• Explosive revelations in Rafale deal keep pouring in, Modi government braces for impact

    Nitya Chakraborty

    November 20, 2018

    The Rafale deal has finally torpedoed the four-and-half-year-old NDA government headed by Narendra Modi. After the last hearing on the PIL on Rafale deal on November 14 and the close appraisal of the proceedings in the Court, the legal experts have come to believe that there is no way for the Modi Government to get away unscathed this time. The learned judges led by the Chief Justice of India Ranjan Gogoi have reserved the verdict and in all probability, it will be out in December, but there is unanimity that the Prime Minister’s decision making process will be under question and various gaps and irregularities in processing the deal revealed in the official submission to the Supreme Court, are sure to lead to strictures against the decision making process. In sum, there is no way, the Modi government can get a clean chit on Rafale deal.

    What has drawn the attention of the legal experts is that the Government note submitted to the Supreme Court bench misrepresents some very vital areas related to decision making process and this is a serious misdemeanour on the part of the Government

    What has drawn the attention of the legal experts is that the Government note submitted to the Supreme Court bench misrepresents some very vital areas related to decision making process and this is a serious misdemeanour on the part of the Government. The various misleading and false aspects of the government note are as follows:

    1.1) Para 8 on Page 3 of the note on Decision Making Process, states provisions of Para 71 of Defence Procurement Procedure, 2013 (DPP 2013) on which reliance has been placed to show that the procurement for the 36 Rafale aircraft could have been proceeded with under an Inter Governmental Agreement (IGA). Curiously, the said provision is not quoted in its entirety and omits the three specific pre-conditions/cases under which a procurement may be carried out through the IGA route as opposed to the competitive route under that provision. As none of the three pre-conditions existed in the new Rafale deal for 36 aircraft, the failure to quote the necessary pre-conditions that are mentioned in Paragraph 71 itself is designed to mislead the Court.

    The provision as quoted in the note is as follows: “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 would not classically follow the Standard Procurement Procedure and the Standard Contract Document but would be based on mutually agreed provisions by the Governments of both the countries. Such procurements will be done based on an Inter Governmental Agreement after clearance from CFA.” While the above extract may give an impression that the total and gross violation of the Standard Procurement Procedure may be justified in the Rafale deal for 36 aircraft, it is not so.

    Beginning immediately after the end of the quote, the rest of provision is as follows: “The following cases would fall under the purview of this provision:

    (a) There are occasions when equipment of proven technology and capabilities belonging to a friendly foreign country is identified by our Armed Forces while participating in joint international exercises. Such equipment can be procured from that country which may provide the same, ex their stocks or by using Standard Contracting Procedure as existing in that country. In case of multiple choices, a delegation may be deputed to select the one, which best meets the operational requirements.

    (b) There may be cases where a very large value weapon system/platform, which was in service in a friendly foreign country, is available for transfer or sale. Such procurements would normally be at a much lesser cost than the cost of the original platform/ weapon system mainly due to its present condition. In such cases, a composite delegation would be deputed to ascertain its acceptability in its present condition. The cost of its acquisition and its repairs/modifications would be negotiated based on Inter-Governmental Agreement.

    (c) In certain cases, there may be a requirement of procuring a specific state-of-the art equipment/ platform, however, the Government of the OEM’s country might have imposed restriction on its sale and thus the equipment cannot be evaluated on ‘No Cost No Commitment’ basis. Such equipment may be obtained on lease for a specific period by signing an Inter-Governmental Agreement before a decision is taken for its purchase.”

    The Government note submitted to the Supreme Court fails to mention that in the absence of a ‘Sovereign Guarantee’, the Ministry of Law and Justice also objected to the seat of Arbitration being outside India and the fact that in case of a dispute the Indian Government is first required to take recourse to arbitration with the vendor i.e. Dassault Aviation, a process that could take years to conclude

    As none of the three conditions/cases apply to the procurement of the 36 Rafale aircraft, and given that the provision has not been quoted in its entirety, it suggests mischief. 1.1) Para 5 on Page 2 of the note on Decision Making Process quotes from the preamble of DPP-2016 while giving an impression that it alludes to DPP-2013. There is no “Preamble” in DPP-2013. The quotes in Para 5 do not appear in the ‘Foreword’ of DPP-2013 either.

    According to the legal experts, 1.2) In para 10, in support of procurements through IGA route, the note states that “The IGA is typically an assurance from a sovereign government for assistance in case of unforeseen problems, e.g. international sanctions, contract failure, need to integrate more sophisticated weaponry, requirement of product support etc…IGA also facilitates and strengthens the foreign industry’s commitment for long term support for the equipment and spares through a matching commitment by a sovereign government”.

    An impression is given that the IGA route was preferred as the French Government provided an assurance in case of unforeseen problems. This is in fact false. The note fails to mention that the Ministry of Law & Justice specifically and repeatedly objected to the fact that in the agreement for procurement of 36 Rafale aircraft the French government did not provide a ‘Sovereign Guarantee’ as required and instead merely provided a ‘Letter of Comfort’ of little value. The said objection of the Ministry of Law & Justice was eventually overruled by the Cabinet Committee on Security and the French government has not provided a ‘Sovereign Guarantee’ or ‘Bank Guarantee’ as required.

    Furthermore, the note fails to mention that in the absence of a ‘Sovereign Guarantee’, the Ministry of Law and Justice also objected to the seat of Arbitration being outside India and the fact that in case of a dispute the Indian Government is first required to take recourse to arbitration with the vendor i.e. Dassault Aviation, a process that could take years to conclude. It was highlighted that these terms & conditions were not favourable to India’s interest specifically because under the agreement huge payouts were required to be made by the Indian Government whereas the delivery of the equipment would be years away.

    Taking into account all these gaps pointed out by the petitioners’ legal counsel in their reply to the Government note, there is no escape route for Prime Minister Narendra Modi. The government will lose its moral authority to function.


     

    First published in The Leaflet.

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