Cairn on May 14 filed a lawsuit in the US District Court for the Southern District of New York seeking declaration of Air India as the ‘alter ego of Indian government’ by virtue of control and as a state-owned company it “legally indistinct from the state itself,” according to a copy of the petition.

The lawsuit seeks to establish the “Air India is the alter ego of India and that it should be held jointly and severally responsible for India’s debts, including from any judgment resulting from recognition of the Award.” Once a court recognises Air India as the alter ego of Indian government, Cairn can seek attachment or seizure of its assets in the US such as airplanes, immovable assets and bank accounts to recover the amount it was awarded by the arbitration tribunal.

While Cairn said it is “taking necessary legal steps to protect shareholders’ interest in the absence of a resolution to the arbitral award”, sources said India will take all necessary steps to defend against any such “illegal enforcement action.”