Vol. XLII No. 51 December 23, 2018

Rafale Deal: A Controversial Judgement

THE Supreme Court Judgement by a three-member Bench on the Rafale Deal has become controversial even before the ink on the judgement has dried. Indeed, accepting notes in sealed covers, acceptance of governments arguments at face value, puts the court’s reputation at risk.

The scope of judicial review was whether a) the defence procedures laid down were violated in the Rafale deal, and b) whether the Indian people have a right to know the price of defence deals. On both counts, the court has effectively said that it is not their task to do such a review, and accepted it as government’s prerogative to keep the price of Rafale aircrafts secret.

 The subsequent developments – regarding what was in the sealed cover, in particular the statement in the judgement regarding the price having been examined by the CAG, its report submitted to the PAC and a redacted version placed in the parliament – have provoked justifiable criticism.

The court judgement reads, “The pricing details have, however, been shared with the Comptroller and Auditor General (of India) (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 (the) public domain.” It transpires that the statement in the sealed cover was quite ambiguous, merely stating that the pricing details have been shared with the CAG. The rest is a “description of procedure”, not what has already been done.

The government then moved a petition in the court to correct the “grammar” in the court’s order; everything else is to remain the same. Is this a revision petition? And if it is, will others be heard in the petition? Or will the court cover its embarrassment and declare the petition to be only a grammatical correction of its poor English?

The controversy over what was submitted in sealed cover and “misunderstood” by the court raises another issue. What else was in the sealed cover? And how much of it has led to the court making up its mind not to interfere? If the sealed cover was only about price, how is it that statements regarding CAG, etc., were made in the sealed cover, and not in the note submitted to the court and shared with the petitioners? If it had nothing to do with the actual price, why was this part of the argument in a secret note?

The substantive issues before the court were: the Modi government had violated procedure by cancelling the open tender to procure 126 Rafale aircrafts, and instead procured only 36 aircraft through an inter government procurement route; the Modi-Hollande announcement was made without following the procedure required for an Inter-Government Agreement for procuring defence equipment; the offset partner chosen was Dassault, the manufacturers of Rafale, and Anil Ambani’s newly formed defence company. This choice was made with the support of the Modi government – an act of crony capitalism. Finally, the induction of Anil Ambani into the Rafale contract aborted the transfer of advanced aeronautical technology; and it was a blatant attempt to weaken Hindustan Aeronautics Limited (HAL), the premier public sector undertaking in aerospace manufacturing.

In the government, a violation of procedures that benefits either a company or a person, and causes a loss to the exchequer, constitutes corruption. This is what the 2G scam under the UPA was all about; and the same goes for the coal-gate scam. That is why it was important for the Supreme Court to examine the procedural violations by the Modi government in the case of the Rafale deal, while examining how the price of the Rafale aircraft was arrived at. The court judgement seems to have accepted the government's contentions at face value, even copy-pasting large parts of government’s submissions in its judgement. Hence the disappointment with the judgement.

The violation of defence procurement procedure by Modi’s Rafale deal puts the clock back to the “good old days”, when defence contracts were mired in corruption and controversies. To rectify this arbitrary and often completely opaque set of procedures, successive governments had worked out a detailed Defence Procurement Procedure (DPP). This DPP would rely on requirements being worked out by the defence ministry and the armed forces, open tender being floated, and a detailed procedure for testing, evaluation and finalising prices, off-set partners, etc. The Inter Governmental route was thought to be an exception, only to be followed if the armed forces and defence ministry had an urgent need for such a procurement.

The Modi government aborted the Rafale deal, which was in its final stage -- with complete transfer of technology, scope of work and prices. It chose instead the Inter Governmental procurement route. Suvarna Raju, the former chairman of HAL,  has said that Dassault and HAL negotiations had been finalised and was pending with the ministry when the deal was scrapped. The air force got far fewer planes than it needed; and the country is paying a much higher price – the “guesstimated” amounts varying from 60 per cent higher price to three times; and there is no transfer of technology for buying these sophisticated aircrafts. The only beneficiary is the debt-ridden Anil Ambani business house, which stands to gain about Rs 21,000 crore from offsets.

The court needs to take stock of its misunderstanding of the submissions in the sealed cover, allow its contents apart from the price to become public, and treat the government’s petition to “correct” its judgement as a revision petition; and allow the petitioners to be heard. Anything else would be only compounding its earlier mistake.

In any case, the court has a limited role in policy issues. The larger issue is a political one. The CPI(M) will follow a political route to bring out all the facts of the Rafale deal for the people. The CPI(M) and other parties are demanding a joint parliamentary committee to examine the Rafale deal. The CAG needs to furnish its report on the Rafale deal for the consideration of the parliament and its Public Accounts Committee.

Finally, it is the bar of public opinion, not the courts, that will decide this case, as it did on Bofors.

(December 19, 2018)