Govt to appeal restraint on encashing Agusta deposit

Govt to appeal restraint on encashing Agusta deposit

Govt to appeal restraint on encashing Agusta deposit

Faced with a legal setback in Italy, the Defence Ministry on Tuesday said it would appeal against the orders of an Italian court which restrained India from encashing the bank guarantees deposited by AgustaWestland in a Milan bank while securing the lucrative commercial contract to supply 12 VVIP helicopters to the Indian Air Force.

A Milan court on Monday accepted a plea by AgustaWestland's parent company Finmecannica to stop India from encashing over €278 million (approximately Rs 2,360 crore). “The Milan court has confirmed the ruling made last January, prohibiting the payment of collateral of more than €278 million deposited in relation to the contract,” said the company.

India would be filing an appeal against the order within two weeks, said a defence ministry official, adding that the government would “vigorously pursue all options for encashing of the bank guarantees”.

In 2010, India had signed a Rs 3,727-crore (€556-million) contract with AgustaWestland—a subsidiary of Italian arms major Finmeccanica—to supply 12 choppers, out of which three had been delivered.

The defence ministry terminated the deal this January 1 on the ground that AgustaWestland had breached the “pre-contract integrity pact and terms of the contract”.

 There are allegations of corruptions, and a former IAF chief and his brothers are among the key suspects in a probe being conducted by the CBI.

Subsequently, the defence ministry encashed two bank guarantees amounting to approximately Rs 240 crore deposited at the State Bank of India. The government also initiated the process to cash the bank guarantees deposited at the Milan branch of Deutsche Bank, which can be adjusted against the advance payment.