The controversial Rs. 3,600 crore contract for procuring 12 helicopters to ferry VVIPs is moving towards cancellation. The Defence Ministry has issued a final show cause notice to Anglo-Italian firm AgustaWestland for cancelling its contract for alleged violation of the terms of contract.

The notice, issued by the Defence Ministry on Monday, has asked AgustaWestland 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 UK-based firm has been given 21 days to reply to the notice, Defence Ministry sources said here.

The VVIP chopper contract is being probed by the Italian agencies as well as the Central Bureau of Investigation (CBI) for payment of alleged kickbacks to some Indian citizens, including former Indian Air Chief SP Tyagi.

The Defence Ministry has stated that because of the integrity pact, it can get back all the money paid by it for the deal. India has put on hold the further delivery of choppers and payments. The firm had already given delivery of three choppers to the Indian Air Force.

The final show cause notice came within days of Swiss resident Guido Ralph Haschke, an alleged middleman named by the Italian investigators, being arrested on charges of bribery. It has been alleged that Finmeccanica, the parent company of AgustaWestland, had used the services of middlemen, including Haschke to bribe Indian officials.

On its part, the company had said last week that it has invoked arbitration proceedings against the Defence Ministry for ``unilaterally’’ freezing the deal.

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