Vedanta Ltd to challenge SEBI's Rs 77 cr penalty for alleged delay in dividend payment to UK's Cairn Energy

In a statement, billionaire Anil Agarwal-led firm said the UK-based company had given up its right to claim interest when it settled a retrospective tax demand with the government.

“When Cairn UK reached a settlement with the Government of India in its tax dispute, all dues were cleared including the said dividend amount. Also, as per the settlement with GOI on the tax dispute, Cairn UK undertook to surrender its rights to claim interest on such tax refund (arising on account of this dividend),” Vedanta Ltd said in a statement.

On March 12, 2024, SEBI directed Vedanta Ltd to pay Rs 77.6 crore to Cairn UK Holdings Ltd, now Capricorn UK Holdings Limited (CUHL) as an interest payment for delayed payment of Rs 667 crore in dividend in the period between April 2016 and June 2017.

In the statement, Vedanta Ltd said that the dividend payment to CUHL was under a tax dispute between Cairn UK and 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,” it said.

“Vedanta Ltd. will appeal the SEBI order before the appropriate forum,” the statement said.

Citing para 111 of the SEBI order, the statement said that it “explicitly says that Vedanta Ltd. / Cairn India Ltd. deposited unpaid dividend amount in special account called unpaid dividend account and it ‘did not benefit from the unpaid dividend amount during April 01, 2016 to June 15, 2017.’”

The company said it had no intention 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 Rs. 84,000 crores to shareholders in the last ten years. It has never delayed, or been penalised for, any dividend payment. The amount of Rs. 667 crore is a very small amount in the context of the amount of dividend Vedanta Ltd pays,” read the statement.

“It defies logic and the company’s exemplary record to withhold payment to any shareholder. It was purely the unique circumstances that Cairn UK found itself in with the Income Tax department of the Government of India in 2016-17 that led to the ‘delay,’” read the statement.