Defence equipment supplier challenges business suspension order, HC directs Defence ministry to file affidavit

New Delhi [India], December 27 : The Delhi High Court recently directed the Ministry of Defence (MOD) to file an affidavit on a plea of a firm, Defsys, challenging the order of suspension of business. The firm is engaged in supplying defence equipment and parts since 2007.
The MOD on December 9, 2022, suspended the business with the firm in view of an intimation received from the Central Bureau of Investigation (CBI) regarding an alleged probe against the petitioner in the Augusta Westland VVIP helicopter case. The petitioner firm sought a stay of the order of December 9 passed by the Ministry.
Justice Prathiba M Singh perused the original files, including the intimation received from the CBI by the Ministry of Defence and directed, "let a short affidavit be filed by January 10, 2023 in response to the stay application".
Meanwhile, the court directed that in view of the statement of the Defence Ministry, the ongoing contracts would not be affected by the said order.
M/s Defsys Solutions Pvt Ltd moved a petition challenging the impugned order dated December 9, passed by the Ministry of Defence.
The petition said by the order, the MOD suspended business dealings with the petitioner, for a period of one year or until further orders, based on the parameters set forth in the Guidelines of the Ministry of Defence for Penalties in Business Dealing.
The grievance of the petitioner is that it has been doing business with the central government and has been supplying various defence equipment and parts, since the year 2007.
The petitioner has several ongoing contracts with the MOD and has also submitted
its bids in response to the various Request for Proposal (RFPs), the petitioner submitted.
The petitioner submitted that no notice was issued prior to the said suspension.
The petitioner submitted that the CBI intimation also seemed to be incorrect as he has no connection to the Agusta Westland case.
Senior Advocate Sandeep Sethi, the counsel for the petitioner, submitted that he was neither an accused, nor has it ever been called for an investigation in the said case.
Advocate Sethi said the list of ongoing contracts has been submitted to Central Government Standing Counsel (CGSC). In addition, the bankers have also put on hold and suspended all remittances and other dealings in respect of the Petitioner, in view of the impugned December 9 order.
On the other hand, CGSC Kirtiman Singh, under the instructions of Director (Air-II), Ministry of Defence, submitted that 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 December 9 order.
Justice Singh queried about the basis of intimation from the CBI as the suspension order merely mentioned the intimation from the CBI.
The CGSC submitted that the same would be placed on record by way of an affidavit within a week.
The court also took on the record the submission that the ongoing contract would not be affected by the order under challenge.
In the meantime, the court directed till the next date of hearing, insofar as the existing contracts concerned would not be affected.
In view of the statement made by the MOD, the December 9 order would not take effect insofar as it relates to existing ongoing contracts including offset contracts, executed prior to December 9, 2022, the court said.
The court further directed, bankers of the petitioners shall not, in any manner, cause impediments in his day-to-day functioning in relation to the existing contracts.