Rafale Decision: Is Mr Modi an Imperium in Imperio?

Bar & Bench January 4 2019

Dushyant Dave

“The King can do no wrong.”

This was the belief of Sir Edward Coke during the reign of King James I Roman, who maintained successfully that the King should be under God and Law, thus establishing the Supremacy of Law against the Executive. 

Regrettably, in 2018 the Supreme Court of India appears to believe that Prime Minister Narendra Modi can do no wrong. It has approved Mr Modi’s acquisition of 36 Rafale aircrafts by its judgment dated December 14, 2018 in Manohar Lal Sharma v. Narendra Damodardas Modi and others, popularly known as Rafale case.

The judgment raises serious questions as to its narration of facts, findings, reasons, appreciation of the Defence Procurement Procedure and most of all, as to the powers of the Supreme Court under Article 32 of the Constitution of India. To say the least, the judgment purports to lay down law and decide issues in a manner which is deeply disturbing and disappointing. It negates the Constitution, Constitutionalism and Constitutional Morality.  

[Read Judgment] Breaking: Supreme Court dismisses petitions calling for probe into Rafale Deal

The judgment concludes by stating,

“34. 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.”

The Supreme Court would be better off remembering the words of Dr. B R Ambedkar spoken on December 9, 1948 in the Constituent Assembly on Article 32. He said,

“Now, Sir, I am very glad that the majority of those who spoke on this article have realized the importance and significance of this article. If I was asked to name any of particular articles in this Constitution as the most important an article without which the Constitution would be a nullity I could not refer to any other article except this one. It is the very soul of the Constitution and the very heart of it and I am glad that the House has realized its importance.” 

The group of petitions raised very serious questions on the purchase of 36 Rafale aircrafts at a cost of 58,000 crore, which even as per the judgment, was in the “confines of national security” and “crucial to the nation’s sovereignty.” As I would endeavour to demonstrate herein below, far from protecting the same, the decision of Prime Minister Modi to acquire the aircrafts has compromised both National Security and Sovereignty. The Supreme Court, with deepest respects, is entirely wrong in holding to the contrary. 

It is ironic that in 1772, while debating the affairs of East India Company and Robert Clive, Edmund Burke argued that subordinates were not deterred from committing abuses in order to enrich themselves; they might be subject to Company discipline or fired, but faced no legal exposure for their misdeeds. He then said,

“Where no laws exist, men must be arbitrary.” And that, “When discretionary power is lodged in the hands of any man, or class of men, experience proves, that it will always be abused”.

Later in 1949. Lord Denning observed,

“Properly exercised the new powers of the executive lead to the welfare State; but abused they lead to a totalitarian State.”

That is why Professor Wade maintains that the powerful engines of authority must be prevented from running amok.”

Mr Modi’s government has certainly run amok in acquiring 36 Rafale aircrafts in complete disregard of every known notion of governance.  

The petitions before the Supreme Court were in the realm of administrative law, the principle objective being to ensure governmental accountability and foster participation of interested parties in the decision making process. Dicey defines it as denoting “that portion of a nation’s legal systems which determines the legal status and liabilities of all state officials.”

This branch of law is not different in essence from Constitutional law. According to Hood Phillips:

“Constitutional Law is concerned with the organization and functions of government at rest whilst administrative law is concerned with that organization and those functions in motion”.

In a 1989 judgment in Union of India v. Raghubir Singh, the Supreme Court thundered,

The range of judicial review recognised in the superior judiciary of India is perhaps the widest and the most extensive known to the world of law.”

Indian Constitution is founded upon the principle of Rule of Law and the entire basis of administrative law is the doctrine of the Rule of Law. In ensuring Rule of Law, the Constitution has assigned special tasks to the Judiciary in the country. It is only through courts that Rule of Law unfolds its contents. In delivering its judgment in the Rafale case, the Supreme Court has refused to exercise its powers in justly testing the discretionary exercise by Mr Modi. There is nothing called absolute discretion in a democracy.  After all, Mr Modi is not Imperium in Imperio. 

CJI Gogoi, Justices Sanjay Kishan Kaul (Left) and KM Joseph (Right), the Bench that delivered the Rafale judgment

The first fundamental mistake that the Court made was when it passed an order on October 10, 2018, in the group of petitions wherein it is stated that,

“We make it clear that we are not issuing any notice at this stage on either of the writ petitions filed under Article 32 of the Constitution” and then further stated, “However, we would like to be apprised by the Government of India of the details of the steps in the decision making process leading to the award of the order for the defence equipment in question i.e. Rafale Jet-Fighters (36 in number).”

Pertinently, the Supreme Court never found “that stage” to issue notice in the writ petitions. In so doing, the Supreme Court has completely ignored the Supreme Court Rules, 2013 framed by it under Article 145 of the Constitution and particularly the provisions contained in Order XXXVIII which, inter alia, oblige the Court to do as follows,

“8. The petition shall be posted before the Court for preliminary hearing and orders as to the issue of notice to the respondent. Upon the hearing, the Court, if satisfied that no fundamental right guaranteed by the Constitution has been infringed or that the petition is otherwise untenable, shall dismiss the petition and if not so satisfied, shall direct a rule nisi to issue to the respondent calling upon him to show cause why the order sought should not be made, and shall adjourn the hearing for the respondent to appear and be heard.”

Rules 9 to 11 provide a detailed procedure for filing of objections, affidavits in opposition, filing of written briefs, and service of the same on all the parties concerned. Rule 12 thereunder deals with Public Interest Litigation and also adopts as far as possible Order XV to the same.

The procedure adopted by the Supreme Court in the present case is a “novel” one and the writ petitions have been disposed of by a judgment without either issuing notice or a rule as well as in absence of any kind of affidavits/written briefs as required. In so doing the Supreme Court has also glossed over the law declared by it in series of judgments. In 1964, in Hazara Singh Gill v. State of Punjab the Supreme Court had categorically held that,

“In the absence of any specific denial on the part of the State, the Chief Minister and the Superintendent of Police concerned, we must reluctantly go by the affidavit filed by the petitioner.”

Clearly, the allegations made in great detail in the petition filed by Shri Yashwant Sinha, Shri Arun Shourie and Shri Prasanth Bhushan in Writ Petition (Criminal) No. 298 of 2018 remained uncontroverted on affidavit. 

The Supreme Court went even further in 1994 in Rajindra v. Commissioner of Police to hold,

The indulgence shown by the courts in pursuing the file seems to have given an impression that the Central Government is under no obligation to file a counter-affidavit to explain the delay. We propose to remove this impression once and for all if it persists and to impress upon the Central Government that it is under obligation to file its counter within the time permitted by the Court failing which the case may go by default.” 

Clearly, the procedure of inviting the government to give information in sealed covers, permitting the petitioners to see it on a selective basis and then deciding cases is highly irregular. The judgment suffers from fundamental flaws and it would be just and proper that the Supreme Court recalls the judgment, allows parties to complete pleadings, and then hears and decides matters as per settled law and practice.

I have not known of a single case filed by the Union of India against citizens where the Supreme Court does not issue notice or grants rule nisi and decides matters without allowing parties to complete pleadings. Then why adopt such a course in petitions filed by eminent citizens like Sinha, Shourie and Bhushan raising very substantial issues of Constitutional and administrative laws? 

Yashwant Sinha, Arun Shourie, and Prashant Bhushan have now filed a Review Petition against the judgment

On merits, the judgment is equally wrong. The Court appears to have side-stepped exercise of its wide powers under Article 32 by innovating and, in my respectful submissions, wrongly, a new principle based on the nature of the tender and holding that,

“The parameter of scrutiny would give far more leeway to the Government, keeping in mind the nature of the procurement itself”.

The Court then seeks support from two judgments, namely Siemens Public Communication Networks Pvt. Ltd. & Anr. v Union of India & Ors and Reliance Airport Developers (P) Ltd.  v Airports Authority of India & Ors and another to conclude in Paragraph 11 that,

“judicial review in matters of contracts, procurement, etc. would vary with the subject matter of the contract and there cannot be any uniform standard or depth of judicial review”, and ultimately holds that scrutiny of challenge will have to be made keeping in mind the confines of “national security” and “nation’s sovereignty”.

Neither Siemens nor Reliance lays down this principle affirmatively. What is more important is that both these matters were appeals arising from the reasoned judgments of the High Court of Delhi, which had extensively considered challenges arising in respect of tenders and that too after allowing parties to complete pleadings and upon detailed hearing.

Again, in both the matters, the Supreme Court itself allowed parties to file affidavits, heard matters extensively and gave judgments upholding the judgments of the High Court of Delhi. The Supreme Court in both the cases based its decisions on findings of facts and not because of lack of power of judicial review to uphold the judgments of the High Court. 

The law on public contracts for purchase or sale by governments has been made crystal clear by a catena of decisions. It is now authoritatively held that the government must act fairly, transparently and with probity and only through the tender process. Its objective should be to minimize costs and get the best quality. If there is patent illegality, irrationality and procedural impropriety in such process, the Court will invariably strike down the decision.

In fact, the law is taken to greater heights in Reliance Energy Ltd v Maharashtra State Road Development Corporation Ltd, when in 2007, the Supreme Court said that Article 14 must be read in conjunction with other rights like Article 21 and to provide a level playing field so as to ensure Rule of Law in contractual matters. 

My Lords, with greatest respects, I must submit that your conclusion in paragraphs 5 to 11 do not lay down the correct law. Therefore, the basis to dismiss the petitions recorded in paragraph 15 is also incorrect.

The Supreme Court has lost sight of the fact that the contracts involved large sums of money and therefore any saving would have been in public interest for a poor country like India. It is a notorious open secret that Defence contracts involve corruption. The Court failed to appreciate that “national security” and “sovereignty” in fact demanded that the acquisition of Rafale aircrafts by the government ought to have been set aside and it would have been in the national interest to buy either the same or any other equally good aircraft from competent suppliers at competent prices and through a competitive bidding process. 

The findings in the judgment on “decision making process” suffers from factual inaccuracies and completely side steps the inquiry that the Court ought to have made to sub-serve Public Interest, National Security and Sovereignty.

First and foremost, the Court ought to have asked the government as to how Mr Modi could throw out of the window the basic requirement to acquire such an important aircraft without the tender process by unilaterally resorting to the Inter Government Agreement on April 10, 2015, and that too in France when Mr Modi disclosed this decision.

He said during his visit to Paris at Élysée Palace standing alongside Francois Hollande, “I have asked President (Francois Hollande) to supply 36 ready-to-fly Rafale jets to India”. And yet in a interview published on April 9, 2015 to La Figaro, a newspaper owned by Dassault, Mr Modi has said that “the issue of Rafale jets is still under discussion and we should be able to move forward in mutually agreeable terms.”

The Supreme Court has simply wished away the fact that the process of acquisition which began in 2007 through a tender process remained inconclusive on account of intransigent attitude on the part of Dassault in finalising terms with HAL, and was not even scrapped on April 10, 2015. Yet, Mr Modi announced his decision. Rules of Business framed under Article 77 of the Constitution did not authorize the Prime Minister to do what he did in Paris.

Instead, the Court should have asked why not go in for a fresh tender process in an expeditious manner. The Court has overlooked the fact that in the tender process since 2007 various equally sound aircrafts like Lockheed Martin’s F-16s, Eurofighter Typhoon, Russia’s MiG-35, Sweden’s Gripen and Boeing’s F/A-18s were in the race along with Dassault’s Rafale and that the bids were opened only in 2012.

A fresh tender process could have benefitted India immensely in terms of better quality of aircraft, at perhaps better costs and with a sound Make in India program. The Supreme Court appears to have been readily willing to accept that there was a stalemate in the process of RFP withdrawal which began in March 2015, without there being any material to support it. Mr. Modi’s interview, which referred to the above, demolishes this finding. There were no government-to-government negotiations till April 10, 2015, as per Mr Modi himself.

In any case, the Court found that the decision to scrap that RFP was taken in June 2015, a finding which may perhaps require a closer scrutiny by the Court. In any case, the Supreme Court should have been concerned about why Dassault and HAL were not finalizing the offset agreement and should have ensured its completion, rather than putting its imprimatur on the fateful decision to scrap that tender. 

Arguments between Attorney General KK Venugopal and Prashant Bhushan during the Rafale Hearing before the Supreme Court

 

Equally, the Court has failed to examine the DPP 2013 in greater detail. It notices some portions of DPP but misses the very basis of DPP, its “Aim”, which is described as under:

“The objective of this procedure is to ensure expeditious procurement of the approved requirements of the Armed Forces in terms of capabilities sought and time frame prescribed by optimally utilising the allocated budgetary resources. While achieving the same, it will demonstrate the highest degree of probity and public accountability, transparency in operations, free competition and impartiality. In addition, the goal of achieving self-reliance in defence equipment will be kept in mind.”

The Court at one stage quotes Paragraph 77 of DPP 2013 and proceeds to poses a question to itself,

in this case where the RFP was  issued much prior to 1st April 2013 and it was withdrawn, as already noted, in June 2015, a question may arise as to how it could be claimed that DPP 2013 was followed.

Yet it proceeds to consider the DPP 2013 and fails to answer this question. The announcement by Mr Modi of the Inter Government Agreement was wholly impermissible as per Paragraph 71, which categorically provides as under:

There may be occasions when procurements would have to be done from friendly foreign countries which may be necessitated due to geo-strategic advantages that are likely to accrue to our country…Such procurements will be done based on an Inter Governmental Agreement after clearance from CFA. The following cases would fall under the preview of this provision”.

The only three situations in which the Inter Government Agreement can be entered are:

  1. If proven equipment is identified in a friendly country while participating in a joint exercise
  2. If large value weapon system is available in a friendly country at a much lesser cost
  3. If equipment is restricted by foreign country for sale 

Neither did the government justify the agreement with France under any specific clause, nor did the Court recognize it to do so. But most of all, since this was a large value acquisition and requiring the product support over a long period of time, the agreement should have provided for assistance of the foreign government in case the contract runs into unforeseen problems, something which has not been told to the Nation, as also to the Court. 

The conclusions therefore by the Court that,

In such a situation, government to government negotiations resulted in conclusion of the IGA for the supply of 36 Rafale Aircrafts, as part of a separate process”  or that “the requisite steps are taken to have been followed as per DPP 2013”, or that upon INT having been constituted, and further processed by Inter Ministerial consultation and approval of CCS resulting in signing of the agreement, which, Court says “was in conformity with the process as per paragraph 72 of DPP 2013” are de hors facts and the DPP 2013.

Various findings further recorded in paragraph 22 appear to be based on believing what was provided by the government in a sealed cover and not on what ought to have been told under sworn affidavits. The consultation with the senior Air Force Officers by the Court at short notice was wholly uncalled for and highly improper. Equally, the Court has unduly believed that there is a financial advantage to the Nation without going into great details of comparison of costs in the original RFP of 2007 and Dassault’s offer with the new contract of 2016. With utmost respect, the Court has committed manifest error in concluding:

“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.”

The judgment on pricing is equally incorrect. The finding in paragraphs 24 to 26 are clearly unwarranted. The Supreme Court has failed to actually compare the price between what was offered pursuant to the 2007 tender for 126 aircrafts vis-a-vis the price at which 36 aircrafts were being acquired by Mr Modi. The failure of the Supreme Court to do such an exercise demonstrates the error in its judgment on this issue.

Equally, its findings about CAG and the Public Account Committee are wholly incorrect. It appears that the Supreme Court may have been persuaded to record those findings by the government supplying incorrect information in sealed covers. Perhaps, the Court’s conscience on pricing was satisfied because of the involvement of CAG and PAC and the Parliament. The government has misled the Court and is clearly guilty of gross contempt in the face of the Court, if it is so. If not, then the Supreme Court must explain to the Nation from where it found those facts and recorded them sans submissions of the parties. 

On offsets, the judgment in paragraphs 27 to 33 is, to say the least, curious. The Court appears to have been influenced by the fact that,

 “33. The point remains that DPP 2013 envisages that the vendor/OEM will choose its own IOPs.  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.” 

On the contrary, DPP 2013 provides for offsets as under:

The offset clause would be applicable for all procurement proposals where indicative cost is 300 Crore or more and the schemes are categorized as ‘Buy (Global)’ involving outright purchase from foreign / Indian vendors and ‘Buy and Make with Transfer of Technology’ i.e Purchase from foreign vendor followed by Licensed Production. The procedure for implementing the offsets provisions is given at Appendix D to this chapter” 

Appendix D contains “Defence Offset Guidelines” and provides as its objective as under:

“1 The key objective of the Defence Offset Policy is to leverage capital acquisitions to develop Indian defence industry by (i) fostering development of internationally competitive enterprises, (ii) augmenting capacity for Research, Design and Development related to defence products and services and (iii) encouraging development of synergistic sectors like civil aerospace, and internal security”. 

Paragraph 2.4 states,

“The offset condition will form a part of the RFP and subsequently of the main contract. A separate offset contract will be executed simultaneously with the main contract.” 

Paragraph 4 deals with Indian Offset Partner (IOP) as under:

“Indian enterprises and institutions and establishments engaged in manufacture of eligible products and/or provision of eligible services, including DRDO, are referred to as the Indian Offset Partner (IOP).

Paragraphs 6 to 8 to the Appendix lay down the detailed procedure for approval of the IOP. Thus, the Court has missed the fundamental aspect that only those can be selected as IOPs who are “Indian enterprises and institutions and establishments engaged in manufacture of eligible products and/or provision of eligible services” and that too after following procedure.

The freedom to select does not include selecting a complete stranger or a wholly new entity not already involved in manufacture of legible products, like Reliance Aerostructure Limited. Dassault has selected tens of other offset partners on its own. The Court ought to have enquired and ought to have been satisfied that each of them fulfills the conditions under Appendix D. By not going into that exercise, national interest is severely compromised, as completely strange, incapable and unqualified entities have become offset partners to provide services in the long run. 

With utmost respect, My Lords, clearly the judgment when read as a whole throws up serious questions on various findings, conclusions, reasoning adopted by the Hon’ble Supreme Court. It has a number of errors apparent on the face of the record requiring its recall upon review. The Court would do a great service to the Nation if it were to instead re-examine the matter as per settled principles enumerated above and then takes the decision. It is only then that the conscience of the Nation will be satisfied that the Court has taken pains to go into such a serious matter involving national security and sovereignty and affecting public interest. 

Contrast this scrutiny by the Supreme Court with those done in the 2G and the Coal Gate cases, where the Court not only interfered to subserve public interest, but also put those holding public offices to rigorous tests to satisfy its conscience, failing which it proceeded to quash the respective allocations of public resources. Regrettably, in the Birla Sahara case, the Loya case and now the Rafale case, the Supreme Court has failed to adopt the same approach and strike at the arbitrariness or wrong doing on the part of the Executive.

Equally regrettably, each of these three decisions have been rendered without requiring the Executive to file affidavits to justify their stand by adopting highly improper procedures. Each of the three cases involved serious allegations against the highest public functionaries or the most powerful persons in the country. It is not my suggestion that they must be damned. But what is disappointing is that they have been given a clean chit by the Court in an extremely summary fashion.

Is the Court veering away from its Constitutional duties because of the belief that this government can do no wrong? I hope and trust not.

“Is the Court veering away from its Constitutional duties because of the belief that this government can do no wrong?”

I can only end by reminding the countrymen that Justice Ranjan Gogoi spoke about “noisy judges” as democracy’s first line of defence, but the Nation still awaits to hear that noise from Chief Justice Gogoi.

The author is a Senior Advocate and the former President of Supreme Court Bar Association.

Disclaimer: The views expressed in this article are those of the author’s and do not necessarily reflect the views of Bar & Bench.

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