The lawsuits filed by Cairn Energy and Devas Multimedia in the US are not likely to have any impact on the disinvestment process of Air India, said Minister of State for Civil Aviation VK Singh said on Thursday. He said that Air India is a corporate entity with its own management and board and hence won’t be impacted. Cairn and Devas are seeking $1.72 billion and $1.2 billion respectively from India, which they won in international arbitrations.
"Cairn Energy and Devas Multimedia have filed lawsuits in the United States District Court for Southern District of New York seeking declaratory and money judgement against Air India Limited as an alter ego of the Republic of India," Singh said in a written reply to a question in Lok Sabha, adding that there is not going to be any impact on the disinvestment process.
"The case is being defended by Air India Limited. The company has appointed lawyers to defend its interests," Singh said.
In another reply in Lok Sabha, Singh said that bids from qualified bidders are likely to be received by September 15. The disinvestment process for Air India was started in January last year.
In May this year, Cairn Energy brought a lawsuit in the US District Court for Southern District of New York, and said that Air India is controlled by the Indian government so much that they are ‘alter egos’ and hence the airline should be liable for the arbitration award.
The Scottish firm invested in the oil and gas sector in India in 1994 and a decade later it made a huge oil discovery in Rajasthan. In 2006 it listed its Indian assets on the BSE. Five years after that the government passed a retroactive tax law and billed Cairn Rs 10,247 crore plus interest and penalty for the reorganisation tied to the flotation.
Cairn’s remaining shares in the Indian entity were liquidated, dividends seized, and tax refunds withheld to recover part of the amount. Cairn challenged the move before an arbitration tribunal in The Hague, which awarded it $1.2 billion plus costs and interest, amounting to $1.72 billion.
On October 27 last year, a US court had asked Antrix Corporation, the commercial arm of Indian Space Research Organisation (ISRO), to pay compensation of $1.2 billion to a Bengaluru-based startup, Devas Multimedia, for cancelling a satellite deal in 2005.
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