The Supreme Court ruled that no irregularities were found in the decision making, pricing and selection of Reliance as Dassault's partner.
The sale of 36 Dassault Rafale fighter jets to India by France, signed during the presidency of Francois Hollande, and under the leadership of Prime Minister Narendra Modi in 2016, drew flak and suspicion after reports that Anil Ambani’s Reliance Group was assigned as Dassault’s partner in the building of the jets, came to light. Several questions were raised: why Dassault, one of the world's most established and experienced defense manufacturers, picked Anil Ambani's debt-ridden firm as a partner in India.
The plans to buy Rafales for the Air Force were first set upon by the government of Dr. Manmohan Singh; originally, HAL, the state-run company, was to play a large role in the manufacturing of 108 planes; Mukesh Ambani's defence firm was to be a partner contributing to the process but its intended role was not clear. Dassault has maintained that it began talks with Mukesh Ambani's firm in 2012, then changed later to discussions with the company headed by his brother, Anil Ambani, NDTV reported.
In Sept. 2016, India and France signed an inter-governmental agreement (IGA) to acquire 36 aircraft following clearance from the Indian Cabinet Committee on Security. The joint venture between Reliance Group and Dassault Aviation named Dassault Reliance Aerospace Limited was announced the following month to manufacture components for Legacy Falcon 2000 series of jets such as the nose, cockpit, and doors at the DRAL facility in Nagpur starting from January 2018.
After the IGA was signed between France and India, the opposition accused Ambani of benefitting from ‘brazen crony capitalism’ in the massive $8.6 billion deal, which was announced by PM Modi in 2016 during a visit to Paris. For months, the opposition has alleged wrongdoing in the deal, claiming that PM Modi overpaid for the planes and struck the deal without transparency.
The Congress leaders demanded that the details of the agreement be made public and raised doubts about procedural wrongdoing and whether there had been an escalation in per-aircraft cost. That HAL was dropped from the deal also fuelled allegations if the move was motivated to benefit Anil Ambani. Finance Minister Nirmala Sitharaman said HAL was dropped because of the defense PSU's poor state of affairs. She added that the transfer of technology to HAL would not be economically feasible in a smaller contract for 36 aircraft, which was an emergency purchase, and that no government approvals were required for the joint venture between two private companies.
Her remarks were met with criticism by the opposition, and the allegations of corruption gained further traction when former HAL chief T Suvarna Raju said HAL could have built Rafale fighters in India had the government managed to close the original negotiations with Dassault and had actually signed a work-share contract with the French company. "He admitted that HAL might not have been able to build the planes at the desired 'cost-per-piece', one of the reasons why that deal fell through but insisted that the company can make advanced fighters," reported Hindustan Times.
In Sept. 2018, the Supreme Court of India agreed to hear a public interest writ petition seeking cancellation of the inter-governmental agreement alleging corruption and after a few days, asked the Central government to provide details of the decision making process in the Rafale deal with France in a sealed cover.
The same month, news agency ANI published a report from a French media outlet, Mediapart, quoting former President Francois Hollande as saying that the Indian government proposed the name of Anil Ambani’s Reliance Group as Dassault Aviation’s offset partner. In the report, the French government said that ‘Dassault had no choice but to take the company given to it.’ Prior to this, The Indian Express had reported that Reliance Entertainment had funded a film produced by Hollande's partner Julie Gayet when Rafale negotiations were ongoing. Hollande's stance that the French administration had no choice was contradicted by Dassault and the Ministry of Defence stating that neither the Indian nor French government had any say in Dassault's decision to partner with Reliance.
The Supreme Court ruled on Dec. 14, 2018, that it found no evidence of wrongdoing in the government’s decision-making process, as it rejected petitions for an investigation into the Rafale deal. The apex court said it found no evidence of wrongdoing in the government’s decision-making process or in the choice of Reliance Infrastructure Ltd as the Indian partner and refused to go into pricing details. The BJP welcomed the verdict and attacked the Congress accusing it of raising the issue for political mileage.
However, the Congress's senior leaders continued to demand a Joint Parliamentary Committee probe into the Rafale deal. The-then Congress president Rahul Gandhi said the government misled the court as the Comptroller and Auditor General (CAG) report was not shared with the Public Accounts Committee as directed by the court. In May 2019, Former BJP union ministers Arun Shourie and Yashwant Sinha and advocate-activist Prashant Bhushan filed their written submissions in a review petition case. In Dec 2018, the Union defense ministry suggested that the apex court may have misinterpreted the government’s prose on the Rafale deal and sought corrections by the Supreme Court in the judgment. The Supreme Court's judgment had said that the pricing details of the Rafale combat planes were shared with the Comptroller and Auditor-General (CAG), the Public Accounts Committee of Parliament examined the report of the CAG and a redacted portion of the report was placed before Parliament and was in the public domain. In its petition, the defense ministry said that the court seems to have misunderstood its original submission due to a mixing up of tenses and implied that the CAG report specific to the Rafale deal had not been submitted. On Nov. 14 2019, the Supreme Court dismissed all the petitions seeking review of its verdict delivered on Dec. 14 2018, on the controversy. It upheld the previous judgment stating that no irregularities or corruption have been found in the deal.