I remember someone telling that apparently after he came to know about RAW's plans to do so he immediately called up Zia-ul-Haq and told him about the plans to attack the nuclear facility, he destroyed the R&AW and several other smaller wings of R&AW as he thought that its officers were Indira Gandhi's agents, budgets for R&AW was reduced and the organization was severely undermined and all of his actions set the Indian external intelligence apparatus decades back.
From what I gather from Nitin Gokhale's book on R.N. Kao, his loyalty was also under question as he was seen as a close confidant of Mrs. Indira Gandhi, which even if true(and most likely it was) was no reason to do what he did to RAW.
Interesting Fact is that Morarji Desai was awarded the highest civilian honour(correct me If I am wrong) of Nishan-e-Pakistani by the Pakistani government.
You are slightly wrong about the turn of events.
Morajji was in power from 1977-79. During the 70s, RAW came to know about Pakistan nuclear programme and had penetrated deep into kathua nuclear facilities. RAW spies v isited saloon shops near nuclear plant and collected hair samples from there (scientists visited the shop for haircut), which confirmed the level of the nuclear enrichment and the extent of their programme.
Then during a phone call to Paki PM in 1977-78, Morajji Desai apparently mentioned that we know about your nuclear programme, thereby expposing RAW's assests there. Paki identified those assests and killed them. His future admirers claim that it was his slip of tongue moment.
However, it was during mid 80s, (not sure Indira or Rajiv's tenure) that Israel planned an airstrike on Kathua with India's help, similar to Isareli strike on Iraq's Osirak nuclear reactor facility ( 7 June 1981) known as Operation Babylon. The Israeli planes were to take off from Indian airbases. However, India chickened out at the last minute.
Morajji had nothing to do with the planned airstrike, however knowing his nature it would be safe to assume to would have have outrightly cancelled it or if approved he would have even revealed the flight planes of Israeli planes to Pakis.