Suspension Of Business Dealings With Company Over AgustaWestland Investigation Not To Affect Ongoing Contracts: Delhi HC

The Delhi High Court in a writ petition filed by Defsys Solutions Pvt. Ltd. challenging the order passed by the Ministry of Defence stated that the suspension of the business dealings with the petitioner i.e., the company over AgustaWestland investigation shall not affect the ongoing contracts.

A Single Bench of Justice Prathiba M. Singh ordered –

"Insofar as the existing contracts are concerned, the Ministry of Defence has already clarified that the ongoing contracts would not be affected. 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."

Senior Advocate Sandeep Sethi appeared on behalf of the petitioner while CGSC Kirtiman Singh appeared for the respondent.

In this case, the petition was filed by the company against the order of the Ministry of Defence, as the respondents suspended the business dealings with the company for a period of one year or until further orders, based on the parameters set in the Guidelines of the Ministry. The grievance of the company i.e., the petitioner was that it has been doing business with the Union of India and has been a regular supplier of various defence equipment and parts, since the year 2007. It has several ongoing contracts with the Ministry and has also submitted its bids in response to various Request for Proposals (RFPs).

It was submitted by the petitioner that the impugned order has come as a complete surprise as it learned of the same from the media. It was further submitted that no notice was issued to the petitioner prior to the said suspension. In addition, it was submitted that the reason given for the respondents' action was an alleged "intimation from the CBI regarding ongoing investigation against the [Petitioner] in relation to the Agusta Westland VVIP Helicopter case." As per the petitioner, the said intimation is also incorrect as it has no connection to the AgustaWestland case.

The counsel for the petitioner argued that the petitioner is not an accused and the order is liable to be stayed. On the other hand, the counsel for the respondents contended before the Court that insofar as the existing contracts of the petitioner which are already ongoing with the Ministry of Defence are concerned, the same would not be affected by the impugned order.

The High Court after hearing both parties, directed –

"Insofar as the contracts which are listed in paragraph 20 of the present petition are concerned, it is submitted by ld. CGSC that a perusal of paragraph 20 itself shows that the same are still in the initial stages. Accordingly, if any of the said contracts mentioned in paragraph 20 of the present petition are likely to be concluded with any third-party, the Petitioner is permitted to approach this Court."

Accordingly, the Court listed the matter on January 17, 2023, for further hearing on the stay application and asked the Centre to file a short affidavit in response by January 10.

Cause Title – Defsys Solutions Private Limited v. Union of India & Anr.

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