In a major blow to India, a French court allowed Cairn Energy to confiscate the assets of the Indian government in Paris. The Arbitration Court had given Cairn the right to recover damages of $1.7 billion. Under this order, a French court has been allowed to confiscate 20 Indian government properties located in the country.
A French court on June 11 ordered Cairn Energy to acquire Indian government properties, mostly flats, and the legal process in this regard was completed on Wednesday evening. An arbitration court in December ordered the Indian government to pay Cairn Energy more than $1.2 billion in interest and fines. The Government of India, however, did not accept this order.
After this, Cairn Energy had appealed in many courts abroad for recovery of dues by confiscating the assets of the Government of India. Courts of five countries had approved the decision of the Tribunal (Permanent Court of Arbitration) in favor of Cairn. These included the courts of America and England.
No communication received from Cairn: Finance Ministry
Meanwhile, the Indian government says that it has not received any notice, order, or communication from any court in France in this regard. The Finance Ministry said in a statement that the government is verifying the facts in this regard. If any such notice is received, then after consultation with the lawyers, appropriate legal steps will be taken keeping in mind the interests of India.
The government has filed an application on 22 March requesting the quashing of the December 2020 order of The Hague Court of Appeal. The CEO and representatives of Cairn Energy had approached the government to resolve the issue. Constructive talks have taken place on this and the government is ready to open talks for a peaceful settlement of the dispute under the law of the land.
What is the matter?
Cairn, a UK company, had introduced IPO in 2007 to get its company listed in India. A year earlier, it had merged several of its units in India with Cairn India. But this did not change their ownership. Cairn had taken permission from the Foreign Investment Promotion Board (FIPB) for this. Seven years later, the tax department in India sent a notice of capital gains tax. It told Cairn in 2014 that it had merged several of its units with Cairn India before the IPO which made it liable for tax.
The tax department took over 10 percent of Cairn India's shares in lieu of arrears of more than 10 thousand crores (Capital Gains Tax). After hearing this case, the Arbitration Court of The Hague in the Netherlands ruled against the Indian government. It directed Cairn to repay this amount along with interest.
