The Defence Ministry has issued a final showcause notice to Anglo-Italian firm AgustaWestland for cancelling its contract worth Rs 3,600 crore for supplying 12 choppers to the Air Force for "violating" the terms of its contract.
The notice was issued by the Defence Ministry on October 21 in which it has asked the Anglo Italian firm to explain why "all or any action as prescribed, including cancellation of the contract, should not be taken against them for violating the terms of the pre-integrity pact and the contract for procurement of 12 VVIP choppers."
The firm has been given 21 days to file its reply to the final warning, Defence Ministry sources said. Asked about the arbitration process invoked by AgustaWestland, they said these proceedings are not applicable on the breach of pre-contract integrity pact of the Defence Ministry.
The government has already frozen the contract for supply of 12 AW-101 VVIP choppers to the IAF after allegations that Rs 360 crore were paid as bribe in which two top officials of the company were accused. IAF has already received three helicopters and delivery of the rest has been put on hold.
The company last week said it has invoked arbitration proceedings against the Defence Ministry for "unilaterally" freezing the deal.
The sources claimed that the government had been preparing to issue the notice for cancellation much before AgustaWestland took the step.
The Defence Ministry had first issued a show cause notice to AgustaWestland on February 15 asking it to explain within seven days the bribery allegations against it after the alleged scam was exposed in Italy.
In the notice, the company was asked why the Rs 3,600 crore deal of 2010 should not be scrapped.
In its reply, AgustaWestland had denied the allegations. Former IAF chief S P Tyagi is among those under cloud in connection with the kickback charges.The CAG also recently highlighted loopholes in the deal.
Soon after the arrest of the firm's former CEO, Guiseppe Orsi, in Italy in connection with the case, Defence Minister A K Antony had suspended the payments to be made to it along with the delivery it was due to make to IAF for the remaining nine choppers.