AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2018 (12) TMI 1716
X X X X Extracts X X X X
X X X X Extracts X X X X
....e' was included in the DPP in the year 2005 so as to promote Indigenisation and to that effect Services Qualitative Requirements ("SQRs") were prepared in June 2006. On 29th June 2007 the Defence Acquisition Council ("DAC") granted the "Acceptance of Necessity" for the procurement of 126 Medium Multi Role Combat Aircrafts (for short "MMRCA") including 18 direct fly­away aircrafts (equivalent to a single squadron) to be procured from the Original Equipment Manufacturer ("OEM") with the remaining 108 aircrafts to be manufactured by Hindustan Aeronautics Limited (for short "HAL") under licence, to be delivered over a period of 11 years from the date of signing. The bidding process commenced in August 2007. Six (06) vendors submitted proposals in April, 2008. The proposals were followed by technical and field evaluations; a Staff Evaluation Report and a Technical Oversight Committee Report. All these were completed in the year 2011. The commercial bids were opened in November, 2011 and M/s Dassault Aviation (hereinafter referred to as "Dassault") was placed as the L­I sometime in January 2012. Negotiations commenced thereafter and continued but without any final result. In the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... alleging illegality and non­transparency in the procurement process. The said writ petition seeks investigation into the reasons for "cancellation of earlier deal" and seeks a scrutiny of the Court into the alteration of pricing and, above all, how a 'novice' company i.e. Reliance Defence came to replace the HAL as the Offset partner. Cancellation of InterGovernmental Agreement and registration of an FIR has also been prayed for. The fourth and the last writ petition bearing Writ Petition (Criminal) No.298 of 2018 has been filed by Shri Yashwant Sinha, Shri Arun Shourie and Shri Prashant Bhushan claiming to be public spirited Indians. They are aggrieved by nonregistration of FIR by the CBI pursuant to a complaint made by them on 4th October, 2018 which complaint, according to the petitioners, disclose a prima facie evidence of commission of a cognizable offence under the provisions of the Prevention of Corruption Act, 1988. The prayer, inter alia, made is for direction for registration of an FIR and investigation of the same and submitting periodic status reports to the Court. 5. Adequate Military strength and capability to discourage and withstand external aggression an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion Networks Pvt. Ltd. & Anr. Vs. Union of India & Ors. (2008) 16 SCC 215). The triple ground on which such judicial scrutiny is permissible has been consistently held to be "illegality", "irrationality" and "procedural impropriety". 10. In Reliance Airport Developers (P) Ltd. vs. Airports Authority of India & Ors. (2006) 10 SCC 1) the policy of privatization of strategic national assets qua two airports came under scrutiny. A reference was made in the said case to the commentary by Grahame Aldous and John Alder in their book 'Applications for Judicial Review, Law and Practice': "There is a general presumption against ousting the jurisdiction of the courts, so that statutory provisions which purport to exclude judicial review are construed restrictively. There are, however, certain areas of governmental activity, national security being the paradigm, which the courts regard themselves as incompetent to investigate, beyond an initial decision as to whether the Government's claim is bona fide. In this kind of non­justiciable area judicial review is not entirely excluded, but very limited. It has also been said that powers conferred by the royal prerogative are inh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st October, 2018, the other two writ petitions came to be filed. 13. On 31st October, 2018, the Court in its order had recorded that in none of the writ petitions the suitability of the fighter jets and its utility to the Indian Airforce had been called into question. Rather what was doubted by the petitioners is the bona fides of the decision­making process and the price/cost of the equipment at which it was proposed to be acquired. 14. Pursuant to the order dated 10th October 2018, a note in sealed cover delineating the steps in the decision­making process was submitted to the Court and by order dated 31st October 2018 this Court had directed that such of the information which has been laid before the Court, which can legitimately be brought into the public domain, be also made available to the petitioners or their counsels. Details with regard to the induction of the Indian Offset Partner (IOP), if any, was also required to be disclosed. The Court also directed that the details with regard to pricing; the advantages thereof, if any, should also be submitted to the Court in a sealed cover. 15. It is in the backdrop of the above facts and the somewhat constricted ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se as to how it could be claimed that DPP 2013 was followed. We, however, also notice clause 75 of DPP 2013 which reads as follows: "75. Any deviation from the prescribed procedure will be put up to DAC through DPB for approval." 17. Also, we notice that the official respondents have sought support from paragraph 71 of the DPP 2013. Para 71 of DPP 2013, in respect of the IGA has been referred to, which postulates possibilities of procurement from friendly foreign countries, necessitated due to geo­strategic advantages that are likely to accrue to the country. Such procurement would not classically follow the Standard Procurement Procedure or the Standard Contract Document, but would be based on mutually agreed provisions by the Governments of both the countries based on an IGA, after clearance from the Competent Financial Authority (hereinafter referred to as "CFA"). Of the total procurement of about Rs. 7.45 lakh crores since 2002 under DPP, different kinds of IGAs, including Foreign Military Sales and Standard Clauses of Contract account for nearly 40%. With the object of promoting indigenization, a robust offset clause is said to have been included since 2005. As....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isterial consultations and the approval of the CCS was also obtained, finally, resulting in signing of the agreement. This was in conformity with the process, as per para 72 of DPP 2013. 20. The petitioners, on the other hand, seek to question the very fulfilment of the prerequisites for entering into an IGA. The Government of France, giving only a 'Letter of Comfort' and not a 'Sovereign Guarantee' has been questioned. 21. It is a say of the petitioners that para 71 envisages three eventualities, where the question of entering into an IGA would arise, which have not arisen in the present case: (a) Proven technology and capabilities belonging to a friendly foreign country is identified by our Armed Forces while participating in joint international exercises; (b) Large value weapon system/platform in service in a friendly foreign country is available for transfer or sale normally at a much lesser cost; or (c) Requirement of procuring a specific state­of­the­art equipment/platform where the Government of the OEM's country might have imposed restriction on its sale and thus the equipment cannot be evaluated on 'No Cost No Commitment' basis.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... into this issue or to seek clause­by­clause compliances. Pricing 24. The challenge to the pricing of the aircrafts, by the petitioners, is sought to be made on the ground that there are huge escalations in costs, as per the material in public domain, as found in magazines and newspapers. We did initially express our disinclination to even go into the issue of pricing. However, by a subsequent order, to satisfy the conscience of the Court, it was directed that details regarding the costs of the aircrafts should also be placed in sealed covers before the Court. 25. The material placed before us shows that 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 (hereafter referred to as "PAC"). Only a redacted portion of the report was placed before the Parliament, an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the said amendment it is contended that cloak of secrecy is cast about the Offset partner and the vendor is enabled to give the details at a much later point of time. It is contended, however, that other provisions of the Offset Guidelines remain unamended, and, therefore, Government cannot pretend ignorance about the Indian Offset partner as has been done in the affidavit filed. It is complained that favouring the Indian business group has resulted in offence being committed under the Prevention of Corruption Act. 29. As per clause 8 of DPP 2013, dealing with the processing of offset proposals, it has been stated in clause 8.2 as under: "8. Processing of Offset Proposals 8.2 The TOEC Technical Offset Evaluation Committee will scrutinize the technical offset proposals (excluding proposals for Technology Acquisition by DRDO as per para 8.3) to ensure conformity with the offset guidelines. For this purpose, the vendor may be advised to undertake changes to bring his offset proposals in conformity with the offset guidelines. The TOEC will be expected to submit its report within 4­8 weeks of its constitution." 30. It has been categorically stated that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....past, but the press release suggests that there was possibly an arrangement between the parent Reliance company and Dassault starting from the year 2012. As to what transpired between the two corporates would be a matter best left to them, being matters of their commercial interests, as perceived by them. There has been a categorical denial, from every side, of the interview given by the former French President seeking to suggest that it is the Indian Government which had given no option to the French Government in the matter. On the basis of materials available before us, this appears contrary to the clause in DPP 2013 dealing with IOPs which has been extracted above. Thus, the commercial arrangement, in our view, itself does not assign any role to the Indian Government, at this stage, with respect to the engagement of the IOP. Such matter is seemingly left to the commercial decision of Dassault. That is the reason why it has been stated that the role of the Indian Government would start only when the vendor/OEM submits a formal proposal, in the prescribed manner, indicating details of IOPs and products for offset discharge. As far as the role of HAL, insofar as the procurement of....