The National Gallery of Australia has begun legal action in New York after discovering a statue that it paid $US5 million for had been stolen.
The matter relates to the Gallery's 2008 purchase of a bronze sculpture titled Shiva as Lord of the Dance (Nataraja), dating from 11th century India.
Lawyers acting for the Gallery claim the Art of the Past dealership in new York "fraudulently induced" the Gallery to buy the statue by making "false assurances'' concerning the history of the Shiva.
AAP reports court documents show the dealer provided the gallery with sales receipts for the Shiva dating back to 1970.
Subsequently the gallery paid for the item to be shipped to Australia, added to its collection, and paid in two instalments.
But in July 2012, stolen art was found in a warehouse belonging to the director of the business, including many Indian statues from a period similar to that of the Shiva.
AAP reports further investigations found the Shiva was stolen from a temple where it was the property of the central government of India.
"Based on information obtained ... the Shiva has lost its financial value, and its clouded title and notoriety means that the work cannot be promoted as a key work of art in the Gallery's Indian Collection," court documents read.
The gallery is attempting to recover the cost of the Shiva, plus interest, legal fees and freight costs. It declined to comment on the matter while it is before the court.