Supreme Court

Manohar Lal Sharma Vs. Narendra Damodardas Modi and Ors.

MANU/SC/1477/2018

14.12.2018

Civil

Extent of permissible judicial review in matters of contracts, procurement, etc. would vary with the subject matter of the contract

The issues arising in present 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.

The tender is not for construction of roads, bridges, etc. It is a defence tender for procurement of aircrafts. The parameter of scrutiny would give far more leeway to the Government, keeping in mind the nature of the procurement itself. This aspect was even emphasized in Siemens Public Communication Networks Pvt. Ltd. and Anr. v. Union of India and Ors. The triple ground on which such judicial scrutiny is permissible has been consistently held to be "illegality", "irrationality" and "procedural impropriety".

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 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.

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. Joint exercises have taken place, and that there is a financial advantage to the nation. These are contracts of defence procurement which should be subject to a different degree and depth of judicial review. Broadly, the processes have been followed. The need for the aircrafts 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. It will not be correct for the Court to sit as an appellate authority to scrutinize each aspect of the process of acquisition.

The process was concluded for 36 Rafale fighter jet aircrafts on 23rd September, 2016. Nothing was called into question, then. It is only taking advantage of the statement by the ex-President of France, Francois Hollande that these set of petitions have been filed, not only qua the aspect which formed the statement, that is, the issue of IOPs but also with respect to the entire decision-making process and pricing.

The Government has not disclosed pricing details, other than the basic price of the aircraft, even to the Parliament, on the ground that sensitivity of pricing details could affect national security, apart from breaching the agreement between the two countries. The pricing details have, however, been shared with the Comptroller and Auditor General (hereinafter referred to as "CAG"), and the report of the CAG has been examined by the Public Accounts Committee ("PAC"). Only a redacted portion of the report was placed before the Parliament, and is in public domain. The Chief of the Air Staff is stated to have communicated his reservation regarding the disclosure of the pricing details, including regarding the weaponry which could adversely affect national security.

The pricing details are stated to be covered by Article 10 of the IGA between the Government of India and the Government of France, on purchase of Rafale Aircrafts, which provides that protection of classified information and material exchanged under the IGA would be governed by the provisions 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.

Once again, it is neither appropriate nor within the experience of this Court to step into this arena of what is technically feasible or not. The point remains that Defence Procurement Procedure, (DPP 2013) envisages that the vendor/OEM will choose its own Indian Offset partners (IOPs). In this process, the role of the Government is not envisaged and, thus, mere press interviews or suggestions cannot form the basis for judicial review by this Court. There is no material on record to show that present is a case of commercial favouritism to any party by the Indian Government, as the option to choose the IOP does not rest with the Indian Government.

There is 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. Petition dismissed.

Relevant

Siemens Public Communication Networks Pvt. Ltd. and Anr. v. Union of India and Ors. MANU/SC/8245/2008
: (2008) 16 SCC 215

Tags : Aircrafts Procurement Judicial review

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