AK Antony
Defense Minister AK Antony.Reuters

Squashing hopes of negotiation of the ₹3,727 crore VVIP chopper deal, the Defence Minister of India AK Antony on Monday said that India refuses to be drawn into an arbitration with AgustaWestaland.

The Finmeccanica Anglo-Italian firm had nominated former Supreme Court Judge and former Chief Justice of Kerala High Court, Justice B N Srikrishna as an arbitrator last week. The Ministry of Defence (MoD) then had to nominate an arbitrator by 3 December and also a third one by mutual consent.

"There is no question. Our stand is clear that there is no issue of arbitration. We have already given them a show cause notice and they have not replied so far. Let them reply. We will take a decision after they reply," PTI quoted Antony.

During the hearing on 20 November, AgustaWestland had denied the allegations of bribing the Indian agencies. The kickbacks amounted to over ₹300 crore.  

The Government of India had placed an order to acquire 12 AW101 helicopters for ferrying VVIPs such as Prime Minister among others in March 2010. The contract however came under the scanner in February this year when the former Chief Executive of Finmeccanica was arrested for allegedly paying bribes to win the deal. India had then frozen payment to the company.  

The MoD had issued a final show cause on 21 October to cancel the deal and had asked AgustaWestland to respond by 26 November. The Ministry in the notice had stated that the Finmeccanica company had violated the integrity pact of the Defence Procurement rules and questioned as to why it cannot take action against the firm in this view.

According to the Defence Procurement rules, the integrity pact forbids paying or accepting bribes to secure a deal. It allows the government to cancel the contract if this pact is violated and the seller has to forfeit the security amount deposited during the bidding. 

The Ministry of Defence will take an action when AgustaWestland will respond to the notice sent by the MoD.

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