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What Was the Need to Amend Offset Guidelines in Rafale Deal Retrospectively, SC Asks Govt

The court also ruled that it would not go into details of the price of the jets, for now, and said the government does not need to share those details with the petitioners at this stage.


Updated:November 14, 2018, 9:09 PM IST

New Delhi: The Supreme Court on Wednesday reserved its order on a batch of petitions seeking a court-monitored probe into the procurement of 36 Rafale fighter jets from France after a fiery hearing that saw a team of IAF officers arrive to assist the bench after the government questioned its competency to examine the deal.

The three-judge bench, comprising Chief Justice Ranjan Gogoi and justices S K Kaul and K M Joseph, said there was no need to share the pricing details of the jets with the petitioners at this stage and focused largely on the decision-making process and the choice of Anil Ambani firm Reliance Defence as the offset partner for the contract.

The apex court said that the main contract for the 36 Rafale jets cannot be separated from the offset contract and the vendor, Dassault Aviation, needs to furnish all details of the offset partner within three months of the main contract. “It may not be in the country's interest if the offset contract is executed later because that may lead to delay in production by the offset partner,” the bench observed.

The court’s lens also fell on the way the deal was announced by Prime Minister Narendra Modi in 2016. Justice KM Joseph asked the A-G what the need was to amend offset guidelines with retrospective effect in 2015 despite objection by the law ministry, as pointed out by petitioner Prashant Bhushan.

With reference to the stand of the government that it had no role to play in the selection of offset partner by Dassault, Justice Joseph asked as to how the nation’s interests will be protected if the offset manufacturer fails to carry out production in terms of the agreement.This was with reference to the stand taken by the Government that Dassault was yet to submit the details of the offset partner to the government.

The CJI asked the A-G about whether there was a sovereign guarantee in the deal as it was an inter-governmental agreement signed between India and France, to which Venugopal responded in the negative. He said that France had given a letter of comfort to the Indian government.

The government vehemently opposed judicial review of the purchase of the fighter jets and questioned if the apex court was even qualified to examine it. “It is for the experts to examine what kind of weaponry and avionics are required. Question is if the Court is really competent to deal with such an issue,” the Attorney General KK Venugopal said.

Arguing on behalf of the Centre, he also rejected the court’s stance on induction of offset partner and said there will be no delay on account of it. “It is for the vendor to be prompt with the choice of the offset partner because the government may or may not accept the choice of offset partner at a later stage,” he said.

Justice KM Joseph also questioned how the PM announced the new deal even before the Request for Proposal (RFP) of the old agreement was withdrawn.

As the A-G struggled to answer, CJI Gogoi came to his rescue and pointed out to Justice Jospeh that “your own note says process of withdrawal had begun in Mar 2015 & was concluded in June".

The pricing details, which the Centre said were classified, were also submitted in a sealed cover to the court. “Any debate on pricing of the Rafale deal comes only if this Court decides those aspects needs to come in public domain,” the SC said.

Venugopal said that secrecy on pricing was with respect to the weaponry and certain other components that India doesn't want its adversaries to know. The government also submitted that details of weaponry were not disclosed even under the old deals.

When asked whether the base aircraft under the new deal was same as the one that was there under the agreement signed with HAL under the UPA government, the Attorney General confirmed it was the same.

After the bench had asked for assistance of an Air Force officer on the issue, Alok Khosla, Commander-in-Chief, Eastern Air Command, and deputy chief of air staff VR Chowdhuri and two other officers appeared in the court to answer their questions. They told the court that Sukhoi 30s were the latest to be inducted which is a third generation aircraft and added that they do not have fourth or fifth generation aircraft in its fleet.

The top court asked if there has been no induction of aircraft since 1985, the officers said "no".

Advocate Prashant Bhushan, appearing on behalf of himself, and former union ministers Yashwant Sinha and Arun Shourie, submitted that the NDA government had "short circuited" the acquisition process by taking the Inter Government Agreement (IGA) route to avoid giving a tender.

Bhushan said there was no sovereign guarantee from the French government in the deal. “Government hiding behind secrecy clause, has not disclosed price of Rafale jets,” Bhushan told the bench. He argued that initially the law ministry had flagged the issue, but later gave in to the proposal of entering into the IGA.

The Air Force needed 126 fighter jets and had intimated the Defence Acquisition Council (DAC) about it, he said referring to the process of defence acquisition. Initially, six foreign companies had applied and two firms were shortlisted during the earlier process, he said.

Later the deal went to French firm Dassault and state-owned Hindustan Aeronautics Ltd was part of it. But, suddenly a statement was issued and it said there will be no technology transfer, and only 36 jets would be procured, the lawyer told the court.

Bhushan submitted that nobody knows about the alleged change in the deal done by the prime minister and even the defence minister was not aware about the change.

He also questioned the Centre’s argument that the deal was changed because the IAF needed the aircraft urgently. The lawyer said three and a half years have passed since the deal was signed on 36 Rafale jets but no aircraft has been received till now.

He said the first jet is to be delivered in September 2019 and delivery to continue till 2022. "If the 126 aircraft deal was still on, at least 18 jets would have been delivered by April 2019," he submitted.

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| Edited by: Aakarshuk Sarna
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