Even as an Italian court restricted India to recover bank guarantees of over Rs 2,300 crore from AugustaWestland for violating integrity clause, the defence ministry has maintained that the Indian law has the jurisdiction over the dispute.
According to defence ministry officials, the contractual agreement between Indian government and Anglo Italian firm AgustaWestland has mentioned that any dispute between the two parties will be resolved by the Indian law, which means the Supreme Court of India has the final say on any dispute.
"Though we have started the process to appeal against the Italian court's order, but ultimately we have an option to approach Supreme Court of India, which the final authority as per the contract," an official told on the condition of anonymity.
Meanwhile, the defence ministry official discussed the issue with the representatives of the union law ministry on how Indian government can go ahead with the recovery of bank guarantees. Besides, challenging Milan court's order, the defence ministry is also expected to contest to get 650 million euros as levy damages to the company because it has violated the integrity clause.
But, the Indian government might face difficulty to recover the bank guarantee, deposited in three foreign banks.
Defence ministry officials believe that instead of approaching Italian court, the company should have had sought arbitrators, as both parties AgustaWestland and ministry of defence have invoked arbitration proceedings and India has appointed Justice (retd) Jeevan Reddy on its behalf for arbitration after AgustaWestland appointed ex chief justice of the Kerala High Court Justice BN Srikrishna for arbitration.
The deal was for supply of 12 AW-101 helicopters out of which three had already been delivered before the contract was frozen after allegations of kickbacks surfaced in February last year. And the ministry has not taken final decision on the fate of these three choppers, which are parked at New Delhi's Palam Technical area.