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Tax dispute between Government of India and Cairn Energy intensifies, company starts legal process to seize Air India assets

Britain’s Cairn Energy has filed a lawsuit in a US court. If the company’s favor is accepted in this lawsuit, then it can get the right to seize the foreign assets of Air India. These include other assets including the company’s aircraft.

An international dispute settlement tribunal upheld the company’s side in the tax dispute case of Cairn Energy and the Government of India. The tribunal had directed the Government of India to return a total of $ 1.72 billion (more than Rs 12,000 crore at the current price) to Cairn Energy. However, the government has appealed against this decision, considering it to interfere with its sovereign rights.

Three sources involved with the development said that Cairn filed a petition in New York’s southern district court on May 14 seeking permission to seize Air India’s assets. According to sources, the Government of India has also appointed a team of advocates in the court to present its case in this matter.

Cairn argues that Air India is a wholly Indian government company and it is not wrong to legally call it India’s property. On one hand, Cairn says that it is taking necessary steps to protect the interests of its shareholders, as the Indian government is not implementing the decision of the International Dispute Settlement Tribunal.
At the same time, the Government of India says that it has the right to protect its interests against any such illegal decision. Sources say that the Government of India or any of its government companies has not received any notice regarding this yet.

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