Supreme Court dismisses Rafale order challenge
SC order notable for factual errors, restricting scope of judicial scrutiny

The Supreme Court on Friday dismissed the Public Interest Litigation (PIL) petitions challenging the order for 36 Rafale fighter aircraft.

In so doing, the court appears to have decided against addressing the decision-making process in terms of how (not why) the size of the order was changed from 126 Rafale fighter aircraft to 36 Rafale fighter aircraft, without any reference to the initiation of a statement of case, minutes of meetings etc, for these 36 aircraft before April 10, 2015, when the announcement of the request for the order was made as part of an Indo-French joint statement in Paris.

All the court has said with respect to this decision is, “In such a situation, government-to-government negotiations resulted in conclusion of the IGA for supply of 36 Rafale Aircrafts (sic), as part of a separate process. The requisite steps are stated to have been followed.”

The court added elsewhere, “We cannot sit in judgement over the wisdom of deciding to go in for purchase of 36 aircraft 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 (sic).”

This dismissal by the court also has several errors and in one instance, restricts the exercise of its own jurisdiction, which is likely to have implications for future cases that could pertain to defence or national security.

Error 01: IAF Submissions

First, there is a reference to remarks made by senior Indian Air Force (IAF) officers on ‘different aspects, including that of the acquisition process and pricing’.

The court has averred in its order, “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.”

A careful reading of the transcript shows that the IAF officers summoned by the court in the last hearing made no such remarks on the acquisition process or pricing. Nor is it accurate that ‘The Chief of the Air Staff is stated to have communicated his reservation regarding the disclosure of the pricing details, including regarding the weaponry which could adversely affect national security.’

Error 02: ‘Parent Reliance Company’

Secondly, the court appears to have misunderstood the history of the two Reliance companies it has referred to in its order.

The court said in its order, “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 companies led by the two Ambani brothers split in 2006. The two companies referred to by the court are entirely different entities and have never had a ‘parent’-child relationship.

Error 03: ‘CAG Report’

Thirdly, the Supreme Court has also made a reference in its order to the sharing of pricing details in a report by the Comptroller and Auditor General (CAG) of India on the Rafale order to Parliament’s Public Accounts Committee (PAC).

“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,” said the court.

The trouble with this reference is that no such report has been tabled before Parliament.

Finance Minister Arun Jaitley tacitly admitted this, when he was asked by a journalist on Friday, “Which report is this?”

Jaitley answered, “Well, I think, whatever are the contents of the verdict in terms of the procedural details or the narration which have been given that’s not a subject matter of our comment. If there is something which is required to be done in that regard, I think the lawyers will examine it and do the needful.”

The opposition Congress seized on this reference with party president Rahul Gandhi saying, “The basic foundation of the Supreme Court judgement is the CAG report. PAC chairman has not seen the CAG report. Yet the court has seen it. Where is the CAG report? Show us? Maybe it was shown to the France parliament? Maybe PM Modi has his own PAC in PMO (Prime Minister’s office)… since he has destroyed every institution.”

At the time of the statement, the chairman of the PAC Mallikarjun Kharge was present with Rahul Gandhi.

Restriction on Judicial Scrutiny

Although an order for dismissal was widely anticipated, the reasoning provided by the court appears to restrict the application of judicial scrutiny in cases related to defence and national security.

“(I)t would be appropriate at the outset, to set out the parameters of judicial scrutiny of government decisions relating to defence procurement and to indicate whether such parameters are more constricted than what the jurisprudence of judicial scrutiny of award of tenders and contracts, that has emerged till date, would legitimately permit.”

The court then goes on to cite judgements in five cases related to the award of government tenders to reason a restricted scope of judicial scrutiny, especially in matters where the subject is related to national security.

But two points arise in this context. Firstly, the order for 36 Rafale fighter aircraft was not the culmination of a government tender process.

Secondly, the three-judge bench has decided to restrict the power of judicial scrutiny in cases that could have an association with issues of defence or national security without properly defining the terms of such restrictions.

This reasoning in the order could be seen as an unnecessary, unmerited free pass from judicial scrutiny in cases that could pertain to defence or national security subjects, which are inevitably shrouded from public scrutiny by the veil of secrecy and opacity and in which it is difficult to prove any illegality or unjust enrichment without an investigation.

In future, any case that could be argued to pertain to defence or national security will have to be distinguished from this Rafale case by a five-judge bench for it to be heard by the Supreme Court. This consequence of raising the bar for judicial scrutiny is not necessarily a desirable outcome.

Disclaimer

Finally, the court said in the last line of its order, “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 of India which has been invoked in the present group of cases.”

What this means is that the court has dismissed the petitions because no Fundamental Rights have been violated.