The Delhi High Court has asked the Centre to issue a show cause notice with reasons and relevant material to Defsys Solutions, a defense equipment supplier. The government had suspended its business dealings due to a CBI probe related to the AgustaWestland VVIP helicopter case.
The court, in a petition filed by the company challenging the suspension order, emphasized that the suspension should not have occurred without a show cause notice, solely based on the involvement of defense procurement. It directed that the petitioner be given an opportunity to respond before a reasoned order is issued within three months.
The court clarified that suspension cannot be indefinite and must follow due process for banning or revocation. It stressed that the principles of natural justice should not be bypassed unless national security concerns outweigh fairness, and such a decision should be justified.
Suspension orders must be reviewed every six months, and the duration of any subsequent ban should consider the time already spent in suspension. In this case, the suspension was based on CBI intimation letters regarding an investigation against one of the petitioner’s ex-directors and his companies, without prior notice, reply, or hearing.
The court called for clarity on the nature of allegations and investigation. It asserted that the involvement of defense procurement does not exempt the issuance of a show cause notice.
Existing contracts with the petitioner were ordered to continue as per interim arrangements. The Centre’s suspension order, issued in December 2022, did not affect ongoing contracts.
The petitioner, a regular supplier of defense equipment to the Union of India since 2007, was surprised by the suspension order, which cited an alleged connection to the AgustaWestland case. However, the petitioner claimed no involvement or investigation in that case.
The CBI case relates to a Rs 3,600-crore alleged scam in the purchase of VVIP helicopters, and the suspension order was based on national security considerations and guidelines.
