TMI Blog2018 (12) TMI 1716X X X X Extracts X X X X X X X X Extracts X X X X ..... ns 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. There are 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. We, thus, dismiss all the writ petitions, leaving it to the parties to bear their own costs. - Writ Petition [Criminal] No.225 Of 2018 - - - Dated:- 14-12-2018 - Ranjan Gogoi, Sanjay Kishan Kaul And K.M. Joseph, JJ. W. P.(C) NO.1205/2018, W.P. (CRL) NO.297/2018, W.P. (CRL) NO.298/2018 JUDGMENT Ranjan Gogoi, 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 in the post Kargil experience that saw a renewed attempt to advance the strategic needs of the armed forces of the country. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echnical 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 InterGovernmental 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jagdish Mandal vs. State of Orissa and Ors. (2007) 14 SCC 517) 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 tailor made to benefit any particular tenderer or a class of tenderers. [See Maa Binda Express Carrier Anr. Vs. North East Frontier Railway Ors. (2014) 3 SCC 760] 8. Various Judicial pronouncements commencing from Tata Cellular vs. Union of India(1994) 6 SCC 651), all emphasise the aspect that scrutiny should be limited to the Wednesbury Principle of Reasonableness and absence of mala fides or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitute legal proceedings on behalf of the public interest. [emphasis supplied] 11. It is our considered opinion/view that 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 before us, therefore, 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. 12. Adopting such an approach, on 10th October, 2018 when the first two writ petitions were initially listed before the Court, the Court had specifically observed in its order that it is proceeding in the matter by requiring the Government of India to apprise the Court of the details of the steps taken in the decisionmaking process notwithstanding the fact that the averments in the writ petitions were inadequate and deficient. The Court had also indicated that it was so proceeding in the matter in order to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arket commercial form of procurement and has certain unique features such as supplier constraints, technological complexity, foreign suppliers, high cost, foreign exchange implications and geo political ramifications. As a result, decision making pertaining to defence procurement remains unique and complex. It also states that Defence procurement involves long gestation periods and delay in procurement will impact the preparedness of our forces. The needs of the armed forces being a non negotiable and an uncompromising aspect, flexibility in the procurement process is required, which has also been provisioned for. It is DPP 2013 which is stated to have been followed in the procurement in question. It is no doubt true that paragraph 77 of the DPP 2013 reads as follows: 77. This procedure would be in supersession of Defence Procurement Procedure 2011 and will come into effect from 01 June 2013. There are, however, cases which would be under various stages of processing in accordance with provision of earlier versions of DPP at the time of commencement of DPP 2013. The processing of these cases done so far under the earlier procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and 108 aircraft manufactured in India) as per RFP requirements. Issues related to contractual obligation and responsibility for 108 aircraft manufactured in India could not be resolved. 19. The aforesaid issues are stated to have been unresolved for more than three years. Such delay is said to have impacted the cost of acquisition, as the offer was with in built escalation and was influenced by Euro Rupee exchange rate variations. The stalemate resulted in the process of RFP withdrawal being initiated in March 2015. In this interregnum period, adversaries of the country, qua defence issues, inducted modern aircrafts and upgraded their older versions. This included induction of even 5th Generation Stealth Fighter Aircrafts of almost 20 squadrons, effectively reducing the combat potential of our defence forces. In such a situation, governmentto government negotiations resulted in conclusion of the IGA for the supply of 36 Rafale Aircrafts, as part of a separate process. The requisite steps are stated to have been followed, as per DPP 2013. An INT Indian Negotiating Team was constituted to negotiate the terms and conditions, which commenced in May 2015 and continued til ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts 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. 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. Our country cannot afford to be unprepared/underprepared in a situation where our adversaries are stated to have acquired not only 4th Generation, but even 5th Generation Aircrafts, of which, we have none. It will not be correct for the Court to sit as an appellate authority to scrutinize each aspect of the process of acquisition. 23. We may also note that the process was concluded for 36 Rafale fighter jet aircrafts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the prices of the basic aircraft along with escalation costs as under the original RFP as well as under the IGA. We have also gone through the explanatory note on the costing, item wise. Suffice it to say that 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. We say no more as the material has to be kept in a confidential domain. Offsets 27. The issue of IOP is what has triggered this litigation. The offset contract is stated to have been governed by the Defence Offset Guidelines of DPP 2013. Two of the said contracts were signed with Dassault and M/s MBDA Missile Systems Limited on 23rd September, 2016, the same day on which the IGA was signed between the Government of India and the Government of France. These are the French industrial suppliers of the Aircraft package and Weapon Package respectively. There are stated to be no offset ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within two weeks of being declared the lowest bidder for procurement of 126 aircrafts by the previous Government, had entered into a pact for partnership with Reliance Industries (Another business group) in the Defence sector. Dassault has also issued a press release stating that it has signed partnership agreements with several companies and is negotiating with over hundred other companies. As per the guidelines, the vendor is to provide details of the IOPs, either at the time of seeking offset credit or one year prior to discharge of offset obligation, which would be due from 2020 onwards. The aforesaid press release is in conformity with the clause dealing with IOPs which reads as under: 4. Indian Offset Partner 4.3 The OEM/vendor/Tier I sub vendor will be free to select the Indian offset partner for implementing the offset obligation provided the IOP has not been barred from doing business by the Ministry of Defence. 31. Despite the aforesaid illustration, the petitioners kept on emphasising that the French Government has no say in the matter, as per media reports. It is also stated that there was no reason for Dassault to have engaged the services ..... X X X X Extracts X X X X X X X X Extracts X X X X
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