No Sovereign Guarantee For Rafale, Government Admits In Supreme Court

There is no sovereign guarantee that Dassault will meet its obligation of delivering the 36 Rafale fighter jets for which the country signed a Rs 59,000-crore deal, the government admitted in Supreme Court on Wednesday. What is there, government's top law officer KK Venugopal told the court, was a "Letter of Comfort" from France - a written document that assures that an obligation will eventually be met.

The government's admission came as lawyer-activist Prashant Bhushan raised the matter early during the four-hour long hearing, contending this was one of the issues flagged by the law ministry.  

The ministry, Mr Bhushan had contended, had flagged two issues: If Dassault doesn't deliver, who will be responsible; and if there's arbitration, it would be in Geneva which would put the country at a disadvantage. "This was not disclosed by the government," Mr Bhushan told the court.

In legal terms, a Letter of Comfort is weaker than a sovereign guarantee, under which the foreign government takes full responsibility that the contract will be executed. In case of any breach of contract, the two governments resolve the issue.

Defence ministry sources told NDTV that there is no sovereign guarantee in the Government-to-Government deals between Russia and the US. In case of Rafale, the agreement between the two governments, along with the Letter of Comfort, "covers the risk spectrum" the sources said.

Later in the day, the Supreme Court questioned the Attorney General what were the risks involved in the deal and what were the law ministry's "objections" to it.

"Though there is no sovereign of guarantee, (there's a) letter of comfort from France," Mr Venugopal responded. When the court cut in, underscoring that there is no guarantee, the Attorney General said, "This is a sensitive area.  What's involved is the security of the country... We are very backward in regard -- to acquisition of aircraft and the Air Chief is complaining that we don't have sophisticated aircraft".

Earlier on Wednesday, the bench, led by Chief Justice Ranjan Gogoi, had called in officials of the Air Force. Deputy Chief of Air staff, Air Marshal V R Chaudhari, and two other officers had told the court that no new aircraft has been inducted in the Air Force since 1985.

The court, which was hearing a clutch of petitions demanding a court-monitored inquiry into the Rafale deal, has said the hugely contentious issue of the pricing of the jets will not be debated unless it decides that the matter should be in public domain.

The Congress, which has accused the government of corruption and crony capitalism,  claims that the French firm chose Anil Ambani's Reliance Defence as an offset partner to bag the Rs. 59,000 crore deal, and then lied about the contract.

Disclaimer: NDTV has been sued for 10,000 crores by Anil Ambani's Reliance Group for its coverage of the Rafale deal.