In the Supreme Court of India civil/criminal original jurisdiction writ petition [criminal] no.225 of 2018.
Manohar Lal Sharma …. Petitioner(s)
Narendra Damodardas Modi & ors. … respondents(s)
with w.p.(c) no.1205/2018 w.p. (crl) no.297/2018 w.p. (crl) no.298/2018 judgment Ranjan Gogoi, CJI.
1. The issues arising in this group of writ petitions, filed as public interest litigations, relate to procurement of 36 Rafale fighter jets for the Indian airforce. The procurement in question, which has been sought to be challenged, has its origins 2 in the post-Kargil experience that saw a renewed attempt to advance the strategic needs of the armed forces of the country.
2. As far back as in the month of June of the year 2001, an in – principle approval was granted for procurement of 126 fighter- jets to augment the strength of the Indian airforce. Simultaneously, a more transparent defence procurement procedure (“DPP”) was formulated for the first time in the year 2002. A robust ‘offset clause’ was included in the DPP in the year 2005 so as to promote indigenisation and to that effect services qualitative requirements (“SQRS”) were prepared in June 2006. On 29th June 2007 the defence acquisition council (“DAC”) granted the “acceptance of necessity” for the procurement of 126 medium multi role combat aircrafts (for short “MMRCA”) including 18 direct fly-away aircrafts (equivalent to a single squadron) to be procured from the original equipment manufacturer (“OEM”) with the remaining 108 aircrafts to be manufactured by Hindustan Aeronautics Limited (for short “HAL”) under licence, to be delivered over a period of 11 years from the date of signing. The bidding process commenced in August 2007. Six (06) vendors submitted proposals in April, 3 2008. The proposals were followed by technical and field evaluations; a Staff Evaluation Report and a Technical Oversight Committee Report. All these were completed in the year 2011. The commercial bids were opened in November, 2011 and M/s Dassault Aviation (hereinafter referred to as “Dassault”) was placed as the LI sometime in January 2012. Negotiations commenced thereafter and continued but without any final result. In the meantime, there was a change of political dispensation at the centre sometime in the middle of the year 2014.
3. According to the official respondents negotiation continued. A process of withdrawal of the Request for Proposal in relation to the 126 MMRCA was initiated in March 2015. On 10th April, 2015 an IndoFrench joint statement, for acquisition of 36 Rafale Jets in flyaway condition through an InterGovernmental Agreement (hereinafter referred to as “IGA”), was issued and the same was duly approved by the DAC. The Request for Proposal for the 126 MMRCA was finally withdrawn in June 2015. Negotiations were carried out and the process was completed after InterMinisterial Consultations with the approval 4 of the Cabinet Committee on Security (for short “CCS”). The contract along with Aircraft Package Supply Protocol; Weapons Package Supply Protocol; Technical Arrangements and Offset contracts was signed in respect of 36 Rafale Jets on 23rd September, 2016. The aircrafts were scheduled to be delivered in phased manner commencing from October 2019.
4. Things remained quiet until sometime in the month of September, 2018 when certain newspapers reported a statement claimed to have been made by the former President of France, Francois Hollande, to the effect that the French Government were left with no choice in the matter of selection of Indian Offset Partners and the Reliance Group was the name suggested by the Government of India. This seems to have triggered of the writ petitions under consideration. The first writ petition i.e. Writ Petition (Criminal) No.225 of 2018 has been filed by one Shri Manohar Lal Sharma, a practicing lawyer of this Court. What is sought for in the said writ petition is registration of an FIR under relevant provisions of the Indian Penal Code, 1860 and a Court Monitored Investigation. The further relief of quashing the Inter 5 Governmental Agreement of 2016 for purchase of 36 Rafale Jets has also been prayed for. Writ Petition (Civil) No.1205 of 2018 has been filed by one Shri Vineet Dhanda claiming to be a public spirited Indian. The petitioner states that he was inspired to file the writ petition being agitated over the matter on the basis of the newspaper articles/reports. The third writ petition bearing Writ Petition (Criminal) No.297 of 2018 has been filed by one Shri Sanjay Singh, a Member of Parliament alleging illegality and nontransparency in the procurement process. The said writ petition seeks investigation into the reasons for “cancellation of earlier deal” and seeks a scrutiny of the Court into the alteration of pricing and, above all, how a ‘novice’ company i.e. Reliance Defence came to replace the HAL as the Offset partner. Cancellation of InterGovernmental Agreement and registration of an FIR has also been prayed for. The fourth and the last writ petition bearing Writ Petition (Criminal) No.298 of 2018 has been filed by Shri 6 Yashwant Sinha, Shri Arun Shourie and Shri Prashant Bhushan claiming to be public spirited Indians. They are aggrieved by nonregistration of FIR by the CBI pursuant to a complaint made by them on 4th October, 2018 which complaint, according to the petitioners, disclose a prima facie evidence of commission of a cognizable offence under the provisions of the Prevention of Corruption Act, 1988. The prayer, inter alia, made is for direction for registration of an FIR and investigation of the same and submitting periodic status reports to the Court.
5. 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.
6. Keeping in view the above, 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 7 and contracts, that has emerged till date, would legitimately permit.
7. Parameters of judicial review of administrative decisions with regard to award of tenders and contracts has really developed from the increased participation of the State in commercial and economic activity. In Jagdish Mandal vs. State of Orissa and Ors.1 this Court, conscious of the limitations in commercial transactions, confined its scrutiny to the decision making process and on the parameters of unreasonableness and mala fides. In fact, the Court held that it was not to exercise the power of judicial review even if a procedural error is committed to the prejudice of the tenderer since private interests cannot be protected while exercising such judicial review. The award of contract, being essentially a commercial transaction, has to be determined on the basis of considerations that are relevant to such commercial decisions, and this implies that terms subject to which tenders are invited are not open to judicial scrutiny unless it is found that the same have been tailormade to benefit any particular tenderer or a 1 (2007) 14 SCC 517 8 class of tenderers.
8. Various Judicial pronouncements commencing from Tata Cellular vs. Union of India3 , all emphasise the aspect that scrutiny should be limited to the Wednesbury Principle of Reasonableness and absence of mala fides or favouritism.
9. We also cannot lose sight of the tender in issue. The tender 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. This aspect was even emphasized in Siemens Public Communication Networks Pvt. Ltd. & Anr. Vs. Union of India & Ors.4 . The triple ground on which such judicial scrutiny is permissible has been consistently held to be “illegality”, “irrationality” and “procedural impropriety”. 2 (2014) 3 SCC 760 3 (1994) 6 SCC 651 4 (2008) 16 SCC 215 9
10. In Reliance Airport Developers (P) Ltd. vs. Airports Authority of India & Ors.5 the policy of privatization of strategic national assets qua two airports came under scrutiny. A reference was made in the said case to the commentary by Grahame Aldous and John Alder in their book ‘Applications for Judicial Review, Law and Practice’: “There is a general presumption against ousting the jurisdiction of the courts, so that statutory provisions which purport to exclude judicial review are construed restrictively. There are, however, certain areas of governmental activity, national security being the paradigm, which the courts regard themselves as incompetent to investigate, beyond an initial decision as to whether the Government’s claim is bona fide. In this kind of nonjusticiable area judicial review is not entirely excluded, but very limited. It has also been said that powers conferred by the royal prerogative are inherently unreviewable but since the speeches of the House of Lords in Council of Civil Service Unions Vs. Minister for the Civil Service [1985 AC 374: (1984) 3 WLR 1174 (HL): (1984) 3 All ER 935] this is doubtful. Lords Diplock, Scaman and Roskili (sic.)6 appeared to agree that there is no general distinction between powers, based upon whether their source is statutory or prerogative but that judicial review can be limited by the subjectmatter of a particular power, in that case national security. Many prerogative powers are in fact concerned with sensitive, nonjusticiable areas, for example, 5 (2006) 10 SCC 1 6 To be read as ‘Roskill’ 10 foreign affairs, but some are reviewable in principle, including where national security is not involved. Another nonjusticiable power is the Attorney General’s prerogative to decide whether to institute legal proceedings on behalf of the public interest.”