The Delhi High Court stayed the recovery proceedings launched by Bengaluru-based Devas Multimedia, which has been seeking enforcement of the arbitral award against Antrix Corporation, the Centre-owned company under the administrative control of the Department of Space.
The Delhi High Court on Monday, August 29, stayed the arbitral order directing Antrix Corporation, the Centre-owned company under the administrative control of the Department of Space, to pay $560 million to Bengaluru-based Devas Multimedia.
The high court stayed the recovery proceedings launched by Devas Multimedia, which has been seeking enforcement of arbitral award against Antrix. The high court order stated that the Supreme Court had already held that the seeds of the commercial relationship between Antrix and Devas was a product of fraud committed by the latter. It said all parts of the plant growing out of that seed, including the arbitration award, is infected with the poison of the fraud. The top court added that the product of fraud is in conflict with the public policy of any country, including India, and it would send a wrong message to allow Devas to seek thousands of crores by investing only Rs 579 crore and siphoning off Rs 488 crore.
The Supreme Court Bench in January, while hearing the matter, had said, "We do not know if the action of Antrix in seeking the winding up of Devas may send a wrong message to the community of investors. But allowing Devas and its shareholders to reap the benefits of their fraudulent action, may nevertheless send another wrong message, namely that by adopting fraudulent means and by bringing into India an investment in a sum of Rs 579 crore, the investors can hope to get tens of thousands of crores of rupees, even after siphoning off Rs 488 crore.”
The case: A timeline
In 2005, Antrix signed a deal with Devas to lease out 90 percent of the transponders on the GSAT-6 and GSAT-6A to the latter for $190 million. The deal included 70 MHz of spectrum, which would have had a theoretical value of $27 billion if sold at the same rate as the 2010 3G spectrum auction.
In 2011, Antrix scrapped the deal with Devas after ISRO insiders revealed the particulars of the deal, which were hidden from the Cabinet and the Department of Space. Its investor, Deutsche Telekom, started demanding damages from Antrix over the sudden annulment and it approached the International Chamber of Commerce (ICC) to start arbitration proceedings. Antrix then filed a petition with the Supreme Court stating that ICC had no jurisdiction over the matter, to which the top court said it couldn't do anything once ICC had begun its proceedings.
In 2015, the ICC directed Antrix pay damages of $560 million to Devas for "wrongly terminating the deal with the latter." Devas approached the Delhi High Court to enforce the award, while Antrix challenged the same in a Bengaluru court. The Delhi High Court single Bench allowed Devas to claim interim relief before an appeal to a higher Bench saw the previous order being scrapped.
In 2020, a US court told Antrix to pay the damages after Devas investors approached it for enforcement of the award. The investors had approached the US court to claim ISRO assets that were being held in Virginia in enforcement of its previous arbitration award. The Supreme Court stayed the US court decision and told the Delhi HC to hear arguments from Antrix against the enforcement of the award.
In October 2020, the ICC award had been upheld by a US court. Devas had then proceeded to seek attachment of "any assets" of Antrix in the US.
Antrix had then approached the Bangalore Bench of the National Company Law Tribunal (NCLT) against Devas after being advised by the Ministry of Corporate Affairs. NCLT passed a judgment to wind up Devas on account of fraud during the original deal.
The National Company Law Appellate Tribunal (NCLAT) upheld the same judgment leading to Devas contesting the judgment with the Supreme Court. The same year, a Canadian Court allowed Devas to seize Air India assets to claim compensation as part of arbitration award but reserved judgment before lifting the freeze on seizure of AI assets lying with the IATA early in 2022.
In January this year, the Supreme Court upheld the decision of the NCLAT to wind up Devas Multimedia.