After Voda arbitration, now Cairn expects $1.4 bn in losses from retro tax demand

 British oil explorer Cairn Energy Plc on Tuesday said it is seeking from the Indian government USD 1.4 billion (about Rs 10,300 crore) in losses arising from the expropriation of its investments to enforce a retrospective tax demand.

In its half-yearly earnings statement, the company said it expects an international arbitral tribunal to shortly give a decree on its challenge to the Indian government seeking Rs 10,247 crore in retrospective taxes.

"The main evidentiary hearing of Cairn's claim under the (UK-India Bilateral Investment) Treaty took place in August 2018 in The Hague with a final hearing in December 2018. All formal hearings and submissions have now been made and the tribunal is in the process of drafting its award," the firm said.

The tribunal, it said, has indicated that "it expects to be in a position to issue the award after the end of the summer of 2020, with no significant delay expected as a result of COVID-19."

Cairn said it is seeking "full restitution for losses of more than USD 1.4 billion resulting from the expropriation of its investments in India in 2014; continued attempts to enforce retrospective tax measures; and the failure to treat the company and its investments fairly and equitably."

This is the second most high profile retrospective tax litigation. Last week, an international arbitration tribunal ruled that India's efforts to claim Rs 22,100 crore in past taxes from Vodafone Group were in breach of fair treatment under the bilateral investment protection pact between the south Asian nation and the Netherlands.

Cairn, which gave the country its biggest oil discovery, received a notice from the income tax department in January 2014, raising a preliminary assessment of Rs 10,247 crore tax liability relating to the group reorganisation done in 2006.

Alongside, the department attached the company's near 10 per cent shareholding in its erstwhile subsidiary, Cairn India.

Cairn Energy had in 2010-11 sold Cairn India to Vedanta. Following the merger of Cairn India and Vedanta in April 2017, the UK firm's shareholding in Cairn India was replaced by a shareholding of about 5 per cent in Vedanta issued together with preference shares.

In addition to attaching its shares in Vedanta, the tax department seized dividends totalling Rs 1,140 crore due to it from those shareholdings and set off a Rs 1,590-crore tax refund against the demand.

Cairn Energy in 2015 initiated an international arbitration to challenge retrospective taxation.

Pending the final award, the tax department sold most of Cairn Energy's shares in Vedanta to recover part of the tax demand.

"Based on detailed legal advice, Cairn remains confident that it will be successful in this arbitration and accordingly no provision has been made for any of the tax or penalties assessed by the Indian Income Tax Department," the firm said on Tuesday.

The Treaty, it said, affords strong provisions to enforce a successful award and a decision of the Tribunal under the terms of the Bilateral Investment Treaty is binding on both parties.

"The Group also has legal advice confirming that the maximum amount that could ultimately be recovered from Cairn by the tax department, in excess of the assets already seized, is limited to the value of (the firm's) assets, principally the remaining ordinary shares in Vedanta Ltd with a value of USD 3.3 million at June 30, 2020," it added.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Jallianwala Bagh massacre: 100 years on, Britain has much to apologise for

British Prime Minister Theresa May on Wednesday called the Jallianwala Bagh massacre a "shameful scar" on British-Indian history, but stopped short of a formal apology. As India marks the centenary of the massacre, perhaps it is time Britain crossed that bridge — it has much to apologise for, especially on account of Reginald Dyer.
Dyer wanted to strike terror "throughout the Punjab" when he ordered troops under his command to open fire on a large gathering at Amritsar's Jallianwala Bagh 100 years ago on April 13, 1919. The victims of the massacre were non-violent protesters against British martial law and religious pilgrims visiting the site because of the Baisakhi festival. In 10 minutes, 379 (the official British estimate) men, women and children were killed. The British estimated the number of wounded to be "three times as great as the number of killed".

Dyer's answers about what happened that day, contained in the Disorders Inquiry Committee (1919-1920) report, reveal in graphic detail how he went about his "duty". Dyer admitted that it was "quite possible" that he could have dispersed the gathering at Jallianwala Bagh without firing. But, he believed that the people at the gathering would all come back and "laugh at" him and that he would be making a "fool" of himself. Instead, Dyer immediately opened fire at the people present at the gathering, without giving any warning or asking them to disperse. The Committee's Minority Report said Dyer "continued firing till the ammunition ran short", using 1,650 rounds in all.
Here is what General Dyer said in his evidence:
Q. What reason had you to suppose that if you had ordered the assembly to leave the Bagh they would not have done so without the necessity of your firing, continued firing for a length of time?
A. Yes: I think it quite possible that I could have dispersed them perhaps even without firing.
Q. Why did you not adopt that course?
A. I could disperse them for some time; then they would all come back and laugh at me, and I considered I would be making myself a fool.
Dyer went to the Bagh looking for blood. He had time — hours, in fact — to consider what action to take. The report said that from the time he received information about the planned Jallianwala meeting, Dyer "had four hours to think" before he departed for the site of the massacre. He took another half an hour to reach Jallianwala. "It appears that General Dyer, as soon as he heard about the contemplated meeting, made up his mind to go there with troops and fire," said the report.
Then, in the evidence before the committee, General Dyer said:
Q. When you heard of the contemplated meeting at 12:40 you made up your mind that if the meeting was going to be held you would go and fire?
A. When I heard that they were coming and collecting I did not at first believe that they were coming, but if they were coming to defy my authority, and really to meet after all I had done that morning, I had made up my mind that I would fire immediately in order to save the military situation. The time had come now when we should delay no longer. If I had delayed any longer I was liable for court-martial.
On the morning of April 13, Dyer had issued a proclamation: "No procession of any kind is permitted to parade the streets in the city or any part of the city or outside it at any time.
Any such processions or gatherings of four men will be looked upon as unlawful assembly and will be dispersed by force of arms if necessary."
ALSO READ: Jallianwala Bagh tragedy shameful scar on British Indian history: May
The Minority Report estimated that the people who could have heard Dyer's proclamation would have at most numbered 10,000. This in a city which was then estimated to have a total population of up to 170,000. Dyer, himself, admitted that there might have been "a good many" in the gathering at Jallianwala who had not heard the proclamation.
Regarding the days preceding the massacre, former external affairs minister Natwar Singh has written that after Congress leaders Dr Saifuddin Kitchlew and Dr Satyapal were arrested, in early April, the situation was tense in Amritsar. There was a spontaneous unrest and tempers were running high because of the Rowlatt Act. The Rowlatt Act — officially known as the Anarchical and Revolutionary Crimes Act, 1919 — was passed in March 1919 and allowed the British government to arrest any person suspected of terrorist activities. Under the Act, the government could detain those arrested for up to two years without trial. It also authorised the police to conduct searches without a warrant. Further, the Act placed severe restrictions on the freedom of the press. Punjab, where there were riots and protests against the Act, was put under martial law.
ALSO READ: UK flags financial implications' of Jallianwala Bagh apology
Dyer took machine-guns with him on that fateful day, but he was unable to use them because the armoured cars would not fit into the narrow entrance leading to the Bagh. It did nothing to dull the savagery that followed. The Minority Report shows that Dyer admitted to ordering his troops to aim their fire where the crowds were the thickest.
In the evidence before the committee, General Dyer confirmed this:
Q. From time to time you changed your firing and directed it to places where the crowds were thickest?
A. That is so.
Q. Is that so?
A. Yes.
And, he got away with it. Natwar Singh writes how Dyer received a hero's welcome upon his return to England after he was asked to resign his command. "General Dyer was vigorously defended by — I say this with shame — the Conservative Party, as well as most of the military establishment. He evaded any penalties post inquiry, as his military superiors advised that they could find no fault with his actions, his orders, or his conduct otherwise," Bob Blackman, a member of Parliament from UK's Conservative Party, said recently in a debate tabled by him in the British parliament on the issue of a formal apology for the massacre.
Confirming that many who were killed in Jallianwala Bagh might have been unaware of the proclamation, General Dyer said thus in his evidence before the committee:
Q. On the assumption that there was a crowd of something like 5,000 and more, have you any doubt that many of these people must have been unaware of your proclamation?
A. It was being well issued and news spread very rapidly in places like that under prevailing conditions. At the same time there may have been a good many who had not heard the proclamation.
Of his resoluteness of wreaking a greater havoc if the passage allowed it, General Dyer said this in his evidence before the committee:
Q. Supposing the passage was sufficient to allow the armoured cars to go in would you have opened fire with the machine-guns?
A. I think, probably, yes.
Q. In that case the casualties would have been very much higher?
A. Yes.
Q. And you did not open fire with the machine-guns simply by the accident of the armoured cars not being able to get in?
A. I have answered you. I have said if they had been there the probability is that I would have opened fire with them.
Q. With the machine-guns straight?
A. With the machine-guns.

Youth Congress expels lawyer who appeared for Christian Michel in court

A lawyer who appeared as a counsel for British national Christian Michel, the alleged middleman in the Rs 36 billion AgustaWestland VVIP chopper deal, in court on Wednesday, has been expelled by the Youth Congress.
In a tweet, Krishna Allavaru, Joint Secretary of All India Congress Committee, said, "Aljo K Joseph appeared in his personal capacity. He did not consult the Youth Congress before appearing in the case. IYC does NOT endorse such actions. IYC has removed Aljo Joseph from IYC's Legal Department and expelled him from the party with immediate effect."

The row started after Suresh Nakhua, Spokesperson of the BJP's Mumbai unit, tweeted that Aljo K Joseph, who appeared for the Michel, was national incharge of the legal department of Indian Youth Congress.
"Any guesses who is lawyer for Christian Michel? Mr Aljo K Joseph, National incharge, legal department, Indian Youth Congress (Youth wing of Cong led by out on bail Rahul Gandhi)," he tweeted.
Soon after, In-charge of BJP's national Information and Technology department Amit Malviya tweeted: "Meet the Congressman who is going to defend AgustaWestland 'middleman' Christian Michel... Does it get more obvious than that?."
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Reacting to it, Joseph accepted that he was associated with the Congress but clarified that he appeared in the case in his personal and professional capacity.
"I am an advocate and appeared in my personal capacity. If somebody asks me to appear on his behalf, I have discharged only my duty as a lawyer. This has nothing to do with Congress. My relationship with Congress is separate and my professional relation is separate," Joseph said.