In a major embarrassment for the India, a French Court has ordered confiscation of as many as 20 Indian government properties in Paris, the capital of France.
A French court allowed Britain’s Cairn Energy Plc to confiscate assets of the Indian government in Paris to recover a portion of 1.7 billion dollars from New Delhi after an international arbitration court overturned a levy of retrospective taxes.
According to reports, the French Court has agreed to freeze Indian government-owned residential properties in central Paris based on Cairn’s application.
An international arbitration court in December 2020 had ordered the Indian government to pay Cairn Energy more than 1.2 billion dollars in interest and fines.
However, Indian government did not accept the international arbitration court’s order.
A three-member international arbitration tribunal in December 2020 reversed imposition of tax on Cairns retrospectively and sought recovery of such shares, forfeiture of dividend and tax refund was ordered.
Following Indian government’s refusal to comply with the international arbitration court’s order, Cairn Energy filed lawsuits in many courts abroad for recovery of dues by confiscating the assets of the Government of India.
Similar lawsuits are likely to be brought in other countries as well, especially in those countries where the Indian government has high value assets.
Cairn has identified Indian assets worth US$70 billion overseas for possible confiscation to receive the award, which now totals US$1.72 billion, including interest and fines.
Meanwhile, the Indian government says that it has not received any notice, order, or communication from any court in France in this regard.
Cairns Energy, a British 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.
Cairn had acquired permission from the Foreign Investment Promotion Board (FIPB) for not changing their ownership.
However, in 2014, the Indian tax department dispatched a notice of capital gains tax. It told Cairn that it 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.