MUMBAI – Shareholders in Devas Multimedia have sued Air India in an effort to recover sums Devas won in arbitration awards against the Indian government and seize its flagship carrier’s foreign assets, according to a U.S. District Court filing.
The shareholders said Devas and its affiliates were owed more than $1.5 billion by the Indian government.
Describing state-owned Air India as the “alter ego” of India, three Devas investors – Devas (Mauritius) Ltd, Telcom Devas Mauritius Ltd and Devas Employees Mauritius Pvt Ltd – said in the petition to the U.S. District Court for Southern District of New York reviewed by Reuters the airline should be held liable for the country’s debts and obligations.
The move comes after Cairn Energy sued Air India last month to enforce a $1.2 billion arbitration award that it won in a tax dispute against India, further complicating the state’s efforts to sell the loss-making airline.
That case is ongoing.
In 2011, the Indian government cancelled the Indian Space Research Organisation’s (ISRO) contract with Devas to lease satellite space after discovering irregularities in the deal.
That, the shareholders said, hurt the value of their multi-million dollar investments in Devas and led to multiple arbitration awards, including one by the International Chamber of Commerce, that India has not paid.
India has denied the settlement, citing an investigation into potential fraud in transactions leading up to the deal and a bankruptcy court has ordered Devas’s liquidation.
India “has mobilized the investigative, regulatory, taxation and judicial powers of the state in a coordinated scheme to obliterate Devas,” the shareholders said.
It is “urgent and essential” to begin identifying and securing India’s assets, given its “outlandish and extraordinary measures to evade and nullify the unanimous arbitration award for which the country is ultimately liable”, they said.
India’s Finance Ministry declined to comment and Air India did not immediately respond to a request for comment.