Manohar Lal Sharma vs Narendra Damodardas Modi & Ors.

HELD: 1.1 Adequate Military strength and capability to discourage and withstand external aggression and to protect the sovereignty and integrity of India, undoubtedly, is a matter of utmost concern for the Nation. The empowerment of defence forces with adequate technology and material support is, therefore, a matter of vital importance. It would be appropriate, at the outset, to set out the parameters of judicial scrutiny of governmental 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 tender in issue 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. [Para 5, 6, 9][847-G-H; 848-A-B, F-G]

1.2 The extent of permissible 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 which could be understood as an across the board principle to apply to all cases of award of work or procurement of goods/material. The scrutiny of the challenges, thus, 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. [Para 11][849-G-H; 850-A] Jagdish Mandal v. State of Orissa and Ors. (2007) 14 SCC 517 ; Maa Binda Express Carrier & Anr. v. NorthEast Frontier Railway & Ors. (2014) 3 SCC 760 : [2013]

12 SCR 529 ; Tata Cellular v. Union of India (1994) 6 SCC 651 : [1994] 2 Suppl. SCR 122 ; Siemens Public Communication Networks Pvt. Ltd. & Anr. v. Union of India & Ors. (2008) 16 SCC 215 : [2008] 15 SCR

585 ; Reliance Airport Developers (P) Ltd. v. Airports Authority of India & Ors. (2006) 10 SCC 1 : [2006] 8 Suppl. SCR 398 – referred to.

2. 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. Joint exercises have taken place, and that there is a financial advantage to the nation. 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. Broadly, the processes have been followed. The need for the aircrafts is not in doubt. The quality of the aircraft is not in question. 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. The Court cannot sit in judgment over the wisdom of deciding to go in for purchase of 36 aircrafts in place of

126. The Government cannot be compelled 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 country cannot afford to be unprepared/underprepared in a situation where the adversaries are stated to have acquired not only 4 t h Generation, but even 5th Generation Aircrafts, of which, there are none. It will not be correct for the Court to sit as an appellate authority to scrutinize each aspect of the process of acquisition. [Para 22][854-B-F]

2.2 The process was concluded for 36 Rafale fighter jet aircrafts on 23 rd September, 2016. Nothing was called into question, then. It is only taking advantage of the statement by the ex-President of France, that these set of petitions have been filed, not only qua the aspect which formed the statement, that is, the issue of IOPs but also with respect to the entire decisionmaking process and pricing. [Para 23][854-G-H]

3.1 The material placed before this Court shows that the Government did not disclose pricing details, other than the basic price of the aircraft, even to the Parliament, on the ground that sensitivity of pricing details could affect national security, apart from breaching the agreement between the two countries. The pricing details have, however, 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 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. 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. Despite this reluctance, the material has still been placed before the Court to satisfy its conscience. [Para 25][855-C-F]

3.2 The price details and comparison of the prices of the basic aircraft along with escalation costs as under the original RFP as well as under the IGA and the explanatory note on the costing, item wise have been examined. As per the price details, the official respondents claim there is a commercial advantage in the purchase of 36 Rafale aircrafts. The official respondents have claimed that there are certain better terms in IGA qua the maintenance and weapon package. It is certainly not the job of this Court to carry out a comparison of the pricing details in matters like the present. Nothing more is said as the material has to be kept in a confidential domain. [Para 26] [855-G-H; 856-A]

4.1 The company, Reliance, has come into being in the recent past, but the press release suggests that there was possibly an arrangement between the parent 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. There has been a categorical denial, from every side, of the interview given by the former French President seeking to suggest that it is the Indian Government which had given no option to the French Government in the matter. On the basis of materials available this appears contrary to the clause in DPP 2013 dealing with IOPs. Thus, the commercial arrangement, 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. That is the reason why it has been stated that the role of the Indian Government would start only when the vendor/OEM submits a formal proposal, in the prescribed manner, indicating details of IOPs and products for offset discharge. As far as the role of HAL, insofar as the procurement of 36 aircrafts is concerned, there is no specific role envisaged. In fact, the suggestion of the Government seems to be that there were some contractual problems and Dassault was circumspect about HAL carrying out the contractual obligation, which is also stated to be responsible for the nonconclusion of the earlier contract. [Para 32][858-A-E]

4.2 It is neither appropriate nor within the experience of this Court to step into this arena of what is technically feasible or not. 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. There is no 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. [Para 33][858-F-G]

5. There is no reason for any intervention by this Court on the sensitive issue of purchase of 36 defence aircrafts by the Indian Government. Perception of individuals cannot be the basis of a fishing and roving enquiry by this Court, especially in such matters. It is made clear that the views are primarily from the standpoint of the exercise of the jurisdiction under Article 32 of the Constitution which has been invoked in the instant group of cases. [Para 34][858-H; 859-A-B]