judgments of the courts in the Bofors case and in the Birla Sahara case where we have seen that courts have stopped short of ordering independent investigations in matters involving corruption in high places or even given judgments seeking to put a lid on those cases. The issue will continue to agitate the public mind until there is full public disclosure of all the facts and a comprehensive and independent investigation into the deal.

 

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