The AgustaWestland-defence ministry stalemate over supply of 12 VVIP helicopters appeared headed for a twist with the company Wednesday nominating a former Supreme Court judge for arbitration.
However, ministry sources hinted arbitration was not on the cards.
AgustaWestland officials held a meeting with ministry officials to present their case following a show-cause notice to axe the controversial deal to supply helicopters to the Indian Air Force (IAF) for ferrying VVIPs, sources said.
The ministry was represented by Upamanyu Chatterjee who deals with land and air system acquisition in the defence ministry and other officials.
AgustaWestland officials are learnt to have told the ministry officials there was no wrongdoing by it or its parent company Finmeccanica in the deal.
Later, the company in a release said it was nominating Justice B.N. Srikrishna for arbitration.
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"In accordance with the rules of arbitration under the Indian Arbitration and Conciliation Act 1996, AgustaWestland is nominating former Supreme Court judge and former Chief Justice High Court Kerala, Justice B.N. Srikrishna, a well-known jurist of unimpeachable experience and reputation," the company said.
Ministry sources, however, said there was apparently no cause for arbitration. They said the company has been accused of violating the integrity pact.
The ministry Oct 21 issued the final show-cause notice to the firm giving it 21 days to file a reply. The company had asked for more time.
Sources said AgustaWestland was asked to present its case to the ministry Nov 20 and to give a written reply to the show-cause notice by Nov 26 regarding the Rs.3,727-crore contract for supply of VVIP helicopters.
The decision of the ministry on the contract is likely to be known after the company gives its written reply.
The ministry had earlier this month extended by 15 days the deadline set for AgustaWestland, the Britain-based subsidiary of Italian conglomerate Finmeccanica, to reply to the show-cause notice on axing the deal.
Defence Minister A.K. Antony accused the company of violating its contractual obligations. The ministry had frozen the contract following allegations of kickbacks against top officials of the Anglo-Italian firm.
The ministry concluded a contract with AgustaWestland in February 2010 for 12 AW-101 helicopters at a cost of euros 556.262 million (Rs.3,726.96 crore). Three AW-101 helicopters have already been delivered to the IAF.
The helicopters were for the IAF's elite Communication Squadron which ferries the president, the prime minister and other VVIPs. The Comptroller and Auditor General slammed the defence ministry and IAF for deviations from procedures in procurement of the choppers.