The Delhi High Court has said the Centre’s order suspending business dealings with Defsys Solutions on account of an alleged CBI probe against it in relation to the AgustaWestland VVIP helicopter case will not affect the ongoing contracts.
The court, while dealing with a petition by Defsys Solutions – a defence equipment supplier–challenging the order, also said the petitioner’s bankers shall not cause impediments in its related day-to-day functioning.
The petitioner submitted it was doing business with the Union of India and was a regular supplier of various defence equipment and parts since 2007. It said the reason given for the suspension of business was an alleged “intimation from the CBI regarding ongoing investigation against the petitioner in relation to the AgustaWestland VVIP Helicopter case”.
The CBI case pertains to a Rs 3,600 crore alleged scam in the purchase of 12 VVIP helicopters from AgustaWestland. The agency, in its charge sheet, has alleged an estimated loss of 398.21 million euros (about Rs 2,666 crore) to the exchequer due to the deal that was signed on February 8, 2010 for the supply of VVIP choppers worth 556.262 million euros.
The court listed for January 17 the petitioner’s plea seeking a stay on the order and asked the Centre to file a short affidavit in response in the meantime.
The central government counsel defended the order of suspension passed by the Ministry of Defence (MoD) on December 9 and stated that as far as the existing contracts of the petitioner are concerned, the same would not be affected by the order.
“The said statement is taken on record. In view of the said statement made by the Ministry of Defence, the impugned order dated 9th December, 2022 would not take effect insofar as it relates to existing on-going contracts including offset contracts, executed prior to 9th December 2022.
“Further, bankers of the Petitioners shall not, in any manner, cause impediments in the day-to-day functioning of the Petitioner qua the said existing contracts,” said Justice Prathiba M Singh in a recent order.
The court also clarified that if the contracts that are “still in the initial stages” are likely to be concluded with any third-party, the petitioner is permitted to approach it.
The petitioner claimed the order passed by the MoD on December 9, which suspended business dealings with it for a period of one year or until further orders, was a “complete surprise” as no notice was issued to it prior to the suspension and it had even given bids in response to various ‘Request for Proposal’.
The petitioner argued that the intimation seemed to be incorrect as it has no connection with the AgustaWestland case. Noting that it is neither an accused in the case nor has it ever been called for investigation, the company said the order is liable to be stayed.
The Centre said when an intimation is received from an investigation agency, a suspension can be ordered even without notice, especially in cases involving national security, in terms of Guidelines of the Ministry of Defence for Penalties in Business Dealing which includes the procedure for penal action.
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