On June 11, the French court had ordered Cairn Energy’s take-over of Indian government properties, mostly comprising flat; and the legal process got completed on Wednesday evening, news agency PTI reported quoting sources.
Last year in December, an arbitration panel had ordered the Indian government to return $1.2 billion plus interest and penalty to Cairn Energy after reversing a retrospective tax demand.
With Indian government not honouring the award, Cairn Energy has moved in multiple jurisdictions overseas to recover the amount due by seizing Indian government assets.
How the dispute started
The Cairn dispute started 15 years ago, in 2006-2007. Cairn UK had transferred shares of Cairn India Holdings to its Indian counterpart, Cairn India.
Then, tax authorities decided that since Cairn UK had made capital gains, it ought to pay capital gains tax, which the company later refused to pay.
This was followed by several rounds of litigation at the Income-Tax Appellate Tribunal (ITAT) and the Delhi high court.
Cairn lost the case at ITAT; but a case on the valuation of capital gains is still pending before the HC.
In 2011, Cairn Energy sold the majority of its India business, Cairn India, to mining giant Vedanta. Tax authorities then barred it from selling about 10 per cent, citing pending taxation issues.
The payment of dividend by Cairn India to UK’s Cairn Energy was also frozen.
India’s retrospective tax was introduced in 2012 and made any capital gains resulting from the transfer of shares from a foreign entity whose assets were located in India taxable from 1962.
The tax department had raised the issue with Cairn in 2014 and the company responded by taking the matter up with the international arbitration panel the following year.
(With inputs from agencies)