Rafale Review Deserved A More Decent Burial

Rafale Review Deserved A More Decent Burial

The paradox in the main judgment has been carried forward to the review judgment as well.

A decision, when not based on cogent reasons, is a mere affirmation of power – "I hold so because I can".

The Supreme Court's decision in Rafale review is such an instance. In fact, the Supreme Court seems to be simultaneously saying "I hold so because I can" and "I hold so because I cannot" in the review judgment, both by citing the scope of review under Article 32 of the Constitution.

The December 14, 2018 judgment in Rafale case, which was under review, was built on an internal paradox. Despite saying that it has limited power of judicial review over defence deals, the Court analyzed the merits of the contentious issues of the deal to completely approve the deal. This approval was cited to shut out investigation into corruption allegations pertaining to the deal of Indian Government to procure 36 Rafale aircrafts from French company Dassault Aviation (A detailed critical analysis of the main judgment may be read here).

This paradox was the basis for seeking review by Advocate Prashant Bhushan, former Union Ministers Yashwant Sinha and Arun Shourie. The review petitioners contended that they were seeking CBI probe into corruption allegations but the Court instead reviewed the contract prematurely.

The main cause for the paradox was that the Court had considered the petition for probe along with two other writ petitions which were seeking to scrap the deal itself by questioning its merits. Here, one needs to take note of a striking fact that the Court had entertained those two writ petitions – filed by Advocate M L Sharma and Vineet Dhanda – despite observing that the averments were "inadequate and insufficient". In fact, in paragraph 12 of the review judgment authored by Justice S K Kaul (with concurrence of CJI Gogoi), the Court notes :

"In fact, when two of these writ petitions were listed before the Court on 10.10.2018, we had embarked on a limited enquiry despite the fact that we were not satisfied with the adequacy of the averments and the material in the writ petitions. It was the object of the Court to satisfy itself with the correctness of the decision making process".

Why would the Court delve into the matter at the first place when the petitions are 'inadequate and insufficient'? No answers will be found.

The contention of the petitioners that their prayer for CBI probe was not properly considered is rejected by the main judgment of Justice Kaul by more or less reiterating the same reasons in the December 14 judgment.

In paragraph 16, the judgment states that this contention of the petitioners is "not a fair submission" as "all counsels, including counsel representing the petitioners in this matter addressed elaborate submissions on all the three aspects( decision making process, pricing and offset partner of the deal)". The petitioners' contention that their case was improperly mixed up with the other two petitions challenging the deal- which had been found to be inadequate and insufficient - is not seen specifically addressed in the review verdict.

The judgment adds in the next sentence :

"No doubt that there was a prayer made for registration of F.I.R. and further investigation but then once we had examined the three aspects on merits we did not consider it appropriate to issue any directions, as prayed for by the petitioners which automatically covered the direction for registration of FIR, prayed for".

It can be seen that the Court's examination of the contentious aspects of the deal led to rejection of the prayer for ordering probe. Curiously, the same judgment elsewhere (paras 12 & 13) stresses that the Court had not embarked on a "roving and fishing" enquiry, having regard to the limited scope of judicial review over defence deals. So, without a detailed enquiry, the Court endorsed the deal and this endorsement was used to hold that there was no case for ordering probe. Thus, the paradox in the main judgment has been carried forward to the review judgment as well.

Justice K M Joseph, in his separate judgment, identifies the presence of this paradox and addresses it. It is repeatedly stressed in his judgment that the merits of the deal and the corruption allegations are distinct issues, and that Court's endorsement of the deal under limited scope of judicial review cannot be cited to shut out probe into corruption allegations. If the Court is to do so, it will end up paying "less than a lip service" to Lalitakumari dictum, added Justice Joseph's judgment. To this extent, he disagrees with CJI Gogoi and Justice Kaul, who outrightly dismissed the review (More on Justice Joseph's judgment will be discussed in the later part of this piece).

Rafale Verdict : Flawed, Confused & Contradictory

No discussion on additional materials brought by petitioners

The petitioners had brought on record certain additional materials to allege irregularities in the decision making process. These documents were accessed by certain media houses from the Ministry of Defence. The Government had stoutly objected to the admissibility of these documents stating that they were illegally obtained in contravention of Official Secrets Act. By a detailed judgment delivered on April 10, the Court rejected the claim of privilege of the Government and held that the documents are admissible, regardless of the illegality in their procurement.

Having endorsed the admissibility of the documents, it would have been logical to expect that the review verdict will have a detailed discussion of the arguments based on those documents. It may be also noted that "discovery of new and important evidence" is a ground for review under Article 137 of the Constitution.

Some of those materials seemed to suggest that the Prime Minister's Office (PMO) held parallel negotiations with Dassault, even as the Indian Negotiating Team(INT) constituted under the Defence Procurement Process (DPP) was holding talks. These "parallel negotiations" by the PMO allegedly led to the dilution of the several important clauses in the deal, like waiver of sovereign guarantee, non-insistence of payment in escrow account and incorporation of arbitration at Geneva as means of dispute resolution.

Then the petitioners produced documents indicating the dissent of three members out of the 7 member Indian Negotiating Team, whereby they had flagged the issue of inflated benchmark price. The benchmark price was fixed at 5 billion euros; but in the final deal the price increased by 55.6% above the benchmark. The sovereign guarantee clause was dropped despite objections from the members of INT. The deal was finalized with a letter of comfort from the France, which is as good as no guarantee, argued the petitioners.

Notably, the Centre did not expressly deny the acts of PMO, but termed them as 'monitoring' instead of 'parallel negotiations'.

This raised another issue. The earlier 'sealed cover noted' submitted by the Government had not mentioned that PMO was involved in the negotiation process. It was claimed that the entire process was carried out by the INT in accordance with DPP. In this context, the petitioners filed a perjury application alleging that the Centre withheld relevant facts from the Court.

The petitioners also highlighted the fact that negotiations of the deal as per the DPP started only after the PM announced the deal to procure 36 Rafale aircrafts in April 2015. Elaborate oral hearings were also held on these aspects.

Surprisingly, the judgment dismisses all these arguments with a broad brush in a single paragraph, by effectively saying that the decision of the "competent authority" cannot be reviewed. In paragraph 20 of the judgment of Justice Kaul, it is stated :

" Insofar as the decision making process is concerned, on the basis of certain documents obtained, the petitioners sought to contend that there was contradictory material. We, however, found that there were undoubtedly opinions expressed in the course of the decision making process, which may be different from the decision taken, but then any decision making process envisages debates and expert opinion and the final call is with the competent authority, which so exercised it. In this context reference was made to (a) Acceptance of Necessity ('AON') granted by the Defence Acquisition Council ('DAC') not being available prior to the contract which would have determined the necessity and quantity of aircrafts; (b) absence of Sovereign Guarantee granted by France despite requirement of the Defence Procurement Procedure ('DPP'); (c) the oversight of objections of three expert members of the Indian Negotiating Team ('INT') regarding certain increase in the benchmark price; and (d) the induction of Reliance Aerostructure Limited ('RAL') as an offset partner".

In the next paragraph, the Court adds that it cannot act as an appellate authority over the different views expressed during deliberations.

There is no discussion on whether the involvement of PMO was in accordance with DPP, and whether such involvement led to dilution of the bargaining power of Indian government. In other words, the contentions of the petitioners are not seen specifically addressed.

The original judgment, without much discussion, had trivialized some of the irregularities pointed out by the petitioners as "minor deviations" and stated that "broadly, the process was followed". Similar approach is repeated in review.

In a judgment delivered six months after reserving verdict, one would have expected to see more discussion on the contentious issues raised by the petitioners on the basis of documents, instead of a mere affirmation of the "ipse dixit" of the government.

Error regarding Reliance Industries

A major error in the December 14 judgment was that it made a wrong reference to a Reliance company belonging to Mukesh Ambani group, while observing that there was no irregularity in the selection of Reliance Aerostructure Ltd (RAL) of Anil Ambani group as the Indian Offset Partner.

The Court made this reference in response to the petitioners' argument that it was unusual that a newly formed company such as RAL with no prior experience was made the offset partner. The judgment itself noted that Reliance Aerostructure Ltd came into being in the "recent past". But the Court did not give much weightage to this fact by stating that Dassault tried agreement with parent Reliance company in 2012.

"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", observed the Court in the original judgment in this regard.

The factual error here is that the purported agreement which Dassault had in 2012 was with Mukesh Ambani's company Reliance Industries. It was not the parent company of RAL. The parent company of RAL is Reliance Infrastructure, which belongs to Anil Ambani.

This aspect is dealt with in a highly casual manner in the review judgment. It is stated in paragraph 23 :

"An aspect also sought to be emphasized was that this Court had misconstrued that all the Reliance Industries were of one group since the two brothers held two different groups and the earlier arrangement was with the Company of the other brother. That may be so, but in our observation this aspect was referred to in a generic sense more so as the decision of whom to engage as the offset partner was a matter left to the suppliers and we do not think that much can be made out of it".

With due respect, the Court is wrong in saying that the reference to Reliance was made in a "generic sense". Rather, it was a ground used by the Court to hold that awarding of offset contract to RAL was not unusual. In that sense, this error goes to the root of the matter, at least with respect to the offset contract.

In this backdrop, a detailed examination of the issue in the review judgment was needed.

On Justice Joseph's judgment

As stated above, Justice Joseph's judgment addressed one major paradox in the main judgment; but it ended on a whimpering tone with a heavy reliance on a hyper-technicality.

Justice Joseph observes that the petitioners have 'otherwise' made out a case. But he stopped short of ordering probe by citing deficiencies in the reliefs sought in the writ petition.

  • 1. As per the dictum in Lalitakumari case, FIR in corruption cases can be registered only after a preliminary enquiry. But the petitioners have not sought the relief of a preliminary enquiry being conducted( Paragraphs 81, 82).
  • 2. Section 17A of the PC Act mandates prior approval for investigation as well. Petitioners have not sought any relief in the writ petition for prior approval as per Section 17A (Paragraphs 85, 86).

So on this highly technical ground, Joseph declines relief, despite the fact that Court had power to mould relief under writ jurisdiction.

This is despite the fact that in the complaint filed by the petitioners before the CBI, they had requested the central agency to at least take the first step under Section 17A. However, the fact that such a direction was not sought in the writ petition weighed with Justice Joseph.

But he left the door slightly ajar for the petitioners by observing that the verdict will not stop the CBI from taking lawful action on the complaint, subject to approval under Section 17A.

It can be said that the Court has now put a lid on this issue, more through the use of its power than its logic. The Rafale review deserved a more decent burial.