"Will Defend," Say Government Sources Over Cairn's Air India Takeover Bid

Cairn has reportedly sued Air India in a New York court to enforce a $1.2 billion arbitration award that it won against the government in a tax dispute.

The Indian government is ready to defend any attempt by Cairn Energy to take over its assets including Air India, sources said on Sunday, following reports that the British firm had sued India's flagship carrier to enforce a $1.2 billion arbitration award that it won in a tax dispute. "The government is yet to receive formal notice of any such claims and hence these reports are purely in the realm of speculation. The government is well aware of its legal rights and will defend its case in courts should such proceedings materialise," government sources said. "It is equally confident of winning its appeal in The Hague. Cairn did not pay a single rupee tax anywhere in the world in respect of the impugned transactions. Cairn had also lost its appeal before the Income-Tax Tribunal," they added. The response came after news agency Reuters reported that Cairn filed a lawsuit on Friday in the US District Court for the Southern District of New York, seeking to make Air India liable for the judgment that was awarded to Cairn. The lawsuit argued that the carrier as a state-owned company is "legally indistinct from the state itself".