India plans to appeal an Italian court order that blocks it from claiming bank guarantees held in Italy related to a cancelled deal for AgustaWestland AW101 helicopters configured for VVIP use.

“The Government of India will be filing an appeal against the order of the Italian Court in Milan in the case relating to encashment of bank guarantees in the contract for the procurement of 12 VVIP/VIP helicopters from AgustaWestland International Ltd.,” says India’s ministry of defence.

“Simultaneously, the government will vigorously pursue all options for encashment of the bank guarantees.”

The value of the guarantees amounts to about €250 million ($348.2 million). The funds are on deposit at Deutsche Bank in Milan.

New Delhi’s announcement follows a 17 August statement from AgustaWestland parent Finmeccanica supporting the court’s decision.

“The decision of the Milan Court upheld almost all the claims made by the two companies (AugustaWestland S.p.A and AgustaWestland International), recognizing the patently abusive behaviour of the Indian Defence Ministry in demanding the payment of the collateral on the grounds of generic allegations in relation to the unspecified non-performance of contractual obligations.”

A total of €51 million is alleged to have been paid as kickbacks by AgustaWestland to secure the order, an accusation strenuously denied by the company.

In August last year, India’s comptroller and auditor general stated that the “entire process of acquisition posed serious questions on accountability and lack of transparency in the finalisation of contract, which need to be addressed”.

Three of the helicopters have already been delivered to the Indian air force and AgustaWestland says it is committed to supporting these aircraft.

Despite New Delhi’s decision to cancel the contract, both it and AgustaWestland have appointed arbitrators to argue the case.