Devas Multimedia – a company seeking over $1.2 billion that it had won in international arbitration from India – has joined Cairn Energy in seeking to seize Air India’s assets abroad. 

Calling the flagship airline an “alter ego” of the Indian State and therefore liable for the sovereign’s debts, Devas has filed a petition in New York, asking Air India to pay the amount or forfeit its US property, including planes, cargo-handling equipment and artwork. 

The move may threaten the government’s much-delayed plans to sell the indebted, loss-making carrier and risks denting India’s image as an investment destination. India last year suffered two big losses in international arbitrations – the $3-billion tax dispute with Vodafone Group and the $1.2-billion dispute with Cairn. India has challenged both the rulings. 

Around the time of Cairn’s petition in May, Indian authorities had asked State-run banks to protect their dollar deposits on concern that these could also be at risk of seizure. 

Indian authorities and Devas are engaged in multiple court cases globally, in which Devas seeks the award money, while India wants to liquidate the company and investigate an alleged fraud. 

The dispute goes back to 2011, when a State-owned company, Antrix Corp, annulled an agreement with Devas, citing force majeure. Devas had said in its petition that the annulment had eroded the value of its multi-million dollar investments. An arbitration tribunal in 2020 awarded Devas more than $111 million plus interest. Devas also won $562.5 million in damages plus interest from separate proceedings at the International Chamber of Commerce. Devas has said that Antrix has paid neither of these.  

An Air India spokesman has declined to comment. A representative for the Indian Space Research Organisation (ISRO), which controls Antrix, did not immediately respond to requests for comments.