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A minority shareholder of Cairn India has filed a civil suit against the company and its sister company Vedanta Ltd, regarding the repayment of a $1.25-billion loan that the former owes the latter. The managements of both public companies are in the process of merging the two entities, which would effectively wipe out the loan from both their books before it becomes due for repayment in July 2016.
The case was filed on December 1 in the Bombay High Court and was heard on Wednesday. According to the petition, the inter-company loan allegedly violates Section 67 (2) of the Companies Act, where a listed company cannot give financial assistance to buy shares in itself or its holding company. The minority shareholder has asked for the loan to be repaid before the merger of the two entities goes through.
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