Only Limited Degree Of Judicial Review Possible In Defence Contracts, SC In Rafale Case

The SC bench headed by CJI today dismissed the petitions challenging Rafale deal and seeking court-monitored probe into the allegations of corruption in the deal.

"We find no reason for any intervention by this Court on sensitive issue of purchase of 36 defence aircrafts by the Indian Govt. Perception of individuals can't be the basis of a fishing & roving enquiry by this Court, especially in such matters", stated the operative portion of the judgment authored by CJI Ranjan Gogoi.

"Perception of individuals cannot be the basis of a fishing and roving enquiry by this Court, especially in such matters", observed the bench, also comprising Justices S K Kaul and K M Joseph.

At the same time, the Court clarified "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 which has been invoked in the present group of cases".

This implies that the Court has approached the issue within the limited scope of judicial review. At the outset itself, the judgment states the principles of judicial review, which prescribe that Court should refrain from undertaking in-depth examination of policy decisions of the executive, especially in matters concerning national security and defence. "We also cannot lose sight of the tender in issue. The tender is not for construction of roads, bridges, etc. It is a defence tender for procurement of aircrafts. The parameter of scrutiny would give far more leeway to the Government, keeping in mind the nature of the procurement itself", says the judgment, regarding the scope of jurisdiction exercised by it.

"The scrutiny of the challenges before us, therefore, will have to be made keeping in mind the confines of national security, the subject of the procurement being crucial to the nation’s sovereignty",the judgment goes on to state.

Thus, the Court made it clear in the beginning itself that it is not intending to scrutinize the comparative merits of the deal; rather, it will merely examine whether the decision making process was proper, leaving out the question about the soundness of the decision.

Elsewhere in the judgment too, the Court expressed : "It cannot be lost sight of, that these are contracts of defence procurement which should be subject to a different degree and depth of judicial review".

The judgment analysed three broad areas of concerns, namely (i) the decision ­making process; (ii) difference in pricing; and (iii) the choice of Indian Offset Partner.

The excerpts from the judgment of the Court are as follows:

On Decision Making Process

We have studied the material carefully. We have also had the benefit of interacting with senior Air Force Officers who answered Court queries in respect of different aspects, including that of the acquisition process and pricing.

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.

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. We cannot possibly compel the Government to go in for purchase of 126 aircraft. 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

We do not consider it necessary to dwell further into this issue or to seek clause-­by-­clause compliances.

On the Needs of the Air Force

The need for the aircrafts is not in doubt. The quality of the aircraft is not in question.

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.

On Pricing

The pricing details have 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.

It is certainly not the job of the Court to carry out a comparison of the pricing details in matters like the present

On Offset Partner

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 commercial arrangement, in our view, itself does not assign any role to the Indian Government, at this stage, with respect to the engagement of the IOP. Such matter is seemingly left to the commercial decision of Dassault.

In this process, the role of the Government is not envisaged and, thus, 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.

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

Read the Judgment