Air India bidders to be offered indemnity over claims arising from Cairn tax dispute: Report

Bidders of Air India would be offered indemnity over claims arising from the state-run carrier's tax dispute with British oil major Cairn Energy, a report said on September 1.

A bureaucratic group has cleared the final sale purchase agreement which proposes to absolve bidders of Air India from any claims being made by Cairn, sources told Bloomberg.

The proposal could be approved by a group of ministers this week, the report said, citing people who could not be named since the matter is confidential.

Moneycontrol could not independently verify the claim. The finance ministry was yet to react to the news report.

Also Read | Financial bids for Air India likely to be received by September 15: Minister

The development comes days after the Centre reversed the 2012 retrospective taxation law, which was at the heart of the dispute with Cairn Energy.

The British company in December 2020 won an international arbitration against the Indian government over the retro tax law, seeking $1.2 billion plus interest and costs.

Air India was drawn into the dispute after Cairn told a US court that the carrier is an “an alter ego” of the Indian government, and its assets in America could be seized to recover the arbitration amount.

Also read: Explained | Why has Cairn Energy sued Air India?

Although the Centre has refrained from accepting the verdict, the finance ministry has indicated that it is open to an amicable solution.

Following the passage of taxation amendment bill on August 6 that which repealed the 2012 retro tax law, Revenue Secretary Tarun Bajaj said Cairn must "stop the arbitration process".

"We are going to provide a settlement to the companies under that legislative framework and not as a result of any arbitration. So, that is the first point that this legislation has nothing to do with the arbitration order. Our stand remains very clear that taxation is not a matter to be agitated under Bilateral Investment Treaties," Bajaj said.