A Defence spokesman while confirming, said the Government had terminated with immediate effect, the Agreement that was signed with M/s AgustaWestLand International Limited (AWIL) on February 8, 2010, for supply of 12 VVIP/VIP helicopters, on grounds of breach of the Pre-contract Integrity Pact (PCIP) and the Agreement by AWIL.
Of the 12 helicopters, the AgustaWestland had already supplied three.
The chopper company was reported to have paid Rs 300 crore as bribe for securing the Rs 3600 cr contract, and therefore, violated the Integrity Pact which barred payment of any bribes for securing the deal.
However, AgustaWestland categorically denied the charges of any wrong-doing.
Dismissing the arguments by AgustaWestland, the deal was cancelled after the Defence Ministry invoked the Integrity Pact signed with the Anglo-Italian helicopter company.
The decision to cancel the deal was taken after a meeting between Prime Minister Manmohan Singh and Defence Minister AK Antony.
The Defence Ministry had frozen payment for the three helicopters already supplied, which forced the company to resort to arbitration.
The helicopter company was issued the final showcause notice for cancellation of the deal on October 21, to be replied to till November 11.
The AW-101 helicopters, for which about 45 per cent of the total contract value had already been paid, were meant to ferry the President, the Prime Minister and other VVIPs.
The deal was cancelled after the Defence Ministry held detailed consultations with the Law Ministry and Attorney General, pointing out that AgustaWestland had violated the Integrity Pact.
The spokesman said based on the opinion received earlier from Attorney General GE Vahanwati, it had been the view of the Government that integrity-related issues were not subject to arbitration.
However, AWIL had since pressed for arbitration and appointed an arbitrator from its side.
In view of this, the Defence Ministry sought afresh the opinion of the Attorney General.
With a view to safeguarding the interests of Government, the Defence Ministry had nominated Justice B P Jeevan Reddy as its arbitrator.