Moving ahead towards cancelling the controversial chopper deal, the defence ministry on Wednesday said it has issued a final show cause notice to AgustaWestland for "violating" the terms of the Rs 3,600 crore contract for supplying 12 VVIP choppers to the Air Force.
The notice issued on October 21 has asked the Anglo Italian firm to explain why "all or any action as prescribed, including cancellation of the contract, should not be taken against them for violating the terms of the pre-integrity pact and the contract for procurement of 12 VVIP choppers."
The firm has been given 21 days to file its reply to the final warning, Defence Ministry sources said.
The Attorney General has already given his opinion that there was breach of contractual obligations and the integrity pact by the firm, they said.
Asked about the arbitration process invoked by AgustaWestland, they said these proceedings are not applicable on the breach of pre-contract integrity pact of the defence ministry.
Last week, the company said it has invoked arbitration proceedings against the defence ministry for "unilaterally" freezing the deal.
The law ministry has also told the defence ministry that the arbitration proceedings initiated by AgustaWestland are also not binding on it.
The government has already frozen the contract for supply of 12 AW-101 VVIP choppers to the IAF after allegations that Rs 360 crore were paid as bribe in which two top officials of he company were accused.
IAF has already received three helicopters and delivery of the rest has been put on hold.
Soon after the arrest of the firm's former CEO, Guiseppe Orsi, in Italy in connection with the case, Defence Minister A K Antony had suspended the payments to be made to it along with the delivery it was due to make to IAF for the remaining nine choppers.