Air India has time till mid-July to challenge the lawsuit filed by Britain's Cairn Energy PLC demanding that a US federal court force the airline to pay a $1.26 billion arbitration award it had won against the Indian Government in December last year, sources said.
Air India is controlled by the Indian Government so much that they are "alter egos", Cairn had said in the lawsuit filed with the US District Court for the Southern District of New York. The court should hold the airline company liable for the arbitration award, the company had said.
A three-member international arbitration tribunal that consisted of one judge appointed by India had unanimously in December overturned levy of taxes on Cairn retrospectively and ordered refund of shares sold, dividend confiscated and tax refunds withheld to recover such demand.
The government of India, despite participating in the arbitration proceeding over four years, has not accepted the award and has filed a 'setting aside' petition in a court in The Netherlands - the seat of the arbitration.
With Cairn seeking to recover the award from state-owned entities such as Air India, the government has said it will contest any enforcement. Air India has time till mid-July to file a plea contesting Cairn lawsuit, three sources aware of the matter said.
The airline, which is in the process of being privatised, is likely to argue that it is a separate entity and not the alter ego of the Indian government and cannot be forced to pay for any liability of the government, they said.
Air India spokesperson declined to comment on the story.
Cairn has identified USD 70 billion of Indian assets overseas for potential seizure to collect award, which now totals to USD 1.72 billion after including interest and penalty.
The assets identified range from Air India's planes to vessels belonging to the Shipping Corporation of India, and properties owned by state banks to oil and gas cargoes of PSUs, the sources said.
These assets are across several jurisdictions, they said without giving further details.
