The Supreme Court’s Rafale judgment heralds the return to overarching judicial pacifism

Once again, the Rafale judgment on Friday by the Supreme Court, rejecting petitions on Friday seeking an investigation into the government’s purchase of 36 fighter jets, reminds us that time in Indian philosophy is circular, not linear! This may be why the pendulum of judicial decision has now swung to the other apogee.

If 2G and Coalgate were the high points of judicial activism, the Rafale judgment heralds the return to overarching judicial pacifism. The irony is that but for the fluff and bling, the circumstances that led up to these milestones were not that different.

To set the context, all these milestones emerged from deals that looked less than squeaky shiny. 2G saw spectrum unfairly being given over cheaply to the select few, inspiring national auditor CAG to create the inventive formulation ‘presumptive loss’. At the end of the day, it was about who was making big bucks out of a commercial contract. Coalgate saw the favoured few being given coal mine allotments without due process, now leading CAG to create the equally inventive concept of ‘presumptive gain’. Rafale is not that different.

The country may have a presumptive loss in spending too much on too few fighters and handing over a huge presumptive gain to a private Indian company through Offset deals without due process or fairness. Why has the court declined to intervene?

At the outset, the court set out to limit its own jurisdiction by observing that the parameters of judicial scrutiny” in administrative decisions “has to be determined on the basis of considerations that are relevant to such commercial decisions” Consequently, “terms subject to which tenders are invited are not open to judicial scrutiny unless it is found that the same have been tailor made to benefit any particular tenderer or a class of tenderers.” Despite this judicial reluctance, the court still succumbed to the call of its conscience and proceeded to examine each of the three legs of this potential grease-ball stool comprising of (1) the decision making process, (2) the pricing issue and (3) the Indian offset partner. A scrutiny of the limited facts before it did not alter this judicial reluctance.

First, there was the question of decision making. The court circumscribed its own limitation by noting that “these are contracts of defence procurement which should be subject to a different degree and depth of judicial review” and that “we cannot sit in judgment over the wisdom of deciding to go in for purchase of 36 aircrafts (sic) in place of 126.” Well, if you are going to allow a government to purchase 36 of anything for more money than the country would pay for 126 of the same thing on the principle of it, you are really issuing a gate pass to governments to flip all nearly-done deals into lucrative kickback opportunities.

The court’s finding on pricing changes nothing of the overriding paradigm in which the judgment is made. Since we are on legal principles, we will ignore the government’s misrepresentation that led the court to rely on the fact that “The pricing details have, however, been shared with the … CAG …..and the report of the CAG has been examined by the Public Accounts Committee”.

 On the merit of it, the court examined the comparative price details and its explanatory note, only to decide that “It is certainly not the job of this Court to carry out a comparison of the pricing details in matters like the present”. This really means that if Bofors makes the best guns or the Malyshav Factory makes the best Battle tanks or Lenovo makes the best computers for defence purposes, then the government can pay any price for it and this is not the court’s business.

That brings us to the problem of the Indian offset partner. We will be brief. We now stand advised that in Indian law, so long as a government can restructure a transaction so as to outsource the selection of the offset partner to the seller, all the “presumptive gains” in the world will not persuade the court to second guess the selection of the favoured few.

In the words of the court, “it is neither appropriate nor within the experience of this Court to step into this arena of what is technically feasible or not.” It is difficult not to be reminded of Pontius Pilate ritually washing his hands when Jesus Christ was brought to him.

So, are we fundamentally at issue with this judgment? No, probably not. At the end of the day, as professional lawyers, we are intimately aware that at some level, all laws are arbitrary in where they draw the line. Justice is a mirage. It is certainty of law we seek so that we may appropriately advice our client. Swinging pendulums do not quite inspire the confidence of a stable legal system.

That said, to be fair, perhaps we should acknowledge that the court could not have replicated its activism of 2G and Coalgate because CBI has spontaneously combusted and there was no stick left to beat anyone with. How can you possibly disagree with a plan that pursues the art of the possible?

-By Ranjeev C Dubey and Rakesh K Ojha

(Ranjeev C Dubey is managing partner of the Gurgaon-based corporate law firm N South. His bestselling expose’ of the real world of Indian courts "Legal Confidential", released in November 2015. Rakesh K Ojha is senior partner of N South.)