(Refiles to restore AgustaWestland legal team details removed in error)
MILAN Jan 11 An Italian judge has blocked demands by India to recover around 300 million euros ($410 million) in bank guarantees from defence group Finmeccanica in a dispute over a scrapped helicopter deal, two people with direct knowledge of the matter told Reuters.
India's demands came after the New Delhi government last week cancelled a 560-million-euro deal with Finmeccanica unit AgustaWestland for 12 AW101 helicopters over what it termed a breach of integrity relating to alleged corruption.
The temporary measure in favour of AgustaWestland, which is represented by the Italian litigation team of Cleary Gottlieb Steen & Hamilton, will be discussed at a hearing in Milan in mid-February.
It relates to guarantees with Deutsche Bank SpA, Deutsche Bank AG, Intesa Sanpaolo and the State Bank of India, one of the sources said on Saturday, asking not to be named because the legal proceedings are being conducted behind closed doors.
"There will be the hearing in 40 days, meanwhile the tribunal has blocked everything," the source said.
Finmeccanica declined to comment, while the Indian government and the banks did not respond to immediate requests for comment.
Indian defence officials have said AgustaWestland had received just over 43 percent of the deal's value, a sum that the Anglo-Italian firm matched with bank guarantees to be reclaimed after the helicopters were delivered.
The overall value of the multi-currency guarantee scheme is 300 million euros but it was not clear whether the State Bank of India had already paid back to the Indian government around 30 million euros, a source close to the matter said on Saturday.
India froze payments for the contract after Finmeccanica's then Chariman Giuseppe Orsi was arrested in February for allegedly paying bribes to secure the deal, embarrassing the New Delhi government before parliamentary elections due by May 2014.
Orsi and former AgustaWestland head Bruno Spagnolini, who have both denied for allegations they paid bribes to middlemen to secure the deal, are being tried in the northern Italian city of Busto Arisizio.
The separate dispute over the contract, signed in 2010 by AgustaWestland International Ltd, the British unit of the helicopter company, will likely be a lengthy process.
New Delhi has agreed to AgustaWestland's calls for arbitration, which will take place in India and could take months or even years to complete. ($1 = 0.7314 euros) (Reporting by Danilo Masoni and Lisa Jucca; additional reporting by Shyamantha Asokan in New Delhi; Editing by Toby Chopra)