New Delhi: Former BJP union ministers Arun Shourie and Yashwant Sinha and advocate-activist Prashant Bhushan filed their written submissions in the Rafale review petition case on Wednesday.
The submissions comes almost two weeks after the Supreme Court reserved its verdict in a petition filed by the trio and others that sought a review of an earlier judgement by the court. In December 2018, the apex court had declined to order a probe into the decision-making process behind the purchase of 36 Rafale jets.
Consequently, a review petition was moved by a clutch of petitioners earlier this month.
The application and written submissions filed by Shourie, Sinha and Bhushan primarily argues that the December 2018 verdict was based on incorrect and incomplete facts that were supplied by the Centre. Along with the review, the written submissions also seeks perjury proceedings against certain government officials for allegedly suppressing information from the court.
The full text of the written submissions that were supplied today to the Supreme Court can be found below.
IN THE SUPREME COURT OF INDIA
M.A. 403/2019 IN W.P. 298/2018
REVIEW PETITION (Cr.) 46/2019
I.A. No. 71047/2019
IN THE MATTER OF:
YASHWANT SINHA & ORS. ….PETITIONERS
CENTRAL BUREAU OF INVESTIGATION & ANR.…..RESPONDENTS
WRITTEN SUBMISSIONS ON BEHALF OF PETITIONERS
- Sec 193, IPC, read with Sec 340, Cr PC
- As has been set out in the accompanying case laws, the Supreme Court has repeatedly held that a litigant is in duty bound to produce all the documents relevant to the matter under consideration; that a judgment obtained by advancing falsehoods or suppressing facts has ipso facto “to be treated as a nullity . . . it has to be treated as non est by every court, superior or inferior.” Furthermore, the Supreme Court has repeatedly held that those who mislead the Court and thereby thwart justice must be dealt with severely—both because of the grave wrong that they have committed, and so as to deter others from polluting the stream of justice in the future
- Such decisions gain even greater force in the present instance as the two notes that were submitted by the Government were submitted in response to orders of the Court itself: in its Order of 10 October 2018, the Court directed, “we would like to be apprised by the Government of India of the details of the steps in the decision making process leading to the award of the order for the defence equipment in question . . .” Similarly, in its subsequent Order the Court directed, “The Court would also like to be apprised of the details with regard to the pricing/cost . . .” In each of the two Orders, the Court sought “details of”—the “decision making process” and of “pricing/cost”: in a word, it asked for all relevant facts
- The duty cast on the Government to furnish the truth, the whole truth and nothing but the truth was all the greater because one of its two notes was submitted in sealed covers—as a result, the fundamental principle of giving fair opportunity to the Petitioners to counter the information being supplied was being dispensed with.
What transpired in fact:
- The Government wilfully and deliberately misled the Court on matter after matter
- It suppressed the truth and thereby insinuated utter falsehoods: facts and documents of the greatest significance, which have direct and overarching bearing on the matter that the Court was considering, and which were available with the Government were suppressed from the Court
- It was not just one fact or document that might have been left out accidentally. But a series, and all of them conformed to a pattern
- The Court placed its trust in the Government—as a result, in reaching the conclusions that it did, the Court relied almost wholly on the notes that the Government had submitted; and the Government abused that trust
- To prevent it from getting at the truth, the Court was persuaded to rely on these two notes and not examine the primary documents—documents which would have nailed the deliberately misleading averments. Throughout the hearings, right to the point of the Attorney General’s concluding arguments, when petitioners sought to bring these primary documents to the Court’s attention, the Court was told again and again that petitioners were purveying “stolen/purloined documents”, and so the Court should not heed them.
- The falsehoods and suppression of facts were so extensive that they amount to wholesale fraud: and a Judgment obtained by fraud is ipso facto void, non est
- The evasions and falsehoods continue: they characterise even the reply affidavits that the Government filed towards the conclusion of the hearings: therefore, the perjury and fraud have been compounded
Source of errors in the Judgment
The Petitioners have set out in detail the numerous errors that have occurred in the Judgment. Apart from the fact that petitioners’ prayer—of directing the CBI to proceed in accordance with the law laid down by a Constitution Bench of this Court in Lalitha Kumari—was not addressed at all, most of the errors in the Judgment have resulted from the falsehoods that have been advanced by the Government and the facts that have been suppressed by it.
A few examples will be sufficient to show how systematically the Government misled the Court and how the Judgment was thereby vitiated.
- In its Judgment, the Court held,
“It is no doubt true that the company, Reliance Aerostructure Ltd., has come into being in the recent past, but the press release suggests that there was possibly an arrangement between the parent Reliance company and Dassault starting from the year 2012.” (Para 32, Impugned Judgement dated 14.12.2018)
This is an obvious error: the Reliance company that entered into an Offset arrangement with Dassault first entered the Defence Sector only in December, 2014. Having affirmed that one cannot go by statements in the press, the Court could not have committed this error but for the fact that it was deliberately misled by the Press Release of the Ministry of Defence that the Government appended to its note. This Press Release had stated,
“Incidentally, media reports of 2012 suggest that Dassault Aviation, within two weeks of being declared the lowest bidder for procurement of 126 aircraft by the previous government had entered into a pact for partnership with Reliance Industries in Defence Sector.” (Press Release appended to the ‘Notes’ on Offsets)
The Government’s note thus deliberately confounded “Reliance Industries” with “Reliance Infrastructure” and thereby misled the Court into committing an embarrassing error.
- In its Judgment, the Court held,
“An INT (Indian Negotiating Team) was constituted to negotiate the terms and conditions, which commenced in May 2015 and continued till April 2016. In this period of time, a total of 74 meetings were held, including 48 internal INT meetings and 26 external INT meetings with the French side.” (Para 19, Impugned Judgement dated 14.12.2018)
The Court was led to this view of the facts by the Government Note which stated,
“An Indian Negotiating Team (INT) was constituted to negotiate the terms and conditions of the procurement of 36 Rafale aircraft with the French Government team.” “Negotiations between the INT and the French side started in May 2015 and continued upto April 2016. A total of 74 meetings, which included 48 internal INT meetings and 26 external INT meetings with the French side were held during the negotiations.” (Paras 24-29 of ‘Notes’ on Decision Making Process)
From documents that are by now in the public domain, it is manifest that the Note suppressed unauthorised Parallel Negotiations, and that these were strenuously objected to by the INT, as well as by the senior-most officials in the Defence Ministry. The parallel negotiations were
- against the Conduct of Business Rules as well as
- against the mandate of Defence Procurement Procedures (DPP)
While Paras 47 to 59 of DPP, 2013, (Pages 17-19 of DPP, 2013) lay down that negotiations on all aspects are to be done by INT, the documents on record and which were suppressed from the Court show that parallel negotiations were conducted by PMO bypassing the Ministry of Defence & INT.
In its Response Affidavit, the Government has tried to pass off these negotiations by asserting that the PMO was merely “monitoring” the negotiations. This amounts to a further attempt by the Government to mislead the Court as it flies in the face of the facts that have since come on record. That what was being done was not mere “monitoring” will be evident from the following:
Through its note dated 24 November 2015 (Pages 28-29 of Perjury Application, M.A. 403/2019), the Ministry of Defence—a note that has a direct bearing on the issue that the Court was considering, and which the Government suppressed from the Court,
- Objected to “parallel negotiations ” being conducted by officers in the PMO and stated that
- Such negotiations “weakened the negotiating position of MoD and Indian Negotiating Team ”
- The note added, “we may advise PMO that any Officers who are not part of Indian Negotiating Team may refrain from having parallel parlays [parleys] with the officers of French Government.”
Citing “a glaring example” of how the official Indian Negotiating Team was kept in the dark about these “parallel negotiations,” the Defence Ministry note pointed out that
- The INT learnt of parallel negotiations when a French official wrote a letter stating, “taking into consideration the outcome of discussions between Diplomatic Adviser to the French Defence Minister and Joint Secretary to PM, no Bank Guarantee is provisioned in the supply protocol and the letter of comfort provides sufficient assurances of the proper implementation of the supply protocol by the industrial suppliers.”
- The note emphasised that this was “contrary to the position taken by the MoD and conveyed by Indian Negotiating Team that the commercial offer should be preferably backed by Sovereign/Government Guarantee or otherwise by Bank Guarantee.”
- Another instance of a contrary stand taken in the parallel negotiations was on the arbitration arrangement, both in regard to the location, and in regard to the fact that under the terms that were conveyed by the PMO to the French side, the arbitration would be not vis a vis the French Government but vis a vis a private party
The seriousness of PMO’s unauthorized negotiations can be gauged from the fact that the Defence Secretary was constrained to record that,
- “in case the PMO is not confident about the outcome of negotiations being carried out by the MoD, a revised modality of negotiations to be led by PMO at appropriate level may be adopted in the case.”
The Defence Ministry protested that the position taken by the PMO was “contradictory to the stand taken by MoD and the negotiating team.”
And the Defence Secretary, explicitly recorded that, “RM may pl. see. It is desirable that such discussions be avoided by the PMO as it undermines our negotiating position seriously.”
Do these notings by the senior-most officers of the Defence Ministry suggest that all that was happening was “monitoring”? And yet all the notings were concealed from the Court. Instead the Court has been told in the Response Affidavit that the PMO was merely monitoring the negotiations. In a word, once again the Court has been gravely misled.
Furthermore, the Court was kept in the dark about the fact that, notwithstanding objections of the Ministry of Defence and the mandatory provisions of the DPP, the National Security Advisor (NSA), Mr. Ajit Doval, again interfered without mandate and conducted negotiations with the French in Paris on 12.01.2016 and 13.01.2016 on issues of Bank Guarantee, Sovereign Guarantee, Seat of Arbitration, etc. (Pages 33-36 of Perjury Application, MA 403/2019, specifically Paras 3, 6, & 9) These meetings were not reported to the Court, in spite of the fact that the Court in its Order had explicitly directed the Government to provide “details of the steps in the decision making process leading to the award of the order for the defence equipment in question . . .”
Furthermore, the Government suppressed from the Court that as a consequence of Mr. Doval’s unauthorized meetings, the then Defence Minister Mr. Manohar Parrikar directed that the French insistence on providing only a “Letter of Comfort” in lieu of Sovereign Guarantees should be considered by the Cabinet Committee on Security. He was clearly washing his hands, and that of the Defence Ministry of the matter by shunting the decision to the CCS which would be presided over by the Prime Minister himself. (Para 9, Pages 33-36 of Perjury Application, MA 403/2019)
The Court will note that this direction was against para 75 of DPP, 2013, which explicitly states, “Any deviation from the prescribed procedure will be put up to DAC through DPB for approval.” (Page 23 of DPP, 2013)
The Petitioners are confident that had these and similar facts not been deliberately suppressed from the it, the Court would not have taken at face value the bland assertion in the Government’s note that
“It is reiterated that the procurement process laid down in the Defence Procurement Procedure (DPP)-2013 was followed in the procurement of 36 Rafale aircraft” (Para 29 of ‘Note’ on Decision Making Process)
“This was further processed for inter-ministerial consultations and the approval of the CCS was also obtained, finally, resulting in signing of the agreement. This was in conformity with the process, as per para 72 of DPP 2013.” (Para 19, Impugned Judgement dated 14.12.2018)
Had the facts not been suppressed, the Court would not have taken at face value the bland assertion of the Government in its note that
“It is reiterated that the procurement process as laid down in the Defence Procurement Procedure, (DPP-2013) was followed in procurement of 36 Rafale aircrafts. The approval of DAC for procurement of 36 Rafale aircrafts was taken, Indian Negotiating Team (INT) was constituted which conducted negotiations with the French side for about a year and approval of CCS being the CFA was taken before signing the IGA” (Para 29, ‘Note’ on Decision Making Process)
“We are satisfied that 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…..Broadly, the processes have been followed.” (Para 22, Impugned Judgement dated 14.12.2018)
What does signing dilute?
The serious objections that had been raised the three members of the INT who had domain knowledge have already been brought to the notice of the Court. In its Response Affidavit the Government makes much of the fact that the note for the CCS was signed by one of the three officers, Mr. Rajiv Verma, then Joint Secretary & Acquisition Manager (Air). It may be noted that he was obligated to sign the proposal as required under Para 59 of DPP, 2013, that states, “The CNC Report, along with the summary of recommendations, would be processed by the Director / Acquisition Manager at their level, as applicable, for obtaining expenditure clearance and CFA approval.” (Para 59 at Page 19 of DPP, 2013)
The mere fact that he signed the note for the Cabinet does not dilute the weight of the objections that he and two other officers had raised. Whether the grounds on which they had opposed what was being pressed upon them had been satisfactorily resolved in subsequent consideration of the facts can only be settled by examining the documents that we have requested the Court to call for. Neither in its Response Affidavit, nor in the final arguments of the Attorney General has the Government indicated a single fact which shows that the apprehensions and objections that the officers had recorded were wrong.
The grounds on which the officials had opposed what was being pushed through apart, consider what they had been constrained to record in regard to the way mandatory procedures were being violated.
Contrast what they set out in writing about what was in fact happening with what para 56 of the DPP, 2013 requires (Para 56 at Page 19 of DPP, 2013). This mandatory para requires:
- The CNC [Contract Negotiating Committee] should document the selection of vendor using a formal written recommendation report addressed to the relevant approval authority.
- The report must be complete in all respects and should be checked by the members of the CNC.
- It should comprehensively elaborate the method of evaluation and the rationale for the selection made.
- All CNC members should sign the recommendation report, in the interest of probity and accountability, as evidence that they concur with the process adopted and the ultimate selection made.
These are the mandatory requirements as laid down by the DPP, 2013. What was happening in practice was set out by the three officers in their comprehensive note dated 01.06.2016 (Pages 37-44 of Perjury Application, MA 403/2019). They drew attention in writing to the fact that outright attempts were being made to distort and manipulate the draft INT report of 30 May 2016. This draft, they pointed out had
- “a number of factual inaccuracies and omissions. It was also observed that
- certain issues pertaining to the benchmark price that were never deliberated in the internal meeting were also included in the draft report that was prepared by Air HQ ”
After their protest, another draft report
- was brought at “around 4:00 pm on 31.05.2015 … [That time and date are important as the then Defence Minister, having sat on the file for 41 days, had set 31 May 2015 as the deadline for submission of the report of the INT]
- it was not shown to Member Secretary INT, as he was busy in some other engagement…
- It was noticed that the revised draft report had similar factual inaccuracies and omissions…
- It was noticed that some of the directions issued by MoD from time to time with approval of Defence Secretary/Hon’ble RM to INT were not referred to in the revised Draft Report.
- Similarly, all communications between the INT and French side in form of letters that have taken place during the course of negotiations were also not reflected in the Draft Report.”
- They closed with this warning, “It may also be mentioned that Records of Discussion of number of meetings of INT have not been finalized by Air HQ I in spite of repeated requests. It is imperative to finalise these RoDs ”
It will be recalled that the Court had asked for “details of the steps in the decision making process leading to the award of the order for the defence equipment in question . . .”; it had asked for “the details with regard to the pricing/cost . . .” In each of the two Orders, the Court sought “details of”—the “decision making process” and of “pricing/cost”: in a word, it asked for all relevant facts. The attempts at distortion and manipulation of the Report had a direct bearing on the “decision-making process” about which the Court had directed the Government to provide details. And yet, the Government deliberately concealed this record of distortion and manipulation. Had the facts been disclosed to the Court, it would have been in a better position to weigh our prayer about the need for an inquiry to determine who was including “issues pertaining to the benchmark price that were never deliberated in the internal meeting . . . in the draft report that was prepared by Air HQ” and why. Suppression of such important facts manifestly amounts to misleading the Court.
Everyone agrees that the country must be fully prepared to meet the threats that our adversaries pose. It is for this very reason that the Air Force had determined that it needs one hundred and twenty six multi-role combat aircraft, not thirty six. It is for this very reason that teams with domain expertise had determined that we must acquire the technology to make such aircraft on our own so that we do not remain dependent on foreign suppliers and governments. And we had a ready-made, and vastly experienced organization to absorb the technology, namely HAL.
Similarly, everyone is agreed that decisions in regard to such vital issues affecting the security of the country must be taken swiftly.
But even on these central points the Government has seriously, and deliberately misled the Court into making manifest errors in its Judgment. Two examples will suffice to illustrate the pattern of suppressio veri, suggestio falsi.
To justify the sudden jettisoning of the negotiations for the 126-aircraft, negotiations that had been almost completed, the Government in its note to the Court stated,
“During this long period of inconclusive 126 MMRCA process, our adversaries inducted modern aircraft and upgraded their older versions . . . Further, they modernized and inducted aircraft with advanced weapon and radar capabilities. As per available information, our adversaries inducted more than 400 fighters (equivalent to more than 20 Squadrons) during the period 2010 and 2015. They not only inducted 4th Generation Aircraft but also inducted 5th Generation Stealth Fighter Aircraft.” (Para 19 of ‘Notes’ on Decision Making Process)
The Court took this at face value and in its Judgment recorded,
“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.” (Para 19 of Impugned Judgement dated 14.12.2018)
In para 9, the Reply Affidavit of the Government now affirms these claims on the authority of the Supreme Court Judgment.
Clearly the Court had been misled by an insinuation. Recall the sentence in bold above:
This included induction of even 5th Generation Stealth Fighter Aircrafts of almost 20 squadrons . . .
A squadron consists of around 20 aircraft. This statement would mean that our adversaries have around four hundred “5th Generation Stealth Fighter Aircrafts.” If they have even one and we do not have any, or if they have even one and we do not have the means to counter that, it is one too many. But to insinuate something to the Court so that it comes to conclude that our adversaries have around four hundred “5th Generation Stealth Fighter Aircrafts” is to grossly mislead it. The facts, as can be easily ascertained from experts in military aviation, are:
- Pakistan does not have a single “5th Generation Stealth Fighter Aircraft”
- China’s PLA air force is developing two 5th Generation fighters, the J-20 and the FC-31. The first squadron of the former is not yet complete. The latter—the FC-31—is still in the flight-testing stage, with two prototypes having been built.
Instead of correcting what it had led the Court to take on trust, the Government now cites this gross exaggeration on the authority of the Supreme Court!
Petitioners have already set out the way facts have been distorted in regard to the comparative price per aircraft in the original 126-aircraft deal and the 36-aircraft deal which was pushed through. Each of those sleights-of-words amounts to misleading the Court.
On the question of preparedness, the same pattern is visible in regard, for example, to the delivery schedule. In their comprehensive note, the three domain experts had stated, “in the MMRCA process, the first 18 flyaway aircrafts were being delivered between T0+36 months to T0+48 months whereas in the delivery schedule offered by the French side, first 18 aircrafts will be delivered between T0+36 months and T0+53 months. ”
In the note that it submitted to the Court, the Government stated,
“ INT report was finalized and signed on 21st July, 2016. Report indicated better terms and conditions arrived at as a result of negotiation compared to 126 MMRCA case” (Para 26 of ‘Notes’ on Decision Making Process)
The Court took Government’s assertions at face-value. In its Reply Affidavit the Government now invokes the CAG’s Report to assert that the contract eventually signed for 36 Rafales involves delivery in 71 months, as compared to 72 months in the MMRCA contract. It conceals the fact that the negotiation of the 36 Rafale contract took another 18 months after the Prime Minister’s announcement, a time frame which has to be added onto the 71 months, since the clock starts from the date on which the contract has been signed.
Wholesale suppression of facts
- The Court was led to rule in its Judgment that “DPP 2013 envisages that the vendor/OEM will choose its own IOPs”; “. . . the option to choose the IOP does not rest with the Indian Government”; furthermore, that the Government does not even need to be informed who has been chosen as the Offset Partner till the contract actually begins to get executed. These conclusions have been secured by the Government entirely by suppressing from the Court that the Offset Guidelines made it mandatory [i] for the Government to be informed of the identity of the Offset Partner at the very time the commercial contract was signed; [ii] the eligibility and capability of the partner so named will be whetted by the Manager, Defence Acquisitions; [iii] that the selection of the Offset Partner would be personally approved by the Defence Minister. And that each of these mandatory requirements was done away with and the Government could secure from the Court the observation on offsets that it did only because the requisite clauses were overthrown, and that also with retrospective effect. And that this was done in a meeting which the Government concealed from the Court. In this way it was able to lead the Court to state that the Government had no role to play in the selection of the Offset Partner, that this was entirely an arrangement between two private companies. Having misled the Court in this way, the Government further and deliberately suppressed facts that went to the heart of the matter—it concealed facts relating to the dates on which the Ambani companies that have been selected as Offset Partners were constituted, the dates on which they obtained land for the work they had to execute, their complete lack of experience, the fact that the industrial licence which the companies had obtained disqualified from undertaking the kind of works that the Offset Contract obliges them to execute, the totally bankrupt state of the Group.
- The even more flagrant concealment of facts from the Court related to the eight clauses that were overturned in a meeting that the CCS held in September 2016, a month later than the date by which the Government inveigled the Court into believing that everything had been done and finalized. It is through this concealment that the Government secured from the Court its imprimatur on aspects that were central to the proper execution of the contract as well as safeguarding the interests of the country—namely, the question of obtaining a Sovereign Guarantee, of obtaining at least a Bank Guarantee, of setting up at the least an Escrow Account into which payments would be made. When a document setting out the decision to overturn the eight vital clauses (Page 7 of Rejoinder Affidavit dated 08.05.2019) was presented to the Court during the final hearing of the matter, the Government did not, as it could not, deny either that the meeting had indeed taken place or that the unconscionable decisions the Petitioners had listed had indeed been taken. Nor did it provide any reason to justify dropping any of the clauses—in particular, the standard clauses relating to “Penalty for Undue Influence” (Page 317 of DPP, 2013) pertaining to use of undue influence by the vendor, to “Agents/ Agency Commissions,” (Page 318 of DPP, 2013) and clauses that ensure “Access to Book of Accounts” (Page 323 of DPP, 2013) in case of suspected use of an Agent or Undue Influence. The only answer of the Government was to assert again that the document containing this vital information had been “stolen” like the other documents to the production of which it had objected.
- In the same way, the Government misled the Court by asserting time and again that Sovereign Guarantee, etc. were not required as this was a Government-to-Government deal. The fact of the matter, however, was that the contract had none of the features of a Government-to-Government deal—and that this had been put on record by both the Ministry of Defence and the Ministry of Law and Justice. The Government has compounded this suppression of vital facts in its Reply Affidavit by stating that there is nothing unusual in dropping the requirement of sovereign and bank guarantees. It has illustrated this assertion by citing the fact that they are routinely waived in contracts signed with Rosoboronexport of Russia, and Foreign Military Sales (FMS) contracts with the USA. This is a textbook ilustration of pulling wool over the eyes of the Court. These guarantees are waived in contracts signed with Rosoboronexport because this organization is an arm of the Russian Government and, therefore, sovereign guarantees are inherent in contracts with Rosoboronexport. The same is true with Foreign Military Sales contracts with the USA: these contracts are signed with the USA’s Department of Defence via the Pentagon. By contrast, the contract for 36 Rafales has been signed with Ms. Dassault Aviation, a private company. The need for sovereign guarantee cover by the French Government was, therefore, essential. A non-binding “Letter of Comfort” would not suffice. The wording of the Letter of Comfort is clearly non-binding and without specified penalties for non-compliance.
- The Government kept from the Court the vital bearing that the International Arms Trade Treaty has on the question of ensuring a Sovereign Guarantee. This Treaty gives a signatory the authority to interrupt, modify or cancel export of military equipment, in the present instance the Rafale fighters, at any stage. France has signed the ATT, but India has consistently refused to do so on the ground that the Treaty is discriminatory. If supplies of defence equipment are stopped by an exporting country, the Treaty’s provisions relieve the exporting country and its defence manufacturers from any contractual liability. A Sovereign Guarantee is a pledge that supersedes the ATT. Had France been made to provide a Sovereign Guarantee in the Rafale contract, as officers of the Ministry of Defence and of Law and Justice were reiterating it must, France would not have been foreclosed from citing the ATT to explain any lapse in the execution of the contract.
- So consequential was the requirement that a Sovereign Guarantee be insisted upon, and so concerned was the Defence Ministry over this decision—which left Indian interests unprotected at the hands of private companies, and which destroyed even the pretence of this being a Government-to-Government deal, that it recorded “With reference to issues pertaining to arbitration, we had vide Note 223, sought legal opinion and advice on
- whether the proposed scheme of Arbitration between Government of India and French Industrial Suppliers is legally tenable in spite of the fact that there is no direct contact between the Government of India and French Industrial Suppliers.
- Whether the Government -to- Government character of the procurement is maintained in the draft IGA by incorporating provisions of Arbitration with the French Industrial Suppliers?
- Whether the scheme of direct Arbitration between Government of India and French Industrial Suppliers adequately protects the legal and financial interests of Government of India and whether the same should be accepted?
(Para 14, Page 36, of Perjury Application, MA 403/2019)
The Ministry of Law and Justice opined that “direct arbitration with the French Industrial Suppliers is not legally tenable since Indian side is not a party to the Convention. As stated above, the French side has even not shared the language of Convention with the Indian side.” (Para 15, Page 36, of Perjury Application, MA 403/2019)
But for the suppression of these vital facts and documents from the Court by the Government, the Petitioners are confident that the Court would not have taken the sanguine view of the contract it did in its Judgment and of the processes that had been followed in arriving at the contract.
Notwithstanding this, on account of parallel negotiations and interference of NSA, matter was again referred to CCS which approved the same.
- Through its notes and arguments the Government has stated a series of untruths, and suppressed vital facts
- So many are these, and to so a clear pattern that they cannot but be regarded as wholesale fraud
- Those who misled the Court are guilty of both perjury and contempt
- Petitioners pray that they be proceeded against: for if this kind of suppressio veri, suggestio falsi—“suppression of the truth is suggestion of the false”—is allowed to go unpunished, courts will be disabled and the cause of justice will be fatally injured. And, as we see in this case, our national security itself will be made a plaything in the hands of authorities out to help their partners
- As the Judgment has been procured by the Government through this wholesale fraud, it is ipso facto, required to be set aside, and petitioners’ prayers are necessitated in light of the aforementioned facts and reasons.
- The petitioners prayer in W.P. 298 of 2018 for directions to the CBI (Respondent No. 1) to take action on the complaint that was made to it on 04.10.2018 is required to be assessed in terms of the law laid down by a Constitutional Bench of this Hon’ble Court in Lalitha Kumari v Union of India (2014) 2 SCC 1. If the complaint prima facie discloses a cognizable offence (as it does in terms of Sections 7 & Section 13 of the Prevention of Corruption Act) then an FIR has to mandatorily be registered and investigated. There is no provision in the law of the land for the CBI to simply not act at all on a complaint that has been made to it. It can do a Preliminary Enquiry (PE) in complaints regarding Prevention of Corruption Act and if it finds no merit, it is open to CBI to submit a status report to that effect. Whether CBI does a PE or investigation, in each case it is required to maintain a record of the actions that it has taken. In the instant case the CBI has taken no action on the complaint of the Petitioners. The Hon’ble Court erred in not calling for a status report on the complaint that was made to the CBI for which an interim application was filed in WP 298/2018. Further, the petition was dismissed as if the Petitioners were seeking a review of the contract which was not and is not the case.
- Petitioners have not sought a ‘cancellation of the deal’ or review of the contract.
- There is prima facie evidence of gross procedural violations in the procurement of the 36 Rafale aircrafts and abuse of office by public servants for the purposes of extraneous consideration (Offset Contract for Mr. Anil Ambani) and loss to the Public Exchequer (Increase in benchmark price from 5.2 billion Euros as determined and recommended by Domain Experts in the Indian Negotiating Team to about 8.2 Billion Euros by the Cabinet Committee on Security) against Public Interest which needs to be investigated into.
In express violation of Paras 18, 19, 20, 20(a), & 20(b), of DPP, 2013, there was no authorisation from Defence Acquisition Council on 10th of April, 2015, for initiating an Inter Governmental Agreement (IGA) for procurement of 36 aircrafts all in a ‘fly away’ condition from France. It is admitted by Union of India that an ex post facto authorisation was taken only on 13th of May, 2015.
- Acceptance of Necessity (AON) from the Defence Acquisition Council (DAC) on the basis of a Statement of Case that is moved by the IAF Services Head Quarters is a mandatory pre-requisite for any procurement (Whether IGA or not). It is as per the IAF’s Statement of Case, that the DAC gives the final AON as regards the number of aircrafts that are to be procured and the mode of acquisition i.e. whether the aircrafts should be purchased in a ‘fly away’ condition from the vendor or whether an Indian Production Agent should manufacture the aircrafts in India.
- That the Union of India in it’s reply has accepted that there was no AON when on the 10th of April, 2015, the announcement for procurement of 36 aircrafts was made. That an ex post facto AON was obtained on 13th of May, 2015, has been admitted by the Union of India (at Page 28-29 of the Reply Affidavit to Review Petition).
- The 10th of April, 2015, statement arbitrarily reduced the number of aircrafts that were required by the IAF from 126 to 36. The statement further changed the ‘mode of acquisition’ from Buy and Make in India for which HAL was to be the Indian Production Agent under a Transfer of Technology Agreement to Buy (Global) under which all the 36 aircrafts were to be procured in a ‘fly-away’ condition from France.
- Till date the Union of India has failed to even state —leave alone produce any record to affirm the same— as to who decided on 10th of April, 2015, to reduce the number of aircrafts from 126 to 36 and changed the ‘mode of acquisition’ without recommendation from IAF and authorisation from DAC.
- Inter alia the credibility of the audit of the C&AG report on which the Union of India seeks to place heavy reliance can be assessed from the fact that the C&AG does not even allude to this fundamental violation of the Defence Procurement Procedures, 2013 (DPP, 2013).
- The Union of India’s contention that it was merely a “statement of intent” (at Page 28-29 of the Reply Affidavit to Review Petition) is absurd and an attempt to obfuscate that without authorisation from the IAF & the DAC, some persons conducted negotiations with L1 (lowest bidder) of the 126 aircraft tender that was not yet withdrawn for extraneous considerations and arbitrarily —in express violation of DPP, 2013— committed IAF to 36 aircrafts all in a ‘fly away’ condition is an attempt to protect these unscrupulous elements. That the entire negotiations that ensued thereafter were conducted within the bounds of the 10th of April, 2015, statement has been recorded in the dissent note of the Domain Experts within the INT and observed by the C&AG as well.
Prima Facie circumstantial evidence showing unknown persons conducted negotiations without authorisation from DAC to initiate an Inter Governmental Agreement (which are non-competitive) for procurement of 36 aircrafts
- Union of India has not questioned the veracity of the statement of Eric Trappier, C.E.O. of Dassault on 25th of March, 2015, in the presence of the IAF Chief and HAL Chairman wherein he stated that, “you can imagine my great satisfaction to hear…from HAL Chairman that we are in agreement for the responsibilities sharing… I strongly believe that contract finalisation and signature would come very soon.” This statement was made as regards the procurement for 126 aircrafts. The Union of India states that Mr. Trappier’s statement was an “optimistic scenario” of a business entity (at page 27 of Reply Affidavit to Review Petition) and “there is no reason for a private entity to have prior knowledge if such a decision…” (withdrawal of RFP for 126 aircrafts) “…is being contemplated by the government.” It is submitted that no primary document has been produced before the Hon’ble Court to affirm that process for withdrawal of RFP had begun on 27th of March, 2015. It is inconceivable that the Ministry of Defence can without consultation with the IAF Chief and the HAL Chairman unilaterally decide to withdraw the RFP for 126 aircrafts or to initiate a new deal for procurement of 36 aircrafts.
- That the Union of India has not denied that on 8th of April, 2015, the then Foreign Secretary, S. Jaishankar, stated that, “In terms of Rafale, my understanding is that there are discussions under way between the French company, our Ministry of Defence, the HAL which is involved in this. These are ongoing discussions.” This shows that even on 08th of April, 2015, members of the PM’s official delegation directly in charge of conducting negotiations with the French side were not told that it had been decided to withdraw the RFP on 27th of March, 2015, or to initiate a new deal for procurement of 36 aircrafts. For the Union of India to state in it’s reply that it was merely the “understanding” (at page 27 of Reply Affidavit to Review Petition) of the Foreign Secretary is disingenuous. If the top ranking bureaucrat of the country in charge of conducting negotiations with the French was unaware of any impending new deal then it is required to be investigated as to who conducted negotiations with L1 in the erstwhile 126 aircraft tender for an Inter Governmental Agreement under which no tenders were called for (even though there were other qualified bidders) even when the RFP for the 126 aircrafts had not yet been withdrawn. The RFP for 126 aircraft tender was finally withdrawn in June of 2015.
- That the Union of India further does not deny that a Work Share agreement had been signed between Dassault and HAL in March of 2014 under which HAL was to be responsible for executing 70% of the work and Dassault was to be responsible for 30% of the work for the 90 aircrafts that were to be manufactured in India under a Transfer of Technology agreement. This fact has been confirmed by the former Chairman of HAL, Mr. T. Suvarna Raju, who was the lead negotiator of HAL for over 5 years in the 126 aircraft procurement process.
Parallel Negotiations by officials in PMO/NSA contrary to Para 47 of DPP, 2013, that specifically states that all negotiations are to be conducted by Indian Negotiating Team. These Parallel Negotiations resulted in terms disadvantageous to the country and were repeatedly and specifically objected to by the Ministry of Law & Justice, Indian Negotiating Team, & Ministry of Defence.
- That the Union of India does not substantively controvert that officials in PMO, specifically Mr. Jawed Ashraf, then Joint Secretary, PMO, and Mr. Ajith Doval, National Security Advisor (NSA) were conducting parallel negotiations with the French and were responsible for granting several monetary concessions (Bank Guarantee/ Sovereign Guarantee) and other concessions against the stand that was taken by the Indian Negotiating Team and behind the back of the Indian Negotiating Team/Ministry of Defence. The Union of India states that the PMO was “monitoring” the progress of the deal. No matter the euphemism used, the fact remains that only the Indian Negotiating Team is authorised to conduct the negotiations until the conclusion of the contract. PMO officials and NSA were in express violation of DPP, 2013, when they conducted the negotiations which the Ministry of Defence (MOD) itself found out about when a French Diplomat wrote to MOD and thereafter the MOD took a strong stance about these unauthorised negotiations. (Referred to in detail in Written Submissions on Perjury)
Based on Parallel Negotiations, then Defence Minister, Late Sh. Manohar Parrikar directed that issues of Bank Guarantees, Sovereign Guarantee, Arbitration, (which are part of Standard Procurement Process) etc be placed for consideration of CCS. These directions were in violation of Para 75 of DPP, 2013, which provides that Defence Acquisition Council is the Competent Authority to approve any deviation from Standard Procurement Process.
- Late Sh. Manohar Parrikar, the then Defence Minister, based on the negotiations conducted by the NSA, Mr. Ajit Doval, in Paris on 11th & 12th of January, 2016, directed that inter alia the issue of Sovereign Guarantee/Bank Guarantees, should be placed for the consideration of the Cabinet Committee on Security (CCS). This direction was in express violation of Para 75 of DPP, 2013, as the Defence Acquisition Council is the Competent Authority to have approved any deviation from the standard procurement procedures/standard contract clauses.
- That it is on record that Ministry of Defence & Ministry of Law & Justice had recorded that in the absence of Bank Guarantees or Sovereign Guarantees, this procurement ceased to have the characteristics of an “Inter Governmental Agreement” (IGA) and was an IGA in nomenclature only as the supply protocols for aircrafts and weapons were with two private entities i.e. Dassault & MBDA. Notwithstanding that, the Sovereign Guarantee/Bank Guarantees were dropped by CCS after Mr. Parrikar directed that the issue be placed for consideration of CCS instead of the DAC which is the Competent Authority based on the parallel negotiations conducted by the NSA.
- That the Union of India in its response states (at Para 8.2 Page 41) that sovereign/bank guarantees are routinely waived in contracts signed with Rosoboronexport and Foreign Military Sales (FMS) contracts with the US and that there is nothing unusual in this. This is an obfuscation. These are waived in contracts signed with Rosoboronexport because it is an arm of the Russian government and, therefore, sovereign guarantees are inherent in contracts with Rosoboronexort. The same is true with FMS contracts, which are signed with the US Pentagon. However, the contract for 36 Rafales was signed with Ms Dassault Aviation, a private company. The need for sovereign guarantee cover by the French government was, therefore, essential. A non-binding “Letter of Comfort” would not suffice. The wording of the Letter of Comfort is clearly non-binding and without specified penalties for non-compliance. (Referred to in detail in Written Submissions on Perjury)
Court relied on submissions of Union of India to state that the price, delivery schedule, etc was more advantageous in 36 aircraft procurement compared to 126 aircraft procurement. The dissent note of INT Domain Experts specifically recorded that this wasn’t so. They had further pointed out that there were efforts at manipulating the reports of the INT.
- That with respect to the extremely strong note of dissent recorded by the only three members in the Indian Negotiating Team who had the requisite domain expertise in complex financial and acquisition matters, the Union of India states that the meetings of INT were conducted in a “collegiate” manner with free and fair expression of views. To the contrary, the INT members decided to put on record that there were attempts at manipulating the INT’s draft report, that instructions issued from time to time from the MOD & Defence Minister were being omitted, and that despite several requests the Record of Discussions of the meetings of the INT had not yet been finalised. (Referred to in detail in Written Submissions on Perjury)
In conformity with Paras 51 & 53, Domain Experts in the Indian Negotiating Team had benchmarked the price for procurement of 36 aircrafts as 5.2 Billion Euros and objected to it being increased to 8.2 billion Euros. They further pointed out that the price and delivery schedule were not on better terms even when compared to the 126 aircraft procurement process.
- The INT had pointed out that the price for the 36 aircrafts was 55% more expensive than the benchmarked price. The INT further pointed out that even if the price of the 36 aircrafts was compared to the aligned price for the 126 aircrafts, the price was still 5.5% more expensive. They further pointed out that even the delivery schedule for the 36 aircrafts was worse than the delivery schedule for the 36 aircrafts. This, when the entire justification for going in for the 36 aircraft procurement was supposedly the ‘urgent’ needs of the IAF. Even the C&AG has been compelled to admit that at best it can be said that the 36 aircrafts would come one month before as compared to the 126 aircrafts. The INT had further recorded their objections to the absence of Bank Guarantees &/or Sovereign Guarantee. The C&AG report which centre relies on to claim that the 36 procurement was 2.86% cheaper than 126 aircraft is erroneous. The C&AG has failed to account for the impact of the waiver of Bank Guarantees which was calculated at 574 million Euros which even the C&AG was compelled to admit was a saving for Dassault.
- The Union of India states that the objections of the INT domain experts were subsequently addressed in meetings of DAC on 09.06.2016 and 18.07.2016. The Union fails to state that even in these meetings, the DAC being the Competent Authority failed to come to a decision on the several contentious issues. It further fails to state the reasons and basis on which the objections of the Domain Experts were eventually dispensed with not by the DAC but by the CCS. This is why the petitioners have specifically called for production of the final INT report dated 21.07.2016. In no way can seeking of the final report of INT be considered “roving and fishing”. Objections can indeed be overruled but they have to be done so for bonafide considerations, cogent reasons, and by the Competent Authority.
- That after the finalisation of the INT report it is processed for approval of the Ministry of Finance & Ministry of Law & Justice (MOL&J). MOL&J’s objections to change in seat of arbitration to absence of bank guarantees and Sovereign Guarantees are on record. In 2014, the Ministry of Defence had cancelled the contract for procurement of Augusta Westland Helicopters on account of suspected use of undue influence and encashed the Bank Guarantee to recover the monies already paid. CAG in its audit report on the Agusta Westland case – the Report of the Comptroller and Auditor General of India on Acquisition of Helicopters for VVIPs; Union Government Defence Services (Air Force) No. 10 of 2013, tabled before Parliament on August 13, 2013 – had observed that: “the MoF should have either recommended, not recommended or recommended with conditions the proposal as MoF provides financial advice to CCS and Government”. It was incumbent on the Ministry of Finance to recommend or not recommend the procurement for 36 aircrafts.
Standard Clauses of every procurement (including IGA) to ensure probity in accordance with the Object of DPP, 2013, were dropped after the 24th of August, 2016. This was concealed from the Court in the ‘notes’ submitted by the Union of India.
- The object of DPP, 2013, states,
- The objective of this procedure is to ensure expeditious procurement of the approved requirements of the Armed Forces in terms of capabilities sought and time frame prescribed by optimally utilising the allocated budgetary resources. While achieving the same, it will demonstrate the highest degree of probity and public accountability, transparency in operations, free competition and impartiality. In addition, the goal of achieving self-reliance in defence equipment will be kept in mind.”
- That significantly, the reply of the Union is silent on the allegation that contrary to what was informed to the Hon’ble Court, after the 24th of August, 2016, where it increased the price from the benchmarked price of 5.2 billion Euros to early 8.2 billion Euros, changed the seat of arbitration etc, the CCS met once more in September, 2016, and decided to drop clauses pertaining to inter alia use of ‘Undue Influence’, ‘Agents/Agency Commission’, ‘Access to Book of Accounts’ of the Private Industrial Suppliers i.e. Dassault & MBDA, Escrow Account that had been suggested as a last measure of basic prudence in light of the waiver of Bank Guarantees/Sovereign Guarantee, and amended the discharge of Offset Schedule. The Union has offered no explanation as to why standard anti corruption clauses of every procurement were dropped at the last minute and on what basis. (Page 7 of Rejoinder Affidavit dated 08.05.2019)
That the C&AG’s report on which heavy reliance is sought to be placed by the government should be assessed in light of the following;
- The government predicted that C&AG would redact the final report and it has.
- This is despite the C&AG’s admission that there is no precedence for reacting commercial details from an audit. It was observed, “The Ministry of Defence vide its letter dated 15 January 2019 had requested this Office to redact commercial details of MMRCA in the Audit Report, citing reference to Article 10 of the Inter-Governmental Agreement (IGA) for acquisition of 36 Rafale Aircraft and the provisions of an Indo French Agreement “concerning the Protection of Classified Information and Material in the field of Defence” signed on 25 January 2008.. This Office had taken up the issue with MoD vide letter dated 05 February 2019, wherein Ministry was intimated about CAG’s reluctance/refusal to carry out the redaction of price information, on account of difficulties in comprehension and lack of precedence of redaction of commercial details in the Audit Reports. However, Ministry has strongly reiterated their stand for redaction of commercial details in MMRCA case on the grounds of security concerns and the said Agreement vide their letter dated 06 February 2019. Accordingly, commercial details in the Volume II on Audit findings of the MMRCA contract have been redacted. Audit is in the process of finalisation of a separate Performance Audit report on Management of Defence Offsets and relevant observations on Offsets Contract related to these eleven contracts would be included in that Report.” (Page iii of Report No. 3 of 2019, annexed to Affidavit of Union of India claiming privilege over documents relied on by Petitioners.)
- The Union’s claim for redaction on the basis of the Security Agreement of 2008, needs to be judged in light of Union of India’s admission that notwithstanding the 2008 Security Agreement, for Mirage Aircrafts (also from France), the pricing details have been officially disclosed along with the pricing details of the missiles that were to be procured from MBDA which incidentally is also supplying weaponry in present procurement and with whom also the Supply Protocols have been signed. (Page 37 of Reply Affidavit to Review Petition)
- The C&AG’s report is silent on the ex post facto AON that was granted.
- The C&AG’s report is silent on the parallel negotiations.
- The C&AG’s report is silent on the dropping of the Standard Clauses meant to ensure probity and transparency in every procurement.
- The C&AG’s report does not address the issue of Offsets and proposes to do a separate audit for the same.
- The C&AG’s report concedes that waiver of Bank Guarantees was a saving for Dassault & yet fails to account for impact of the same when stating that the 36 aircraft procurement was 2.86% cheaper than the 126 aircraft procurement. The INT Domain experts had calculated the impact of Bank Guarantees at 574 million Euros.
- As aforementioned the C&AG’s credibility can be judged from the fact that though it concludes that 574 million Euros were saved by the private suppliers on account of absence of Bank Guarantees and Sovereign Guarantee, yet it fails to consider the same (which was done by INT experts) when comparing the price for the 36 aicraft procurement and the 126 aircraft procurement to state that 36 aircraft procurement was 2.86% cheaper.
Violation of Offset Guidelines:
- As regards selection of Indian Offset Partner, impugned judgement errs in holding in para 32 that, “the commercial arrangement, in our view, 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.” Said observation is erroneous given that as required under Clause 2.4. of Offset Guidelines and as admitted by the government and recorded in the judgement, the offset contract was signed simultaneously with the main procurement contract on 23rd of September, 2016.
- Per Clause 7.2 of Offset Guidelines, the Offset Contract is only signed after the Technical Offset Proposal and Commercial Offset Proposal that are required to be submitted prior to signing of the Offset Contract are approved by the Raskha Mantri. It states,“The technical and commercial offset proposals should be submitted in two separate sealed covers to the Technical Manager of Acquisition Wing.”
- Per Clause 8.4,“The Commercial Offset Offer will contain the detailed offer specifying the value of the offset components, with a breakdown of the details, phasing, Indian Offset Partners.”
- Both the proposals were required to be submitted prior to signing of the contract on 23rd of September, 2016, and were required to be approved by the Raskha Mantri.The requirements for submitting the Commercial Offset Offer were detailed in Annexure III to Appendix D of DPP, which states,
“Note: Vendor to provide following along with commercial offset offer: -(a) Undertaking that IOP is an eligible offset partner as per applicable guidelines.
(b)Company profile of IOP/agency.
(c) Details with values of the proposed offset, including details of Tier-1 sub-contractors, if any.
(d) Letter of IOP/agency confirming acceptance of the offset project in case of direct purchase or investment.”
- Clause 8.6 required that all offset proposals had to be approved by the RakshaMantri. It stated,“All Offset proposals will be processed by the Acquisition Manager and approved by RakshaMantri, regardless of their value.”
- It is apparent that notwithstanding the surreptitious and absurd retrospective amendment (at Pages 139-140 of W.P. 298/2018) against Public Interest to the clause dealing with Technical Offset Proposal, the Commercial Offset Proposal, required the disclosure of the Indian Offset Partner and was required to be approved by the Raksha Mantri prior to signing of Offset Contract. While Dassault may have had the option of choosing the offset partner, the offset partner was required to be approved by the Raskha Mantri. The judgement relies on the governments averment that details of Indian Offset Partner were not made available to it by Dassault. This averment in a note that has misled the Hon’ble Court on various other counts, even if true, would require an investigation by CBI as to how when Dassault failed to disclose the Indian Offset Partner as required in its Commercial Offset Proposal, did the Raksha Mantri approve the Commercial Offset Proposal and whether such approval was malafide.
- The judgement errs in relying on the government’s averment in the note to hold in Para 32 that, “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.” The French President himself has not denied the interview. He had stated to MediaPart on 21.09.2018 that, “We didn’t have any say in this matter…It is the Indian government which had proposed this service group, and Dassault who negotiated with Ambani. We didn’t have the choice, we took the interlocutor who was given to us.” He had reiterated on 23.09.2018 that, Mr. Anil Ambani was suggested to the French as, “part of the new formula of the Indian Government.” Both statements were on record in Annexes P19 & P20 of Writ Petition 298/2018 at Pages 228-235. That the government of India, Dassault, & Mr. Ambani would deny the statement as it directly proves their own complicity is not surprising.
- In discounting the French President’s statement, the impugned judgement does not consider further corroborative evidence of Dassault’s official press release which states that, DRAL —the joint venture between Reliance and Dassault— was created in April of 2015 itself. Said press release was placed on record by petitioners in Annexure P24 of Writ Petition 298/2018 at Page 247.
- Further corroborative evidence in the form of internal papers of Dassault’s trade unions which showed that they were told that agreeing to set up a Joint Venture with Mr. Ambani’s company was “imperative and mandatory” for Dassault and a “trade off” to secure the contract for 36 fighter aircrafts was also not considered or dealt with. A report on the same was annexed as Annexure P22 of the Writ Petition 298/2018 at Pages 239-241
- Further, a contemporaneous news report of 17.04.2015 in the French TTU Online: Strategic & Defence Newsletterhad stated, (The new deal),
“At the political level, is for Narendra Modi, to demonstrate that India is a reliable partner and reaffirm his authority …and at the same time, he (is) devoted to the rise to power of the private consortium Reliance Ambani family, one of his main financial support(ers), (whom) he would like to see play a greater role in the defence industry.” The said report was on record in Annexure P23 of Writ Petition 298/2018 at Pages 242-246.
- It is now on record and confirmed by the secretary of the Defence Minister of France, that Mr. Ambani was in regular touch with the French Defence Minister throughout the period when the INT was conducting negotiations with France. (Pages 19-25 of Application for Product of Documents, I.A. 71047/2019)
- A leaked email shows that prior to announcement on 10th of April, 2015, Mr. Ambani had met the French Defence Minister for defence deals and stated that MOU was going to be signed when the Prime Minister visits France. (Pages 16-18 of Application for Product of Documents, I.A. 71047/2019) The record shows that the treatment of French authorities changed significantly after the announcement of 10th of April, 2015, and favourable tax settlements were made with respect to group companies of Mr. Ambani on 22.10.2015 after the meeting of Mr. Jawed Ashraf, Joint Secretary in PMO on 20.10.2015, with the French Authorities.
- The record shows that on 24.01.2016 Mr. Ambani made an “investment” of 1.42 million Euros in a movie to be produced by Ms. Julie Gayet, partner of then French President Mr. Hollande. Annexure P26 of Writ Petition 298/2018 at Pages 250-251.
- All these facts prima facie dispute the notion that Dassault independent selected Mr. Anil Ambani’s company as it’s Indian Offset Partner. The entire procurement happened under the shadow of a businessman which is required to be investigated.
Scope of Judicial Review
- The contention of Respondent No. 2 that in matters concerning National Security the Hon’ble Court’s power of judicial review is constrained is misplaced as the petitioners’ prayer is to be adjudged in light of the Lalitha Kumari judgement.
- The Supreme Court has consistently held that where the allegation is that of corruption, procedural violations, & malafide decision making, the Court will be well within it’s right to exercise it’s jurisdiction.
- Even in Reliance Airport Developers Pvt. v. Airports Authority Of India 2006 10 SCC 1, (relied on by Union of India and in the Impugned Judgement), it had been specifically held as regards Judicial Review that, “92. Same would be available only if public law element is apparent which would arise only in a case of ‘bribery, corruption, implementation of unlawful policy and the like.’”
- The contention that investigation into the matter by the statutory authorities ipso facto would compromise the National Security is self serving. Statutory authorities have earlier investigated into allegations of corruption inter alia in the Bofors Artillery Guns case, the French Scorpene Submarine Case, and the Augusta Westland VVIP Helicopters case (also procured under DPP, by MoD).
In their Reply Affidavit to petitioners’ plea for documents as well as in the oral arguments through the Attorney General, the Government has objected to our request for documents on the following grounds:
- The documents that have been annexed to the petition and which have been published widely were “stolen”—the Attorney General specifcally used this characterisation repeatedly in his concluding arguments also
- Petitioners are seeking the documents “to get a fishing and roving inquiry ordered.” [para 17 of the Reply Affidavit to Perjury Application]
- The documents relate to defence acquisitions
- The documents relate to the security of the country
- The documents have already been shared with the CAG
The grounds have no merit, and deserve to be set aside:
- This ground has been pressed again in spite of the Court’s judgment on this very point in this very case. In substance, the Court has reiterated what it has held in several previous judgments: namely, that the test would be, not the manner in which the document/evidence might have been procured, but the [i] relevance of the document/evidence to the point at issue; and [ii] its authenticity. Order dated 10.04.2019, has further drawn attention to the revolution in transparency that has been brought about by the Right to Information legislation. That the documents are relevant to the issue at hand—the gross violation of provision after provision mandated for Defence Procurement, and the total failure of the Government to explain the rationale for the violations—is manifest. And the repeated assertions of the Attorney General that the documents have been “stolen” establishes that they are authentic.
- The petitioners do not intend to go on any “fishing and roving inquiry”. They have merely requested that a Government agency—the CBI—ascertain the facts. Because of the well-documented condition of the CBI, we have further requested that the Court monitor the inquiry.
- If there is to be a bar on a document being examined just because it relates to defence acquisition then, as was observed by the Honourable Judges themselves during the hearing on this question, the prohibition would be a license to all wrong-doing. This ground which was pressed again by the Attorney General in his final arguments has been decisively disposed of by the Court in its judgment.
- That the documents relate to defence works to the opposite effect than that advanced by the Government—precisely because the documents relate to the security of the country, precisely because wrong-doing in this sphere can endanger the security of the country as well as the lives of our servicemen, the Court must examine the documents to make sure that nothing has been done for collateral purposes.
- As the documents have already been shared with the CAG, there can be no difficulty in sharing them with the Court. If the Government feels that the documents must not be placed in the public domain and must not be given to private individuals like the petitioners, let it place them before the Court alone.
- In trying to thwart every request for documents or inquiry by invoking the fear that acceding to the request will jeopardise the country’s defence, the Government is creating a bogey. How does determining whether there were any grounds for deleting the clauses relating to corruption, or changing the requirements for Offset partners jeopardise defence of the country? The test in this regard was stated in the Affidavit of the Defence Secretary himself: the test is whether the documents sought or the inquiry requested would disclose any details of “the war capacity of combat aircraft.” Not one of the documents that petitioners have requested sets out any specifications of the aircraft that would in any way help an adversary of the country.
- Only by examining the original documents will the Court be able to determine whether the assertions of the Government are correct. For instance, it is only by examining the successive notes of the Indian Negotiating Team as well as its final Report will the Court be able to ascertain whether the grounds on which the grave appehensions that were expressed by the three members (who alone had domain expertise) were sound, whether they were allayed on subsequent examination; and whether the efforts to “distort and manipulate” the final report of the Indian Negotiating Team which they nailed, were successfully thwarted. To assert, as the Government has done that one of those three officers ultimately signed the Note for the Cabinet Committee on Security does not in any way establish that the apprehensions which the three officers had noted were invalid, nor that they had been dealt with in subsequent discussions. Similarly, it is only by examining the documents petitioners have listed that the Court will be able to determine whether there were any grounds at all for throwing out the mandatory provisions of the Defence Procurement Procedures relating to corruption and undue influence, to Sovereign Gurantees, to Bank Guarantees, etc. It is only by examining the original documents that the Court will be able to ascertain whether there was any justification at all for wholly altering the requirements regarding selection of the Offset Partner, and that too with retrospective effect.
- Petitioners again plead that the assertions of the Government about documents being “secret”, etc., need to be examined minutely. In the original hearing when a reference was made by petitioners to the Agreement between the Governments of France and India regarding secrecy in relation to defence purchases, and it was pointed out that the Agreement itself provided that it would be subject to the national laws of the respective countries, the Government insisted that petitioners could not discuss the document as it was a secret Agreement about secrecy. The fact is that the relevant Agreement can be downloaded from the website of the Ministry of External Affairs at any time even today: this can be done from the following website:
https://mea.gov.in/Uploads/PublicationDocs/177_foreign-relations-2008.pdf. The Agreement is printed at pages 2266-2275. The relevant provision which petitioners had tried to bring to the notice of the Court is Article IV, which provides:
* * *
Article IV: SECURITY PRINCIPLES
The Parties shall, in accordance with their national laws and regulations, take all measures necessary for the protection of classified information and material provided to them under this Agreement or in accordance with agreements, contracts or sub-contracts concluded between or by the Parties or by their duly authorized agencies for that purpose.
* * *
In a word, the Agreement is published by the Ministry of External Affairs itself. It is available to anyone and everyone. And yet the Government attempted to block any reference to it on ground that it is a secret Agreement! The reason was not far to seek: Article IV specifically provides that the provisions of the Agreement as well as such arrangements that may be made under it shall be “in accordance with their national laws and regulations”—which is the point to which the Petitioners were seeking to draw the attention of the Court.
- The Petitioners are as committed to the requirements of the country’s defence and security as those who happen to be in Government at the present time. To give just one example, though petitioners had a list of the 14 customer-specific modifications that India had furnished to Dassault, they refrained from making any reference to them either in their written submissions or the oral arguments. This nails the Government’s stance that it alone is concerned about the country’s security.
For all these reasons, petitioners pray that the Government’s assertions be set aside, that the documents listed be secured and perused by the Court, that the inquiry mandated by Lalitha Kumari be initiated. And that because of the condition of the CBI, the inquiry be monitored by the Court.
This extract is taken from Lalita Kumari v. Govt. of U.P., (2014) 2 SCC 1 : (2014) 1 SCC (Cri) 524 : 2013 SCC OnLine SC 999
at page 48
- A perusal of the above referred judgments clarify that the reasonableness or creditability of the information is not a condition precedent for the registration of a case.
at page 61
- In view of the aforesaid discussion, we hold:
120.1. The registration of FIR is mandatory under Section 154 of the Code, if the information discloses commission of a cognizable offence and no preliminary inquiry is permissible in such a situation.
120.2. If the information received does not disclose a cognizable offence but indicates the necessity for an inquiry, a preliminary inquiry may be conducted only to ascertain whether cognizable offence is disclosed or not.
120.3. If the inquiry discloses the commission of a cognizable offence, the FIR must be registered. In cases where preliminary inquiry ends in closing the complaint, a copy of the entry of such closure must be supplied to the first informant forthwith and not later than one week. It must disclose reasons in brief for closing the complaint and not proceeding further.
120.4. The police officer cannot avoid his duty of registering offence if cognizable offence is disclosed. Action must be taken against erring officers who do not register the FIR if information received by him discloses a cognizable offence.
120.5. The scope of preliminary inquiry is not to verify the veracity or otherwise of the information received but only to ascertain whether the information reveals any cognizable offence.
120.6. As to what type and in which cases preliminary inquiry is to be conducted will depend on the facts and circumstances of each case. The category of cases in which preliminary inquiry may be made are as under:
(a) Matrimonial disputes/family disputes
(b) Commercial offences
(c) Medical negligence cases
(d) Corruption cases
(e) Cases where there is abnormal delay/laches in initiating criminal prosecution, for example, over 3 months’ delay in reporting the matter without satisfactorily explaining the reasons for delay.
The aforesaid are only illustrations and not exhaustive of all conditions which may warrant preliminary inquiry.
120.7. While ensuring and protecting the rights of the accused and the complainant, a preliminary inquiry should be made time-bound and in any case it should not exceed 7 days. The fact of such delay and the causes of it must be reflected in the General Diary entry.
120.8. Since the General Diary/Station Diary/Daily Diary is the record of all information received in a police station, we direct that all information relating to cognizable offences, whether resulting in registration of FIR or leading to an inquiry, must be mandatorily and meticulously reflected in the said diary and the decision to conduct a preliminary inquiry must also be reflected, as mentioned above.
This extract is taken from Bhaurao Dagdu Paralkar v. State of Maharashtra, (2005) 7 SCC 605 at page 611
- A “fraud” is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another’s loss. It is a cheating intended to get an advantage. (See S.P. Chengalvaraya Naidu v. Jagannath [(1994) 1 SCC 1] .)
- “Fraud” as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letters or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letters. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by wilfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata. (See Ram Chandra Singh v. Savitri Devi [(2003) 8 SCC 319] .)
at page 612
- In Shrisht Dhawan v. Shaw Bros. [(1992) 1 SCC 534] , it was observed as follows: (SCC p. 553, para 20)
“Fraud” and collusion vitiate even the most solemn proceedings in any civilised system of jurisprudence. It is a concept descriptive of human conduct. Michael Levi likens a fraudster to Milton’s sorcerer, Camus, who exulted in his ability to, “wing me into the easy-hearted man and trap him into snares”. It has been defined as an act of trickery or deceit. In Webster’s Third New International Dictionary “fraud” in equity has been defined as an act or omission to act or concealment by which one person obtains an advantage against conscience over another or which equity or public policy forbids as being prejudicial to another. In Black’s Law Dictionary, “fraud” is defined as an intentional perversion of truth for the purpose of inducing another in reliance upon it to part with some valuable thing belonging to him or surrender a legal right; a false representation of a matter of fact whether by words or by conduct, by false or misleading allegations, or by concealment of that which should have been disclosed, which deceives and is intended to deceive another so that he shall act upon it to his legal injury. In Concise Oxford Dictionary, it has been defined as criminal deception, use of false representation to gain unjust advantage; dishonest artifice or trick. According to Halsbury’s Laws of England, a representation is deemed to have been false, and therefore a misrepresentation, if it was at the material date false in substance and in fact. Section 17 of the Contract Act, 1872 defines “fraud” as an act committed by a party to a contract with intent to deceive another. From the dictionary meaning or even otherwise fraud arises out of the deliberate active role of the representator about a fact, which he knows to be untrue yet he succeeds in misleading the representee by making him believe it to be true. The representation to become fraudulent must be of fact with knowledge that it was false. In a leading English case i.e. Derry v. Peek [(1886-90) All ER Rep 1 : (1889) 14 AC 337 : 61 Lt 265 (HL)] what constitutes “fraud” was described thus: (All ER p. 22 B-C)
“Fraud is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false.”
But “fraud” in public law is not the same as “fraud” in private law. Nor can the ingredients, which establish “fraud” in commercial transaction, be of assistance in determining fraud in administrative law. It has been aptly observed by Lord Bridge in Khawaja v. Secy. of State for Home Deptt. [(1983) 1 All ER 765 : 1984 AC 74 : (1982) 1 WLR 948 (HL)] that it is dangerous to introduce maxims of common law as to the effect of fraud while determining fraud in relation of statutory law. “Fraud” in relation to the statute must be a colourable transaction to evade the provisions of a statute.
“ ‘If a statute has been passed for some one particular purpose, a court of law will not countenance any attempt which may be made to extend the operation of the Act to something else which is quite foreign to its object and beyond its scope.’ Present day concept of fraud on statute has veered round abuse of power or mala fide exercise of power. It may arise due to overstepping the limits of power or defeating the provision of statute by adopting subterfuge or the power may be exercised for extraneous or irrelevant considerations. The colour of fraud in public law or administrative law, as it is developing, is assuming different shades. It arises from a deception committed by disclosure of incorrect facts knowingly and deliberately to invoke exercise of power and procure an order from an authority or tribunal. It must result in exercise of jurisdiction which otherwise would not have been exercised. That is misrepresentation must be in relation to the conditions provided in a section on existence or non-existence of which power can be exercised.
…..In public law the duty is not to deceive.” (See Shrisht Dhawan v. Shaw Bros. [(1992) 1 SCC 534] , SCC p. 554, para 20.)
at page 614
- Suppression of a material document would also amount to a fraud on the court. (See Gowrishankar v. Joshi Amba Shankar Family Trust [(1996) 3 SCC 310] and S.P. Chengalvaraya Naidu case [(1994) 1 SCC 1] .)
at page 614
- “Fraud” is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. Although negligence is not fraud but it can be evidence on fraud; as observed in Ram Preeti Yadav case [(2003) 8 SCC 311] .
at page 614
- In Lazarus Estates Ltd. v. Beasley [(1956) 1 QB 702 : (1956) 1 All ER 341 : (1956) 2 WLR 502 (CA)] Lord Denning observed at QB pp. 712 and 713: (All ER p. 345 C)
“No judgment of a court, no order of a minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything.”
In the same judgment Lord Parker, L.J. observed that fraud vitiates all transactions known to the law of however high a degree of solemnity. (p. 722) These aspects were recently highlighted in State of A.P. v. T. Suryachandra Rao [(2005) 6 SCC 149 : (2005) 5 Scale 621] .
This extract is taken from Union of India v. Ramesh Gandhi, (2012) 1 SCC 476 at page 495
- This Court on more than one occasion held that fraud vitiates everything including judicial acts. In S.P. Chengalvaraya Naidu v. Jagannath [(1994) 1 SCC 1] , this Court observed as follows: (SCC p. 2, para 1)
“1. ‘Fraud avoids all judicial acts, ecclesiastical or temporal’ observed Chief Justice Edward Coke of England about three centuries ago. It is the settled proposition of law that a judgment or decree obtained by playing fraud on the court is a nullity and non est in the eye of the law. Such a judgment/decree—by the first court or by the highest court—has to be treated as a nullity by every court, whether superior or inferior. It can be challenged in any court even in collateral proceedings.”
- Again in A.V. Papayya Sastry v. Govt. of A.P. [(2007) 4 SCC 221 : AIR 2007 SC 1546] this Court reviewed the law on this position and reiterated the principle. In paras 38 and 39 it was held as follows: (SCC pp. 236-37)
“38. The matter can be looked at from a different angle as well. Suppose, a case is decided by a competent court of law after hearing the parties and an order is passed in favour of the applicant plaintiff which is upheld by all the courts including the final court. Let us also think of a case where this Court does not dismiss special leave petition but after granting leave decides the appeal finally by recording reasons. Such order can truly be said to be a judgment to which Article 141 of the Constitution applies. Likewise, the doctrine of merger also gets attracted. All orders passed by the courts/authorities below, therefore, merge in the judgment of this Court and after such judgment, it is not open to any party to the judgment to approach any court or authority to review, recall or reconsider the order.
- The above principle, however, is subject to exception of fraud. Once it is established that the order was obtained by a successful party by practising or playing fraud, it is vitiated. Such order cannot be held legal, valid or in consonance with law. It is non-existent and non est and cannot be allowed to stand. This is the fundamental principle of law and needs no further elaboration. Therefore, it has been said that a judgment, decree or order obtained by fraud has to be treated as a nullity, whether by the court of first instance or by the final court. And it has to be treated as non est by every court, superior or inferior.”
at page 496
- Coming to the question as to what amounts to securing a judgment by playing fraud in the court, in Chengalvaraya Naidu [(1994) 1 SCC 1] , this Court categorically held that the non-disclosure of all the necessary facts tantamounts to playing fraud on the courts. In para 6 of the said judgment, it was held as follows: (SCC p. 5)
“6. … If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the court as well as on the opposite party.”
(PETITIONER IN PERSON)