SC junks Centre’s plea to continue suspension of defence supplier Defsys in AgustaWestland case

THe sublime margaret court on mon dismissed the Centre’s invoke seeking to persist in the suspension of business dealings with Defsys Solutions Private Limited, a defence supplier, in connection with the AgustaWestland VVIP chopper case, after the Central Bureau of Investigation (CBI) conceded that it has no fresh material against the company to indicate criminality.A bench comprising Chief Justice of India Surya Kant and justices Dipankar Datta and Joymalya Bagchi refused to interfere with the Delhi High Court’s order quashing a series of suspension orders issued against Defsys. The court made it clear that in the absence of any new or adverse material, there was no justification for continuing punitive action against the firm.During the hearing, senior advocate Mukul Rohatgi, appearing for Defsys, told the court that the Centre had made it a practice to issue fresh suspension orders every six months despite repeated judicial interventions.“They have issued a fresh suspension order again. Every six months, they pass a fresh order even though we were given an award by the Union ministers. There is absolutely no evidence of our receiving any money from AgustaWestland, which itself has been given a clean chit,” Rohatgi submitted. He added that nearly 12 years had elapsed since the scandal surfaced and yet investigations were still inconclusive.Questioning the rationale behind the continued action against Defsys, the bench asked why proceedings should persist against a company when the principal accused -- AgustaWestland, now part of Italian defence major Leonardo SpA -- had already been cleared and permitted to resume business with the Indian government in 2021. “Why should this continue against this company when you have cleared the principal accused – AgustaWestland?” the bench asked.Appearing for the Centre, Additional Solicitor General KM Nataraj conceded that there was no fresh incriminating material against Defsys at this stage. Recording this submission, the court in its order noted: “ASG K M Nataraj submits on instructions, as of now, no fresh and adverse materials have been found against the respondent. Therefore, we see no reason to interfere with the order of the high court.”The bench clarified that authorities would remain at liberty to take action in accordance with law if new material were to emerge in the future. It also observed that, in light of the ruling, Defsys may approach the competent authority in the Ministry of Defence for appropriate relief.The Supreme Court’s decision brings an end to the Centre’s challenge to an August 2025 judgment of the Delhi High Court, which quashed three successive suspension orders dated July 5, 2024, January 1, 2025 and June 24, 2025. The high court had described the repeated suspensions as a “gross abuse of process”, noting that the government continued to rely on identical grounds despite earlier judicial findings against it.In its December hearing, the Supreme Court had expressed serious reservations over the Centre’s conduct, observing that “mere suspicion” or “speculation” could not justify suspending a firm’s business dealings, especially when the government’s own case was that Defsys was only an alleged conduit for bribes paid by AgustaWestland. The bench had remarked that if the allegation was that bribes were routed through Defsys, AgustaWestland ought to have been in a “worse situation”. “What’s sauce for the goose is sauce for the gander. It cannot be speculative,” the court had said.The controversy arises from the ₹3,600-crore AgustaWestland VVIP helicopter deal signed in 2010 during the UPA regime, which was scrapped in 2014 amid allegations of corruption and money laundering. While the CBI and the Enforcement Directorate continue to probe various aspects of the case, AgustaWestland itself was allowed to resume business with India after the suspension against it was withdrawn in November 2021.Defsys, which has supplied defence equipment to the Armed Forces since 2007, was first suspended in December 2022, followed by another suspension in January 2024. Both orders were set aside by the high court in May 2024. Despite this, the Centre continued to issue fresh suspension orders, claiming to rely on “new inputs” from the CBI -- inputs which courts repeatedly found were neither disclosed nor substantiated.In its verdict, the Delhi High Court had criticised the government for passing “identically worded orders” without issuing show-cause notices or granting a meaningful hearing to the company, even after earlier suspensions were quashed. It held that such action demonstrated “utter callousness” and disregard for judicial orders.