The verdict was given by a three-judge bench, headed by Chief Justice of India Ranjan Gogoi. In its last hearing, the court had reserved the verdict.

The Congress has alleged that the centre scrapped a deal for 126 Rafale jets negotiated by the previous UPA government and entered an expensive new contract for 36 jets just to help Anil Ambani's defence company bag an offset partnership with the jet manufacturer Dassault.

Congress chief Rahul Gandhi also alleged that Dassault chose Anil Ambani's Reliance Defence as an offset partner despite its inexperience in the field, just to bag the Indian order. He also accused Dassault chief Eric Trappier of lying about it. Both the government and the French aeronautics major have denied the allegation.

The offset clause means that in exchange for the contract, Dassault has to invest half the value of the Rafale deal -- about Rs. 30,000 crore -- in Indian firms. Reliance Defence was chosen as one of those "offset" partners and is to manufacture plane parts - though not for the 36 jets ordered by India.

The Congress has also demanded that the pricing details of the planes be made public - a demand the government has rejected citing a secrecy clause in the deal, triggering a huge political battle.

During the last hearing on November 14, the government had defended the secrecy clause, claiming if revealed, it could compromise national security and even the parliament has not been informed about it. The pricing details, however, were submitted to the court in a sealed cover. The government also filed a 14-page document titled "Details of the steps in the decision-making process leading to the award of 36 Rafale fighter aircraft order" as the petitioners had demanded an investigation into the procedure followed as well.

At the court's request, two senior Air Force officers also appeared in court to answer the judges' question about the jets. They told the court that no new aircraft has been inducted into the Air Force since 1985.

The government has told the court that it has no sovereign guarantee from France that Dassault will meet its obligation of delivering the 36 fighter jets. Instead, there is a "Letter of Comfort" from France, the government said. This is a written document that assures that an obligation will eventually be met, but it is legally weaker than a Letter of Comfort.

Reports suggest the Rafale deal had been stalled over France's refusal to be a sovereign guarantor. In the case of government-to-government deals with the US, Washington stands guarantee to ensure the contract is executed without a hitch.