MANOHAR LAL SHARMA V. NARENDRA DAMODARDAS MODI;

WP (CRL.) 225/2018; RP (CRL.) 46/2019

 In 2007, the Ministry of Defence issued tenders for the purchase of 126 fighter aircraft, in line with the procedure set out in the Defence Procurement Procedure (DPP). In particular, the Union would purchase 18 from abroad, while 108 would be manufactured in India by Hindustan Aeronautics Limited (HAL). After an extensive selection process, the Union selected the French company Dassault. Dassault manufactures the Rafale twin-engine fighter aircraft. By 2015,price negotiations were in their final stage.

However, in March 2015 Prime Minister Narendra Modi and the President of France announced a new deal for the purchase of only 36 Rafale fighter aircraft. The Ministry of Defence subsequently announced that the tender for 126 aircraft had been withdrawn. The new deal included a 50% offset clause, which required Dassault (and the other foreign companies involved, such as Thales and Safran) to invest 50% of the contract value back into India via the purchase of Indian goods and services. In October 2016, Dassault and Anil Ambani's Reliance Group announced a joint venture - Dassault Reliance Aerospace Ltd (DRAL) - with Dassault specifying that intends to invest $115 million to partially fulfil its offset obligation.

In 2018, multiple litigants filed petitions in the Supreme Court, claiming that the Rafale Fighter Jet Deal suffers from serious procedural irregularities. They brought forward such concerns as:

• Did Prime Minister Modi make a decision to go ahead with the deal without the approval of the Cabinet Committee on Security?
• Was Reliance Defence made Dassault Aviation's Indian Offset Partner without the approval of Minister of Defence, as required by the Defence Offset Guidelines? Further, was Hindustan Aeronautics Limited (HAL), the previously proposed Offset partner, improperly removed?
• Is the deal in fact an inter-governmental deal between India and France? And if it is, does this allow the Central government to forego disclosing the details of the deal, in violation of the Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act?
• Does the deal suffer from pricing irregularities? The price per aircraft from the first deal to the second deal approximately doubled.

The court observed that it found no irregularity in the decision-making process, pricing or selection of an off-set partner. The court reached its conclusion on the basis of evidence produced by the State in sealed covers. On 21 February 2019, the court agreed to hear a review petition challenging the judgment, filed by Yashwant Sinha, Arun Shourie and Prashant Bhushan. These review petitioners allege that the judgment rests on incorrect factual claims made by the government. On 14 November, it dismissed the review petitions, emphasising that it had limited scrutiny of defence contracts under its Article 32 jurisdiction.

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