As it braces for an Opposition onslaught in Parliament next week, the government on Friday cracked the whip by moving to scrap the 12 helicopter deal with AgustaWestland.
The Centre also decided to send a team of the Central Bureau of Investigation to Italy [ Images ] to probe the charges that kickbacks to the tune of Rs 362 crore were paid to bag it.
The defence ministry also threatened to take other action as per terms of the contract, an apparent reference to invoking a clause in the contract for recovery of money already paid in the Rs 3,600 crore deal. India [ Images ] has paid more than 30 per cent of the sum.
"The defence ministry issued a formal show-cause notice to AgustaWestland, seeking cancellation of the contract and taking other action as per terms of the contract," ministry spokesman Sitanshu Kar said.
The company was asked to explain the bribery allegations within seven days and respond to why the contract of 2010 should not be cancelled.
The action came after the ministry received a report from Italy, sources said.
The external affairs ministry has also written to the Italian government, seeking information on the issue.
A team of the CBI is also being sent to Italy -- where the CEOs of AgustaWestland and its parent company Finmeccanica have been arrested on charges of bribery.
The defence ministry's notice comes a day after the ministry warned of legal action, including invoking an integrity pact which provides for cancellation of the contract if bribes have been paid.