India has cancelled its Rs3,600-crore contract with Anglo-Italian helicopter manufacturer AgustaWestland for purchase of 12 VVIP choppers for the Air Force, in the face of charges that the deal involved kickbacks to the tune of Rs360 crore.
The government today said it has terminated the agreement for purchase of 12 VVIP and VIP helicopters signed with AgustaWestLand International Ltd (AWIL) with immediate effect.
The agreement, signed on 8 February 2010, was terminated on grounds of breach of the pre-contract integrity pact (PCIP) and the agreement by AWIL, a government release said.
The termination has been done on the basis of opinion received earlier from the attorney general of India, who was of the view that integrity-related issues are not subject to arbitration.
However, AWIL has since pressed for arbitration and appointed an arbitrator from its side. In view of this, the ministry of defence has sought a fresh opinion from the attorney general.
The defence ministry has appointed Justice B P Jeevan Reddy as the arbitrator with a view to safeguard its interests.
The decision to scrap the deal comes more than a year after reports surfaced that two top officials of the company had allegedly paid bribes to bag the contract.
Former IAF chief SP Tyagi is also among the accused in the case, which is being probed by the CBI.
The decision to cancel the deal was announced after a meeting between defence minister AK Antony and prime minister Manmohan Singh earlier in the day.
Of the 12 helicopters for which orders have been placed, AgustaWestland has already delivered three.