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Updated on: Wednesday, May 29, 2019, 04:44 AM IST

Rafale Deal: SC grills government on offset clause, asks why Ministry changed guidelines in 2015

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New Delhi: In the four-hour hearing on the Rafale jet deal, the Supreme Court on Wednesday went into details of the offset clause, which is the pivot of the opposition’s charge of corruption in the Rs. 59,000 crore contract. (As per the offset clause, French company Dassault has to invest half the value of the deal – about Rs 30,000 crores – in Indian firms; one of the chosen beneficiaries is Anil Ambani’s Reliance Defence.)

Delving deeper into the clause, Justice K M Joseph specifically asked the defence ministry why the offset guidelines were changed in 2015, after the BJP Government came to power. To this, an additional defence secretary responded that the procedure was amended because of objections raised by Dassault.

The government also told the court that Dassault Aviation is yet to submit details of offset partner to the government, underscoring that it is for the vendor to select the offset partner. “The vendor will inform us about the offset partner. So far there is no information on this,” said Additional Secretary Defence Apurva Chandra to questions from the judges. He, however, did not respond to Justice Joseph’s another question on how country’s interests will be protected if the offset partner does not meet its production obligation. Joseph demanded: “If the offset partner runs off, what happens? What about the country’s interest? What if the offset partner doesn’t undertake any production?”

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The court said the government “can’t separate” the main contract from the offset contract. “It may not be in the country’s interest if the offset contract is executed later because that may lead to delay in production by the offset partner,” the court said. Prashant Bhushan, one of the petitioners, countered that the government saying they don’t know who the offset partner is, runs totally contrary to the procedure laid down since the UPA days, as per which the offset partner has to be approved by Raksha Mantri.

He said the price per aircraft was 155 million Euros in an earlier deal signed by the previous UPA government and was now 270 million Euros. This shows that there was a hike of 40 per cent in its price, a fit case for the CBI to register an FIR, he said, pointing out that they filed the petition after the CBI refused to register the FIR under the Prevention of Corruption Act. He also alleged a conspiracy by Dassault in granting the offset right to Reliance Defence which had no competence otherwise in executing the contract.

The activist-lawyer submitted that the NDA government had “short circuited” the acquisition process by taking the Inter-Government Agreement route to avoid putting out a tender while the fact is that there was no sovereign guarantee from the French government that has been flagged by the law ministry. The CJI asked: “So you don’t have a sovereign guarantee?” The AG conceded: “No we don’t. But we have a letter of comfort from France.” In reply to the CJI’s another query, the AG said Qatar, Egypt and France have bought Rafale from Dassault Aviation.

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Arun Shourie, the other petitioner, drew attention of the court to the fact that Dassault’s documents reveal that the actual pricing is contrary to price disclosed in Parliament. He also insisted that Dassault Aviation would not have chosen Reliance Defence as its offset partner on its own, since the company had no relevant experience.

Advocate M L Sharma, known for filing PILs on the drop of the hat, was the first to argue as his was the first PIL in the matter. Dubbing the inter-government agreement as “illegal,” he said all he wants is an investigation into the matter. Others arguing after him were advocate Vineet Dhanda and AAP MP Sanjay Singh’s counsel Dheeraj Singh who questioned the government’s intent behind reducing the deal from 126 to 36 jets, instead of increasing the number when there was a concern about the adversaries inducting more fight aircraft.

Bhushan endorsed him, pointing out that not a single aircraft has arrived in three-and-a-half years of the deal and the first jet will come only in September 2019 and the process will continue till 2022. If the 126 aircraft deal were still on, at least 18 jets would have been delivered by April 2019, he said.

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Published on: Thursday, November 15, 2018, 06:56 AM IST
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