Centre files appeal against Single Judge order in Vodafone second arbitration
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Centre files appeal against Single Judge order in Vodafone second arbitration

Ashutosh Gambhir

The Delhi High Court has sought the response of Vodafone Group PLC in the appeal filed by the Centre against the order of the Single Judge Bench Justice Manmohan.

Justice Manmohan had dismissed the Centre’s petition seeking an injunction against Vodafone from initiating arbitration proceedings in the UK under the India-UK Bilateral Investment Protection Agreement.

Background

The acquisition of a stake in Hutch (Hutchinson Essar Limited) by Vodafone was held to be liable for a tax deduction, and since Vodafone failed to honor its tax liability, a demand for non-deduction of tax was raised on it. However, the Supreme Court had quashed the said demand.

Subsequently, a retrospective amendment to the Income Tax Act read re-fastened the liability on Vodafone.

Aggrieved by the imposition of the tax, Vodafone initially invoked the arbitration clause provided under the Bilateral Investment Promotion and Protection Agreement (BIPA) between India and the Netherlands.

While the said arbitration proceedings were pending, Vodafone served another notice of arbitration upon the government for resolution of an alleged dispute under the India-United Kingdom BIPA, primarily in respect of the same income tax demand.

The Centre had challenged the second arbitration stating that Vodafone was abusing the process of law, which was dismissed by the Single Judge Bench of Justice Manmohan.

Hence, the appeal.

Appeal

The Division Bench of Justices Siddharth Mridul and Vinod Goel has issued notice to Vodafone and asked it to file its response in the appeal by Centre.

Vodafone represented by Senior Advocate Abhishek Manu Singhvi along with Anuradha Dutt (DMD Advocates) has assured the Court that it will not push for arbitration in the meanwhile. The Centre is being represented by ASG Tushar Mehta.

The matter will next be heard on July 5.

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