Air India has denied allegations that it has pressured families of victims of the Air India Flight 171 crash to declare their financial dependency on the deceased, calling the claims "unsubstantiated and inaccurate".

The airline issued a detailed statement in response to a report in The Guardian, in which UK-based aviation lawyer Peter Neenan, who represents some of the victims’ families, alleged that Air India’s conduct was “ethically outrageous.”

“It has come to our notice that allegations have been made against Air India, claiming that families of the deceased in the AI171 accident are being forced to sign papers disclosing their financial dependency to the deceased, in an attempt to slash compensation payments,” said Air India in an email response to The Telegraph Online. “Air India categorically rejects these allegations and refutes them as both unsubstantiated and inaccurate.”

Air India said its efforts were focused on expediting interim compensation to affected families and not limiting payouts.

“Air India has been making considerable efforts to process payment of interim compensation (also referred to as advance compensation) as soon as possible, in order to meet the immediate financial needs of affected family members, with the first payments having been made within days of the accident.”

The lawyer has claimed Air India's actions could undercut rightful compensation to grieving relatives.

Neenan, who has handled major aviation cases, including the MH17 and MH370 disasters, told The Guardian he was “angered and appalled” by the airline’s approach in the aftermath of the crash. He alleged that Air India’s conduct could reduce payouts by more than £100 million.

It is not clear if Neena is representing the foreign nationals who died in the crash. Of the 260 people who died on board, 60 were foreign nationals. 52 of them were British citizens.

Neenan described distressing scenes where relatives, arriving to identify loved ones' remains after the 12 June crash, were made to sit in a dark, overcrowded room in intense heat and asked to fill out complex financial questionnaires without any prior legal guidance.

Families were not given copies of the documents and were told—falsely, under international law—that no compensation would be issued unless they completed the forms, said Neenan.

The airline said in order to facilitate payments, it has sought basic information to establish family relationships to ensure that the advance payments are received by those entitled to them.

“Starting 15 June, Air India established a Facilitation Centre at the Taj Skyline hotel in Ahmedabad, where the questionnaire relating to interim compensation is available. In addition, families were sent communications informing them that the questionnaire is also available over e-mail, in the event families do not wish to make a visit to the centre. There is no requirement for family members to complete the questionnaire at the Centre, and several families have chosen to complete the questionnaire at their convenience and submit it over e-mail.”

One family member had said to The Guardian, “The conditions where they asked us to complete the questionnaire were unacceptable, in a crowded hot corridor with unsuitable chairs and desks. There was no privacy whatsoever.

“They asked us for information about dependency but there was no specifics about what they meant by that, whether financial or otherwise. I felt pressure at the time under extremely distressing circumstances following such a catastrophic loss.”

Responding to the criticism over the financial dependency question, the airline stated: “Whilst the questionnaire does ask family members to indicate with a ‘yes’ or ‘no’ as to whether they are ‘financially dependent’ on the deceased, Air India believes this is an entirely fair and necessary question in order for us to process payments to those most in need of assistance.”

The airline clarified that the forms being filled at hospitals or morgues were unrelated to compensation and that no home visits had been made for compensation purposes.

“Some of those forms may have been for official government purposes,” the airlines said.

Air India has released interim compensation to 47 families of the passengers and those deceased at the accident site to help them meet their immediate financial needs. The documents relating to a further 55 individuals have also been verified, and interim compensation is being released to their families.

“In addition to any compensation that will be provided by Air India, the Tata Group has announced a voluntary ex-gratia payment of Rs 1 crore to the families of each of the deceased. A trust with a corpus of around Rs 500 crore is being set up to manage and disburse this ex-gratia amount and provide long-term assistance to the families. These families will forever be part of the Tata family.”