Rafale: "Monitoring Of Progress by PMO Cannot Be Construed As Interference Or Parallel Negotiations.", Centre Tells [Read Reply Affidavit]

In its reply to the Rafale review pleas, the Ministry of Defence has submitted that no ground has been made out by the petitioners which would justify a review of the "well-reasoned judgment" passed in December last year, giving a clean chit to the BJP-led NDA government at the Centre.

The said judgment addresses the contentions advanced by the petitioners in this case, on the basis of compelling and incontrovertible jurisprudential principles with regard to the scope of judicial enquiry in cases involving the very security and defense of the nation, it is averred.

In as much as the petitioners have sought a copy of the final report of the Indian Negotiating Team (INT) and the records of consultation with the Finance and Law Ministries post the finalisation of this report, besides the minutes of the Cabinet Committee on Security's (CCS) meeting of August 24, 2016 (where the decision was taken to increase the price by almost 2.5 billion euros from the Benchmark Price, the Sovereign Guarantee and Bank Guarantees were dispensed with, the seat of arbitration was changed) and the minutes of the meetings before the signing of contract on September 23, 2016 where standard provisions relating to 'escrow account', use of undue influence', 'Agents/Agency Commissions' & access to 'Book of Accounts' were dropped disregarding objections of domain experts in INT, Ministry of Defence, & Ministry of Law & Justice, it is contended, "the petitioners now seek to obtain a large number of documents from the Government in order to attempt to somehow create a prima facie case on the basis of which the intervention of this Hon'ble Court could be sought".

In respect of the April 10 decision of the top court permitting the petitioners to buttress their case with certain "secret" file-notings claimed to be obtained unauthorisedly from the Ministry, it has been argued that

"This could lead to the revelation of all closely guarded State Secrets relating to space, nuclear installations, strategic defence capabilities, operational deployment of forces, intelligence resources in the country and outside, counter-terrorism and counter insurgency measures etc. This could have implications in the financial sector also if say budget proposals are published before they are presented in Parliament. Such disclosures of Secret Government information will have grave repercussions on the very existence of the Indian State".

As to the internal file noting wherein various views and legal advice rendered by different agencies at different stages of the procurement process have been reflected/recorded, it is submitted

"that these are incomplete file notings containing views expressed by various functionaries at different times and not the final decision of the competent authority of the Union Government".

The Ministry has claimed that After the concerns were raised by the 3 INT members, two more INT meetings were held on 9-10 June and 18 July 2016 respectively where these issues were duly deliberated and appropriate steps were taken to address these concerns. Certain concerns were also referred to the Defence Acquisition Council (DAC). The INT report indicated better terms and conditions arrived at as a result of negotiation as compared to the 126 MMRCA case. "The then JS & AM (Air), was one of the three signatories to the note bringing out some concerns. The same Officer subsequently has signed the note for CCS approval", it is put forth.

"According to the petitioners' own admission, the review has been sought interalia on the basis of subsequent information that has come to light, which is nothing but unsubstantiated media reports and/or part internal file notings deliberately projected in a selective manner, that cannot form the basis for a review", the Centre has advanced.

The contention of the petitioners that the prayer for registration of FIR and investigation by the CBI has not been dealt with is countered by describing it as "preposterous to say the least"-

"Once this Hon'ble Court had come to the conclusion that on all the three aspects ie., the decision making process, pricing and Indian Offset Partner there is no reason for intervention by this Hon'ble Court on the sensitive issue of purchase of 36 Rafale fighter aircrafts by the Indian Government, there is no question of either registration of FIR much less any investigation by the CBI. A non existent distinction is sought to be created between an inquiry by the CBI and by the Court by playing on words..."

When the judgment was pronounced on December 14, 2018, a controversy was stirred up as to its observations that the deal had already been examined by the CAG, the PAC and a redacted version of it placed before the Parliament. The very next day, the government had filed a correction application explaining the mismatch between its averments supplied to the court in sealed covers and the verdict. In its reply in the review proceedings, the Centre contends that

"The pricing details have been thoroughly scrutinized by the CAG and the report has concluded that the entire package price of the 36 Rafale procurement is 2.86% lower than the audit aligned price compared to MMRCA process apart from additional benefits which would accrue because of change from firm and fixed pricing to non-firm price which was possible under the IGA route" and that "in any case the mis-match does not in any manner either directly or indirectly affect the main judgement and it is not a substantial error as contended as is clear from the observations of CAG on pricing etc".

"The CAG audit report clearly states that in case of 126 MMRCA the procurement which started in 2000 had made no progress even after lapse of 15 years and, in fact, failed on the twin issue of calculation of manpower costs of production of aircraft in India and non-guarantee of aircraft by M/s Dassault Aviation, the OEM for aircraft to be licence manufactured by M/s HAL in India", it is stated.

On the choice of Anil Ambani as the Indian Offset Partner (IOP), it is submitted that the annual offset implementation schedule, as per the offset contract, will commence from October 2019, the vendor/OEM is yet to submit a formal proposal indicating details of IOPs and products for offset discharge and that is no violation of the provisions of the Defence Procurement Procedure (DPP) in this regard.

It is submitted that the waiver of Sovereign/Bank Guarantee in Government to Government Agreements/Contracts is not unusual-

"In Contracts concerning Russian Federation contracts signed with Rosoboronexport of Russia, the requirement of Bank Guarantees is waived off in view of the assurance provided through a 'Letter of Comfort' from the Government of the Russian Federation. Similarly, in Foreign Military Sales (FMS)Cases with US Govt.​ No Bank Guarantee/Sovereign Guarantee is provided for Foreign Military Sales (FMS) Contracts signed between the Government of India and US Government"

Finally, it is asserted that the "Monitoring of the progress by the PMO of this Government to Government process cannot be construed as interference or parallel negotiations." 

Read the Affidavit Here