The defence ministry Sunday said it will take ''immediate steps'' to fully recover bank guarantees deposited by AgustaWestland in the VVIP chopper deal following an Italian court partially lifting the freeze and allowing India to encash the guarantees.

The appellate court in Milan city, in its judgment Friday, "substantially upheld" the claims of Indian government against AgustaWestland International Ltd. (AWIL), A W Spa and Deutsche Bank, Italy, on the encashment of the bank guarantees and performance bond in the VVIP chopper case, the ministry said in a statement.

"The court also ordered the AWIL and A W Spa to reimburse legal costs of the Indian government. The ministry of defence is studying the order and will take immediate steps to recover the amounts fully," it said.

The Italian court allowed India to partially recover the amount deposited in Italian banks by AgustaWestland in the VVIP chopper deal which was scrapped by India on charges of corruption.

India cancelled the Rs.3,600 crore deal Jan 1, 2014 "on grounds of breach of pre-contract integrity pact and the agreement by the AWIL" and initiated the process to seize bank guarantees deposited in banks in Italy and India.

The Milan court in March 2014 admitted a plea by AgustaWestland's parent company Finmeccanica to prevent the Indian government from encashing bank guarantees worth over Rs.2,360 crore. India appealed against the court order.

The AgustaWestland deal was inked in February 2010 for supply of 12 VVIP helicopters to the Indian Air Force.