Right decision: Two rulings on Rafale hold important lessions for vigilance officials

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Published: November 25, 2019 1:15:22 AM

The rulings address a policy lacunae by making it clear that every loss need not be examined from a vigilance point of view, if due processes were followed.

Specifically, on matters of pricing, the SC reiterated that it was not the function of the court to determine pricing or issue directions on mere suspicions or perception.Specifically, on matters of pricing, the SC reiterated that it was not the function of the court to determine pricing or issue directions on mere suspicions or perception.

Delivered within the space of a year, two judgments of the Supreme Court (SC) on procurement of 36 fighter jets from Dassault Aviation is a fine exposition of the legal principles on which our fight against corruption must be based. By declining to direct the CBI to launch roving and fishing inquiries merely on the basis of suspicion, these rulings provide an important contemporary template that vigilance functionaries would do well to follow. SC seemed to imply that the material on record should, at the very least, indicate some evidence of criminal misconduct before the CBI conducts a probe.

A year ago, in the first of these two judgments, SC noted that the Indian negotiating team (INT), set up by the government, apparently negotiated a better deal than the earlier one. There was no reason to doubt the decision-making process because, apart from some minor deviations, it followed the prescribed guidelines.

The need for the aircraft was not in doubt, as the earlier negotiations with the same vendor had almost collapsed. The government, therefore, decided to enter into an intergovernmental agreement for the purchase of 36 fifth-generation stealth fighter jets, called the Rafale.

Pricing details were shown, but could not, because of secrecy obligations, be brought into the public domain.

Offset obligations were to take effect only in October 2019; and Dassault, the original equipment manufacturer, was free to choose its own Indian partners for meeting these for the purpose of outsourcing some its manufacturing activity in India. Most importantly, the SC held that it could not act as an appellate authority on all these different aspects of the case. Accordingly, it declined to direct the CBI to register an FIR.

In the second ruling, it merely indicated that it found no obvious error in its earlier judgment and unanimously rejected the review application of the petitioners. Specifically, on matters of pricing, the SC reiterated that it was not the function of the court to determine pricing or issue directions on mere suspicions or perception.

This case differs materially from the earlier case relating to purchase of guns from Bofors: in the latter, there was a smoking gun, with the Swedish public radio broadcaster having specifically claimed on the basis of reliable sources that Bofors had paid kickbacks to obtain the contract.

The two rulings hold important lessons for vigilance officials all over the country: in PSUs and banks, risk-taking forms an integral part of business functions. Every loss need not, therefore, be examined from a vigilance point of view, if due processes were followed.

The SC reiterated that a mere difference of opinion cannot be the basis for launching an investigation. It was legally inadmissible, the SC held, to seize upon such differences to question the final view taken by the decision-makers.

Least of all should superior authorities use hindsight to sit in judgment on commercial/operational decisions of their colleagues. Nor should they insist on exemplary levels of conduct as the benchmark for making references to the CBI. For every official cannot be expected to be outstanding. Finally, just like the courts, a disciplinary authority too cannot sit as an appellate authority on the decisions taken by an official at the relevant point of time. If two views were possible and the decision-maker chose one, his disciplinary authority should not sit in judgment over him for vigilance purposes.

Overall, the SC has undoubtedly settled the important controversy in the Rafale case, but the significance of its two judgments goes much beyond the facts of this case. Defence acquisitions have been mired in controversies for decades. The same is true of credit facilities extended by PSBs, as well as large contracts awarded and purchases made by government departments and PSUs.

Hopefully, such rulings will go some distance in restoring sanity to management of vigilance functions across the country.

The writer is Former additional secretary, CVC, and chief commissioner, Income Tax

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