Vedanta to appeal against Sebi order to pay ₹77.62 crore to Cairn

Vedanta Ltd on Wednesday said it will appeal against Sebi’s order to pay 77.6 crore penalty to Scottish explorer Cairn UK Holdings Ltd for delay in paying dividends to its erstwhile shareholder, news agency PTI reported. 

Vedanta said the Scottish firm had given up its right to claim interest when it settled a retrospective tax demand with the government.

“Vedanta Ltd will appeal the Sebi order before the appropriate forum,” the mining conglomerate said in a statement.

Earlier on Tuesday, the Securities and Exchange Board of India (Sebi) had ordered Vedanta to pay 77.62 crore to Scottish explorer Cairn. The market regulator also barred the mining firm’s entire board, including Billionaire Anil Agarwal’s brother Navin and daughter Priya, from accessing the capital market for the same.

The market regulator, in its order, said Vedanta violated the law by withholding dividends that should have been paid to the UK firm between January 2014 and June 2017.

However, Vedanta said there was “absolutely no intent” on its part to withhold the dividend payment from CUHL.

“Vedanta Ltd has an exemplary record in payment of dividends. Vedanta Ltd has paid out dividends of over 84,000 crore to shareholders in the last 10 years. It has never delayed, or been penalised for, any dividend payment,” the company said.

The mining conglomerate said “The dividend payment by Vedanta Ltd to Cairn UK Holdings Ltd (parent firm of Cairn Energy) was under a tax dispute between Cairn UK and the Government of India.

“The said dividend amount was deposited in an ‘unpaid dividend account’ as per law and was to be released by Vedanta Ltd as per the orders of the Income Tax Department and which was subsequently released post orders of the department and no benefit, whatsoever was derived by Vedanta Ltd,” the firm said in the statement.

It went to state that when Cairn UK reached a settlement with the government in its tax dispute, “all dues were cleared, including the said dividend amount”.

“Also, as per the settlement with the Government of India on the tax dispute, Cairn UK undertook to surrender its rights to claim interest on such tax refund (arising on account of this dividend),” it said.

The Indian mining conglomerate had in 2011 acquired Cairn Energy’s majority stake in its Indian arm, Cairn India Ltd. Cairn Energy continued to hold a minority stake in Cairn India, which was subsequently merged into its parent and Mumbai-listed Vedanta Ltd.

It is important to note that in 2014, the Income Tax department relinquished it powers to levy taxes retrospectively, to seek 10,247 crore in capital gains tax from the Scottish explorer over a 2006 reorganisation and listing of Cairn India.

The tax department attached Cairn Energy’s residual holding while Vedanta stopped paying dividends, citing the dispute.

The UK firm approached Sebi over stopping the dividend payment even as it contested the tax demand.

The tax department’s attachment expired in March 2016. Cairn Energy in its 2017 complaint to Sebi said despite reminders and release of the attachment, the dividends were not paid until 2017 and the company was liable to pay interest on delayed dividends.

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Published: 13 Mar 2024, 08:17 PM IST

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