Image Credit: indiatoday.in
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The state-run Air India’s overseas assets are at risk as Devas Multimedia Pvt. Ltd seeks to seize the airline’s assets in the US in connection with an arbitration case worth $1.2 billion. The company joins Cairn Energy Plc which is already targetting Air India and other Indian public sector units(PSUs) after India lost a $1.2 billion case against it. Among other things, the move threatens the efforts made by the government of India to privatise Air India.
Devas Multimedia Pvt. Ltd has filed a petition in New York seeking Air India to pay up the arbitration amount failing which it would have to give away its properties in the US like planes, cargo and artwork.
The dispute between the government and Devas started in 2011 when Antrix Corporation, a PSU under the space department, decide to declare invalid an agreement signed with Devas due to ‘Force Majeure’. Complaining that the actions of Antrix had devalued its investments to the tune of millions of dollars, Devas filed a petition. The company won the case and Antrix was ordered to pay up an amount greater than $11 million in addition to interest. Devas also won $562.5 million from a hearing at the International Chamber of Commerce.
However, Indian authorities have refused to abide by the settlement citing that they had discovered a fraud during the series of transactions that caused the dispute. Subsequently, the Supreme Court put a hold on the $1.2 billion arbitration case. Last month, in a victory for the Indian government, a company court ordered the closure of Devas. The case was appealed at the higher appellate court where it remains pending.
The actions of Cairn and Devas would add further complications to the Modi government’s plan to privatise the heavily indebted Air India. Civil Aviation Minister Hardeep Puri had said earlier this month that the disinvestment process of Air India would be completed by the end of the year.