"The government has put BEML CMD V.R.S. Natarajan under suspension following a recommendation by the CBI (Central Bureau of Investigation) that he should be kept away from the post to ensure fair investigation," defence ministry spokesperson Sitanshu Kar said in New Delhi.
The charge of chairman cum managing director has been given to P. Dwarkanath, the senior most functional director in BEML.
The CBI is currently investigating various charges against Natarajan, particularly after former army chief Gen. V.K. Singh openly alleged that an attempt was made to bribe him to clear a supply order for Tatra trucks from BEML.
Natarajan claimed that he was innocent and would come clean.
"I respect the decision (suspension) of the government. I will come out clean in the case and prove I have done no wrong," a crest-fallen Natarajan told reporters in Bangalore after handing over charge to Dwarkanathhere.
Declining to comment on the controversial truck deal, Natarajan said he would cooperate with the CBI and explain the company's stand on the deal during the investigation.
"As the investigation is on, I will not be able to tell the media as the case is sub-judice," said before leaving the company's corporate office in a huff.
As the senior most functional director, Dwarakanath is head of the company's rail and metro coaches division here.
The probe agency told the defence ministry that it would not be able to conduct a fair investigation as long as Natarajan was at the helm since serious charges were levelled against him in the deal.
The CBI registered an FIR (first information report) to probe the deal between BEML and Tatra after Defence Minister A.K. Antony ordered an inquiry into the bribe offer allegedly by former army officer, Lt.Gen. (retd.) Tejinder Singh.
Natarajan's suspension follows a show-cause notice by the defence ministry on him for slapping a legal notice against the ex-army chief June 1, threatening to file a defamation case if he did not apologise for making derogatory remarks against the company and terming the trucks supplied by BEML "sub-standard".
Taking exception to the company serving a legal notice to Gen. (retd.) Singh without its permission, the defence ministry June 6 sought an explanation from Natarajan.
"The defence ministry categorically denies giving permission to the BEML chairman to serve a legal notice for filing a defamation suit against General V.K. Singh," Kar said in a statement last week.
The ministry also asked Natarajan to explain why he made such a statement to the media June 1 in Bangalore after announcing the company's financial results for fiscal 2011-12.
Natarajanhas been the longest serving chairman of the defence behemoth, taking charge adecade ago (Dec 1, 2002) and is set to retire Sep 30 this year.