Rafale Row: Petitioners Say HAL Involved 2 Days Before Ambani Deal

No ‘Sovereign Guarantee’ only a ‘Letter of Comfort’ in the govt-to-govt Rafale deal, govt admitted before the SC.

6 min read
Arun Shourie, Yashwant Sinha and Prashant Bhushan submitted a rejoinder on the government’s 16-page note on the Rafale deal.

Former Union ministers Yashwant Sinha and Arun Shourie and senior Supreme Court lawyer Prashant Bhushan submitted a rejoinder in the Supreme Court during the hearing on Wednesday, 14 November, challenging the BJP government’s 16-page document on the Rafale deal. The SC hearing went on for three and a half hours, post which the SC reserved its order.

On 12 November, the Centre in its 16-page document informed the SC that complete procedure was followed by the government in the purchase of 36 Rafale aircrafts from the French company Dassault Aviation. On the same day, the government had filed the details of the cost of the Rafale aircraft in a sealed cover.

But the petitioners in the rejoinder stated that the government’s claim of a transparent decision-making process is ‘misleading’. The rejoinder said:

“At the outset it is submitted that the note detailing the decision-making process is misleading. Information provided in the ‘Copy for the Petitioners’ is undated, unsigned, and not supported by an affidavit.”

The petitioners made a point-wise rebuttal to the government’s 16-page document.

Untrue That HAL and Dassault Lacked Common Understanding

The controversial aspect of the Rafale deal is that Anil Ambani’s group replaced Hindustan Aeronautics Limited (HAL) as an offset partner of Dassault Aviation. The Centre informed the SC that the contract between Dassault Aviation and HAL couldn’t materialise even after three years of negotiation because of a “lack of common understanding” between them. The government also pointed out reasons behind it.

The petitioners emphasised that the government’s claim was “false.” The petitioners told the SC that by March 2014 the differences between HAL and Dassault were resolved. The rejoinder stated:

“The negotiations (between HAL and Dassault) had commenced in February of 2012. By March of 2014, a ‘Work Share’ agreement had been signed between HAL & Dassault under which Dassault was to be responsible for 30 percent of the work & HAL was to be responsible for 70 percent of the work. The differences between Dassault & HAL had been resolved (sic) has been confirmed by T Survana Raju who was the lead technical negotiator on behalf of HAL and retired as HAL Chairman.”

In an interview to ANI on 13 November, the Dassault Aviation CEO Eric Trappier said that his firm had chosen Anil Ambani’s group to be their offset partner. He also stated that all accusations made by the Congress President Rahul Gandhi on kickbacks were false.

The petitioners informed the SC that on 25 March 2015 – just 16 days before the joint statement was made by Prime Minister Narendra Modi and French President Hollande announcing the Rafale deal – the Dassault CEO had stated that they are in the final stages of finalising the contract with HAL on 126 aircrafts.

The petitioners quote Trappier in the rejoinder which said:

“After an outstanding amount of work and some discussion, you can imagine my great satisfaction to hear...from HAL chairman that we are in agreement for the responsibilities sharing, considering as well our conformity with the RFP (Request for Proposal) in order to be in line with the rules of the competition. I strongly believe that contract finalisation and signature would come very soon.”

The question remains, the petitioners said, that what changed in a couple weeks that Dassault Aviation decided to make Anil Ambani’s group its offset partner replacing HAL?

HAL Was Involved Even 2 Days Before PM Modi's Announcement

On 8 April 2015, the then Foreign Secretary S Jaishankar had made a statement that negotiations between HAL and Dassault Aviation are still on, the petitioners claimed.

The rejoinder quoted Jaishankar’s remarks made on 8 April:

“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. These are very technical, detailed discussions. We do not mix up leadership level visits with deep details of ongoing Defence contracts. That is on a different track. A leadership visit usually looks at big picture issues even in the security field.”

Based on the former foreign secretary’s statement, the petitioners further mentioned six points to rubbish the government’s claims:

  • Negotiations were still going on regarding the Rafale aircraft.
  • Manifestly, the negotiations were going on under the original RFP (Request of Proposal) for 126 aircraft.
  • HAL was very much part of the negotiations and the project.
  • PM Modi and President Hollande were to focus on the “big picture issues even in the security field,” in their meeting on 10 April 2015 in Paris.
  • No new deal for Rafale aircraft was on the agenda for the talks in Paris.
  • Consequently, no preliminary groundwork was done regarding any new deal on the Rafale aircraft.

Who Decided on 36 Aircrafts Instead of 126?

The petitioners claimed that nowhere in the 16-page document does the government clarify as to who determined that the number of Rafale aircrafts to be purchased would be 36 and not 126.

By arbitrarily reducing the number to 36 the government compromised the country’s “national security,” stated the petitioners. They further added:

“Nowhere does the note mention that the IAF asked for just 36 aircrafts.”

The petitioners also pointed out to the SC that the government has now again initiated a new RFP for the procurement of 110-odd aircrafts in 2018 in which the same vendors will be participating.

The government stated in the document that the Defence Procurement Procedure 2013 was followed in procuring 36 Rafale aircrafts. But the petitioners claim that PM Modi "unilaterally announced the acquisition of just 36 aircraft," without following the procedure of obtaining Services Qualitative Requirement, Categorisation Committee's Recommendation, Statement of Case or Acceptance of Necessity by Defence Acquisition Council.

No ‘Sovereign Guarantee’, Only a ‘Letter of Comfort’

The 16-page note by the government claimed that India’s interest was kept in top priority when the Rafale deal was signed between India and France. The note said:

“The IGA (Inter-Government Agreement) is typically an assurance from a sovereign government for assistance in case of unforeseen problems, e.g. international sanctions, contract failure, need to integrate more sophisticated weaponry, requirement of product support etc…IGA also facilitates and strengthens the foreign industry’s commitment for long term support for the equipment and spares through a matching commitment by a sovereign government.”

The government's note doesn't mention that the Ministry of Law & Justice specifically and repeatedly objected to the fact that in the agreement for procurement of 36 Rafale aircrafts, the French government didn't provide a ‘Sovereign Guarantee’ as per the requirement. It merely provided a ‘Letter of Comfort’ which is of little value as claimed by the petitioners.

During the four-hour-long hearing on Wednesday, the government admitted that no Sovereign Guarantee was provided by the French government, which, the petitioners said, has compromised India’s business interest. 

In the absence of a sovereign guarantee, in case there is an arbitration proceeding, the Indian government will have to deal with the Dassault Aviation directly instead of the French government, and that could take several years.

Petitioners Debunk Govt's Price Secrecy Claim

After listening to both parties during Wednesday, 14 November hearing, the SC said that it is not necessary to disclose the price of the Rafale deal to the public right now.

The government told the SC that the price of the Rafale aircraft cannot be brought into the public domain on account of the 2008 secrecy agreement between India and France.

The petitioners claimed that the government had already put the price of the Rafale aircraft in the public domain, twice.

They also pointed out that the secrecy agreement of 2008 states that the information is subject to the national laws of the countries involved.

In the rejoinder, the petitioners state that under Article 4, the secrecy agreement would be subject to various laws in India like the RTI Act under which the pricing of the procurement cannot be a secret.

In the greater public interest, the price of the Rafale deal should be made public, said the petitioners.

During the hearing on Wednesday, 14 November, the petitioner Prashant Bhushan said, “How did the PM have the power to change the deal, remove the technology transfer under Make in India and add the offset obligations?" He argued that under offset guidelines, defence minister has to approve all offset contracts.

“The government cannot say that it does not know about the offset partner. That is against procedure,” Bhushan pointed out in his argument.

In the rejoinder, the petitioners stated that the government didn't follow the Offset Guidelines of the Defence Procurement Procedure which demands that every vendor is to submit offset proposals to the Ministry of Defence for approval.

The offset proposal is submitted in two parts – Technical Proposal and Commercial Proposal. The rejoinder states:

“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.”

The rebuttals by the petitioners on the government’s claim that proper procedure was followed in procuring 36 Rafale aircrafts, raises serious questions. The SC’s judgment on the petition will decide the future course of action on the most controversial deal of the Modi government.

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