The Supreme Court on Tuesday questioned the Union government for continuing to suspend business dealings with Defsys Solutions Private Limited, a defence supplier, over its alleged role in the AgustaWestland VVIP chopper scam, even though the suspension imposed on AgustaWestland (now part of Italian firm Leonardo SpA) itself — the principal accused in the case, was revoked in 2021.
A bench comprising Chief Justice of India Surya Kant and Justice Joymalya Bagchi expressed its reservations about the rationale behind the Centre’s repeated suspension orders against Defsys, observing that “mere suspicion” or “speculation” could not form the basis for such punitive action, particularly when the main accused company had already been cleared by the government.
“If the principal offender is exonerated and the proceedings against them have been quashed, what can be the rationale for continuing the suspension order against a firm that you say was used as a conduit?” the bench asked Additional Solicitor General KM Nataraj, who appeared for the Centre. The court added that if the government indeed had material against Defsys, it ought to have had even stronger evidence against AgustaWestland, which had nevertheless been allowed to resume business.
“What’s sauce for the goose is sauce for the gander. It cannot be speculative,” remarked the bench, underlining that AgustaWestland should have been in a “worse situation” if the allegation was that bribes were paid through Defsys as a conduit.
The hearing arose out of the Centre’s challenge to an August 28 Delhi High Court judgment that had quashed a series of suspension orders issued against Defsys, describing the government’s conduct as a “gross abuse of process”. The high court had struck down suspension orders dated July 5, 2024, January 1, 2025, and June 24, 2025, each of which imposed a six-month ban on the company’s business dealings with the government.
The AgustaWestland case pertains to allegations of corruption and money laundering in the 2010 contract for the purchase of 12 VVIP helicopters during the UPA regime, a deal that was eventually scrapped in 2014. The case has seen multiple developments in recent years, including bail being granted to alleged middleman Christian Michel in both the CBI and ED cases, though he continues to remain in custody over passport-related issues.
Both CBI and ED have filed multiple charge sheets in the AgustaWestland scam. In both the cases, listed before the Delhi’s Rouse Avenue Court, arguments on the framing of charges, is yet to commence.
Defsys, which has supplied defence equipment to the Armed Forces since 2007, was first suspended for a year in December 2022, followed by another suspension in January 2024. Both those orders were set aside by the high court in May last year. Despite this, the Centre continued to issue fresh suspension orders, relying on what it described as “new inputs” from the Central Bureau of Investigation in the ongoing probe into the AgustaWestland scam.
Before the Supreme Court, ASG Nataraj argued that the high court erred in interfering with the suspension, stressing the sensitive nature of defence procurement and stating that the CBI investigation against Defsys and other entities was still underway. He also submitted that other companies were involved in the alleged wrongdoing.
The bench, however, remained unconvinced. It repeatedly pointed out that the Centre’s own case was that AgustaWestland used Defsys as a conduit for the alleged payment of bribes, and yet AgustaWestland has been cleared. “How can you proceed against Defsys when you have cleared Agusta?” asked the court, noting that the government’s last suspension order dated June 2025 was still premised on a pending investigation.
The court suggested that the Centre ask CBI to conclude the investigation expeditiously and made it clear that if any incriminating material emerged, the government was free to issue a fresh notice in accordance with law. “As of now, there is just suspicion of paying the bribe money as a conduit. You cannot make out a case which is not there in the papers or even in your show-cause notice,” the bench observed.
Senior advocate Neeraj Kishan Kaul, appearing for Defsys, told the court that the company had been subjected to multiple show-cause notices since 2021, all of which had been quashed by courts. He pointed out that Defsys has not been named in any CBI chargesheet and that judicial scrutiny of the government’s own files have revealed the absence of any fresh or concrete material against the firm.
The bench acknowledged the concerns of national security but clarified that this could not justify arbitrary action. In its order, the court noted that the latest suspension order issued in June 2025 expressly stated that the CBI investigation was still pending. It recorded that the Delhi High Court interfered with the suspension precisely because this was based on “mere suspicion” rather than substantive evidence. Granting the Centre three weeks’ time, the bench directed ASG Nataraj to place before it, in a sealed cover, the outcome or status of the CBI investigation to justify the continued suspension of Defsys.
The Delhi High Court, in its verdict, had come down heavily on the Centre for repeatedly suspending Defsys on “identically worded orders” despite earlier judgments in the company’s favour. The high court found that the government had failed to disclose what the so-called “new inputs” from CBI actually were, even in broad terms, thereby denying the company a meaningful opportunity to respond.
The high court also underscored that the suspension against AgustaWestland, the prime accused in the ₹3,600-crore VVIP chopper deal, was withdrawn in November 2021. It found that successive suspension orders against Defsys, passed without issuing show-cause notices or granting a hearing, amounted to an abuse of power and demonstrated “utter callousness” and disregard for judicial orders.