Umamageswari Maruthappan
The recent case in which the Cairn Energy of the U. K. won against the Indian Government has placed our country in a situation where it is required to take a decision that is epoch-making.
The total dues against the British Company roughly stands around $1.4 Billion which is a hefty burden especially for a country, the economy of which has already sunk due to the on-going covid-19 pandemic.
However, experts from the area have come up with some strategies which our country could adopt while repaying the debt. One such plan is to have recourse to some of the government-owned gas or oil fields that have been surrendered to it by the operators on various grounds.
Ratna and R-Series oil and gas field in the Arabian Sea, Barmer oilfield in Rajasthan and Vedanta Ltd. are some of the available options for the government to pay its due.
Albeit appealing to the Supreme Court, it is necessary for India to respect the arbitration award because there is little chance for the appeal to be potent.
Furthermore, non-observance of the award would ultimately empower the British Company to seize India’s properties in the foreign countries which could cause heavy losses for an already shrinking economy.
So, by all means, it is efficient for our country to give oil fields in lieu of the dues so that it can also save its funds and assets as well as compensate the U. K. firm.
Cairn Energy had moved the international arbitration tribunal after the Income Tax Department of India had demanded retrospective tax of Rs. 10,247 Crore in March 2015. Amid pending case, the Department went ahead to sell the company’s shares in lieu of the tax amount.
On 23rd December 2020, the international arbitration tribunal passed its verdict in favour of Cairn and the three-member tribunal directed the Indian Government to pay the Company “for the total harm suffered” along with interest and arbitration costs.
This is not the first time that an award was ordered against the Indian Government. In September, Telecom giant Vodafone had won an arbitration award against India’s tax demand of Rs 22,100 crore.
Finance Minister Nirmala Sitharaman is presenting the Budget Speech on 1st February 2021. It is expected that the Budget plan shall include provisions regarding the payment of these dues and a decision on retrospective taxation there withal.
