Dassault Aviation was ensnared on March 24 in the murky case of a $445 bribe allegedly paid to an Indian air force official at the Bangalore air show last month.
The controversy surfaced ahead of final negotiations in a $12 billion contract to sell 126 warplanes to India in which Dassault is among six contenders.
Indian defense ministry spokesman Sitanshu Kar said the military was probing charges leveled by Dassault's India manager P.V. Rao that an air force officer had demanded 20,000 rupees as a bribe during the Bangalore event. "The complaint is that he (Rao) was asked for a bribe and he paid the money which was photographed," Kar said.
The Press Trust of India said the air force officer demanded cash from Rao for providing a better site for Dassault to exhibit its products at the show.
Dassault was among 675 firms which attended the Bangalore event.
"The court of enquiry is going through the statements," Kar said.
A Dassault spokesman in Paris described Rao as merely a witness. "Rao is not accused but he's a witness for having informed about an attempted shakedown during that airshow," the official added.
Kar said the incident would not affect Dassault's prospects in the warplane deal.
Other companies in the race include pan-European manufacturer Eurofighter, Sweden's Saab, U.S.-based Boeing and Lockheed Martin, and Russian MiG.
Copyright Agence France-Presse, 2011