The Centre has decided to file an appeal after an Italian court barred India from encashing the guarantees of over Rs.1,500 crore provided by the Anglo-Italian helicopter manufacturer AgustaWestland.
The Milan bank guarantees relate to the now terminated contract between India and AgustaWestland for supplying 12 VIP helicopters worth Rs.3,727 crore.
“The government of India will be filing an appeal against the order of the Italian Court in Milan in the case relating to encashment of bank guarantees in the contract for the procurement of 12 VVIP/VIP helicopters from AgustaWestland International Ltd. (AWIL),” said Ministry of Defence spokesperson Sitanshu Kar.
“Simultaneously, the government will vigorously pursue all options for encashment of the bank guarantees,” he added, without elaborating as to what all options were left. The decision by the Italian court was a major setback to India, which had already agreed to the arbitration proceedings in the case initiated by Agusta six months ago.
Following the termination of the contract, India had already withdrawn about Rs.250 crore of performance guarantees, drawn from an Indian bank’s local branch,given by Agusta.
Earlier on Monday, the court had accepted a plea by AgustaWestland’s parent company Finmecannica to stop India from encashing over Rs.2,360 crore (Euro 278 million). “With this measure, the Court granted the requests made by the companies of the Finmeccanica Group, recognising the manifestly abusive enforcement of the guarantees made by the Indian Defense Ministry, given the vagueness of the complaints made in relation to alleged breaches of contract,” Finmeccanica said in a statement.“The Milan court has confirmed the ruling made in last January, prohibiting...the payment of collateral worth more than 278 million euros deposited in relation to the contract,” it said.
The deal with Agusta had run into trouble in February last after a Milan court got Finmeccanica’s then CEO Guiseppe Orsi and other company executives arrested in connection with an anti-corruption probe involving foreign contracts.The Italian court had put a stay on India’s effort to encash the bank guarantees in an earlier hearing on January 8. After the cancellation of the contract, New Delhi had also decided to go in for arbitration with the Anglo-Italian firm and the two sides have nominated their members in this regard.
The Anglo-Italian firm has already supplied three choppers to India and the delivery of the remaining nine was put on hold after Defence Minister A K Antony ordered a CBI probe into corruption allegations.