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Arbitration case: Cairn digs in heels, PSBs say prepared for legal battle Deposits are customers’ money and not govt assets, hence can’t be attached: Lenders
Indian public sector banks with substantial presence abroad are legally ready to mount a challenge abroad to counter any efforts by Cairn Energy to attach their assets. The development comes on the back of Cairn Energy saying on Tuesday that it was taking all necessary action to access the $1.7 billion it was awarded by the international arbitration tribunal after overturning the retroactive tax demand slapped by the Indian government. Given that deposits with overseas branches is public money and not a sovereign asset, attaching funds in such accounts is beyond
the realm of rights of the said company, said people in the know. Senior PSB chiefs said that the government had warned them of the possibility of Cairn attaching funds, and had asked the lenders to keep them (the government) informed. The government has nominated a person for prompt and co-ordinated response. The banks’ stand is clear — deposits money is not government money. It is customers’ money. So how can they attach it? In case something happens, banks will fight it legally, said the PSB chief cited above. Besides legal advice, banks are in touch with Indian embassies and high commissions across the world to pursue matters. Legal forums abroad will hear the banks’ side too, before giving a ruling on any attachment plea (by Cairn Energy). The Scottish firm had invested in the oil and gas sector in India in 1994 and a decade later it made a huge oil discovery in Rajasthan…Read More