The Telegraph
Saturday , January 4 , 2014
CIMA Gallary

Agusta contests scrap notice

New Delhi, Jan. 3: Anglo-Italian firm AgustaWestland has contested the Indian government’s decision to scrap a Rs 3,600-crore (euro 560 million) contract to supply 12 VVIP helicopters to the IAF.

The defence ministry issued the notice for “termination of the contract” on Wednesday. Yesterday, a ministry source said the process to punish the firm by encashing a bank guarantee of about euro 210 million had begun.

A statement mailed by the AgustaWestland spokesperson today said the defence ministry had itself in a press release in February last year said the tender process through which its AW-101 helicopters were selected was properly followed.

“AgustaWestland still finds that neither the termination notice by the ministry of defence nor the show cause notice, from which this termination notice stems, offers adequate basis to take any action against the company,” the company statement said.

The company was willing to discuss the notice to cancel the contract during the arbitration. It had earlier appointed former Supreme Court judge B.N. Srikrishna as its arbitrator. In the termination notice, the Indian defence ministry recommended former apex court judge B.P. Jeevan Reddy. The two sides will now have to decide on a third arbitrator.

The company said it was still willing to continue supplying equipment that the IAF may need, meaning it would supply spares for the three AW-101 helicopters delivered in December 2012.