Supreme Court Seeks CBI's Report On Defence Company's Alleged Links To AgustaWestland

The Supreme Court today sought a response regarding the CBI investigation carried out on the alleged involvement of Defsys Solution Limited, a leading defence equipment manufacturer, in the AgustaWestland Chopper Scam.

The bench of CJI Surya Kant and Justice Joymalya Bagchi was hearing a plea filed by the Union challenging the decision of the Delhi High Court, which set aside suspension orders against the respondent company, Defsys Solution Limited, a leading defence equipment manufacturer with which the government was involved in other contracts.

Additional Solicitor General KM Natraj, appearing for the Union, stressed that the suspension was done based on the ongoing CBI investigation. He added that the Courts should generally refrain from interfering in matters related to defence. He referred to the latest letter issued by the CBI.

The CJI pointed out paragraph 45 of the impugned order, which said that the latest suspension order is based on a letter by the CBI. It reads :

"The learned counsel for the respondent (Union) submits that the same is based on a letter received from the CBI which states that “material/evidence collected so far brings our apprehension that M/s Defsys Solution Pvt. Ltd. is involved in the suspicious transaction, which surfaced in the money trail of kickbacks/bribe transferred by the AgustaWestland Company…. The further investigation with regard to role of M/s Defsys Solutions Pvt. Ltd. is continuing, thus in view as above the suspension of M/s Defsys Solutions Pvt. Ltd. may be extended."

The CJI said that "as of now, there is only suspicion of the respondent being a conduit for the primary accused AgustaWestland."

The ASG added that there are multiple companies involved with which the respondent traded.

Justice Bagchi interjected, asking that, before the High Court, it was observed that the suspension against AugustaWestland had been withdrawn; then, why should the suspension continue for the respondent? "If Agusta gets a reprieve, then why action against this respondent? If the principal is exonerated, how can they be proceeded against?"Justice Bagchi asked.

The ASG replied that there are multiple transactions involving companies from other countries. He added, "I will get inputs from the CBI."

The CJI asked the Union to furnish any material against the respondent since the investigation has been going on since June.

" The information which you have been able to gather from June to December, because in June, whatever was, was only suspicion; if you have been able to gather anything you please show us."

Sr Advocate Neeraj Kishan Kaul, appearing for the respondent company, argued that for the past 4 years, the Union has only been saying there is 'new material' to show involvement of the respondent, but has failed to furnish any such material. He added,

"It's an aatma nirbhar programme, my only dealings are with the Government, I do not produce for anyone else. Neither I am an accused, nor am I named, neither is there an iota of allegation on record to show that I am in any way involved."

He added that the respondent's entire business has been brought to a standstill because of the persistent suspension orders.

The bench passed the following order:

"Ld ASG seeks and granted 3 weeks' time to produce, additional affidavit, with the outcome of the investigation under the CBI from June 2025 till the status report is filed."

What Happened Before The Delhi High Court?

Before the Delhi High Court, the Respondent had challenged the suspension order dated September 5, 2024 issued by the Union of India through which the petitioner's business dealings with the Union were suspended for 6 months, with retrospective effect, that is, from 09.06.2024.

The Respondent had contended that the impugned order was issued without any show cause notice; without giving an opportunity to be heard to the petitioner No. 1; and merely on the basis of the vague use of the term “new inputs” from CBI in the ongoing investigation of the respondent company in the AgustaWestland case.

The Respondent had also challenged the vires of "Guidelines of the Ministry of Defence for Penalties in Business Dealings with Entities” along with Paragraphs 8 and 9 of the “Procedure for Penal Action under the Guidelines of the Ministry of Defence for Penalties in Business Dealings with Entities” promulgated by the Union under Rule 142 of the General Financial Rules 2017

Notably, during the pendency of the petition, the Union extended the suspension by order dated January 1, 2025 and then by order dated June 24, 2025.

The High Court set aside the impugned suspension orders against the Respondent, noting that the suspension orders were passed without giving a hearing to the Respondent, and the fact that the Respondent is still not made an accused in the Augusta Westland Case, and that the suspension order against AugustaWestland itself was withdrawn in November 2021.

Further, it held that "there is no mention of any evidence with the respondent or with the CBI against the petitioner No.1 involving the petitioner no.1 with the AgustaWestland Case apart from an apprehension' that it may be so involved."

Notably, in December 2023, the division bench of the High Court comprising Justices Yogesh Khanna and Tushar Rao Gedela held that the previous suspension orders against the Respondent did not follow principles of natural justice. It was held that no suspension can continue indefinitely without a show cause notice, especially because even at the time of review, principles of fairness/natural justice are not to be adhered to.

Case Details: UNION OF INDIA Versus DEFSYS SOLUTIONS PRIVATE LIMITED| SLP(C) No. 035565 - / 2025