The finance ministry said on Sunday that India has challenged an international arbitration tribunal asking it to return USD 1.2 billion to UK's Cairn Energy Plc on grounds that it had never agreed to arbitrate over a 'national tax dispute'.
In a statement, the ministry also refuted reports that the Government of India has purportedly asked state-owned banks to withdraw funds from foreign currency accounts abroad in anticipation of the potential seizure of such accounts.
India had seized and sold shares of Cairn in its erstwhile India unit, confiscated dividend due and withheld tax refunds to recover the tax demand it had levied two years after passing a law in 2012 that gave it powers to levy tax retrospectively.
Cairn invoked arbitration under the India-UK bilateral investment treaty.
In December last year, Cairn won an award that held the levy of taxes using the 2012 law unfair on the company and the tribunal asked the Indian government to return USD 1.2 billion plus cost and interest.