“The question of law — the power of an arbitral tribunal to virtually and substantially declare a parliamentary legislation of a competent Parliament of a sovereign nation to be non est and unenforceable — itself is an issue which needs to be challenged. I therefore, opine that the Union of India must challenge the said award and must file all available proceedings to challenge the award and/or to protect the interest of Union of India,” Mehta said in his opinion.
Mehta said India should explore a competent forum in Singapore and advised against approaching the Delhi high court or the Supreme Court. “From the award, it appears that the seat of arbitration is Singapore and prime facie the challenge may lie in the said arbitration before the municipal courts of Singapore,” the SG suggested.
Two months after Vodafone won the taxation dispute in the SC in January 2012, the Centre had amended the tax laws retrospectively and, in 2013, it slapped the telecom giant with a tax demand of Rs 13,000 crore.
Sources said India has to move fast to challenge the award in an appropriate forum keeping in mind the period of limitation that would be attached to the award. The SG suggested that the future course of action be charted in consultation with attorney general K K Venugopal.
When the law ministry referred the SG’s opinion to the AG and sought his view, Venugopal recused from the process saying he was “prohibited from advising the government in this case by the rules of conflict of interest”.
The AG, in his letter to the law ministry, said, “I was consulted by Vodafone International Holdings BV in regard to the same dispute much before I was appointed to the office of attorney general for India. My office records reveal that I had received a special retainer from the said company in April 2012 in relation to the very dispute.”
He said he had also advised the company through three more conferences for which he was paid additionally. “In the circumstances, therefore, I must express my inability to be involved in the case in any manner,” the AG said.