Shivangi Prakash-
Published On : September 26, 2021 at 15:45 IST
Cairn Energy’s pursuit of Air India’s US assets for the recovery of a USD 1.2 billion arbitral judgment has been stayed by a New York Court to allow the British Corporation to seek an agreement with the Indian Government on the long-running issue.
According to Court documents, the Tax Suit has been postponed until November 18.
This comes after Cairn Energy and Air India jointly asked the Court to halt further proceedings in light of the new government’s decision to repeal the country’s retrospective taxes laws.
The government’s tax demand of Rs 10,247 crore against Cairn will be withdrawn as a result of the new law.
According to sources familiar with the situation, the Finance Ministry is drafting guidelines that will result in the withdrawal of the Retrospective Cax claim against Cairn and 16 other firms, including the Vodafone Group of the United Kingdom.
Companies must withdraw all lawsuits against the Government in exchange for a reimbursement of any money collected to force the retrospective tax demand under these guidelines.
The Government must return approximately Rs 8,100 crore in total, with Rs 7,900 crore payable solely to Cairn.
When the Government failed to honour the international arbitration ruling and refund USD 1.2 billion-plus interest and penalties, the British corporation tried to take over Air India assets.
Cairn and Air India in a joint request to US District Judge Paul Gardephe on September 13 stated that a stay on proceedings would give them “Additional time to evaluate the effects and implications” of legislation that repealed the retroactive tax.
Cairn would abandon cases threatening Court-ordered confiscation of Indian Government property abroad in exchange for Rs 7,900 crore.
One of the complaints was filed in May against state-owned Air India Ltd, which Cairn has described as the Indian Government’s alter ego.
Cairn and Air India had requested the Court, “Stay any further proceedings in this matter through October 31, 2021, and reschedule the initial pretrial conference and, respectively, the deadline for the parties to submit their Joint Pretrial Letter and Proposed Case Management Plan, for new dates in November 2021.”