The Indian government will appeal against an Italian court order barring encashment of bank guarantees in the contract for procurement of 12 VVIP helicopters from AgustaWestland that was terminated by the Defence Ministry in January on grounds of breach of the pre-contract integrity pact and the agreement by the supplier.

The decision comes after the Italian court on Monday admitted a plea by AgustaWestland’s parent company Finmeccanica to prevent the Indian government from cashing bank guarantees worth over Rs.2,360 crore as a post-contract termination penalty imposed by the Defence Ministry.

“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. Simultaneously, the Government will vigorously pursue all options for encashment of the bank guarantees,” a Defence Ministry spokesperson said on Tuesday.

AgustaWestland had already supplied three of the 12 helicopters to the Defence Ministry after the contract was signed in February 2010. While guarantees worth of Rs. 240 crore held with the banks in India have already been cashed, the guarantees with the banks in Italy are yet to be impounded.

The VVIP chopper deal came under the Central Bureau of Investigation scanner in February 2013 after Italian investigators arrested the then Finmeccanica CEO Giuseppe Orsi on allegations of kickbacks to Indian officials.

More In: National | News