New Delhi: In a setback to India, Britain's Cairn Energy Plc has secured a French court order to seize some 20 government properties in Paris to recover a part of the USD 1.7 billion (approx Rs 12,660 crore) due from New Delhi following an arbitration panel overturning levy of retrospective taxes. The centrally located properties mostly consist of flats. They are valued at more than EUR 20 million and were used by Indian government establishments in France, three people with direct knowledge of the matter said.
The French court, Tribunal judiciaire de Paris, on June 11 agreed to Cairn's application to freeze (through judicial mortgages) residential real estate owned by the Government of India in central Paris, they said adding the legal formalities for the same was completed on Wednesday evening. While Cairn is unlikely to evict the Indian officials residing in those properties, the government cannot sell them after the court order.
Commenting on the development, a Cairn spokesperson said: "Our strong preference remains an agreed, amicable settlement with the Government of India to draw this matter to a close, and to that end we have submitted a detailed series of proposals to them since February this year." "However, in the absence of such a settlement, Cairn must take all necessary legal actions to protect the interests of its international shareholders," the spokesperson told PTI.
Responding to the media reports on the issue, the government has said it has not received any communication from the French Court in this regard. “There have been news reports that Cairn Energy has seized/ frozen State owned property of Government of India in Paris. However, Govt. of India has not received any notice, order or communication, in this regard, from any French Court,” the Finance Ministry said in a statement on Thursday. Government is trying to ascertain the facts, and whenever such an order is received, appropriate legal remedies will be taken, in consultation with its Counsels, to protect the interests of India, the statement added.
Origin of the issue
Cairn Energy Plc, a 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. Cairn Energy Plc transferred all of its India assets, which were until then held by nine subsidiaries in various countries, to the newly-formed Cairn India Inc and listed it on the Bombay Stock Exchange (BSE) in 2006.
Five years after this rejig, the government passed a retroactive tax law and billed Cairn Rs 10,247 crore plus interest and penalty. According to tax authorities, Cairn Energy had made capital gains worth Rs 24,500 crores in the process of the reorganization. The Government expropriated and liquidated Cairn's remaining shares in the Indian entity, seized dividends, and withheld tax refunds to recover a part of the tax demand.