Finance Minister Nirmala Sitharaman on Tuesday accused Congress-led UPA of entering into a “fraud” and “scandalous” deal with Devas Multimedia by allocating S-band spectrum used by the defence for “pittance”.
At a press conference, she said the government is now fighting in every court to save taxpayers’ money that would otherwise go towards paying for arbitration awards that Devas has won against the cancellation of the 2005 deal.
She said the Supreme Court on January 17 has comprehensively upheld liquidation of Devas Multimedia on grounds that it was incorporated with fraudulent intentions.
What is Devas-Antrix deal all about
In 2005, Devas Multimedia signed an agreement with Antrix — the commercial arm of the Indian Space Research Organisation (ISRO) — to provide multimedia services to mobile users using the leased S-band satellite spectrum.
The deal was cancelled in 2011 on the ground that the auction of the broadband spectrum was mired in fraud and that the government needed the S-band satellite spectrum for national security and other social purposes.
Devas Multimedia initiated arbitration against the annulment at the International Chambers of Commerce (ICC). Two separate arbitrations were also initiated under the Bilateral Investment Treaty (BIT) by Mauritius investors in Devas Multimedia under the India-Mauritius BIT and by Deutsche Telekom — a German company — under the India- Germany BIT. India lost all three disputes and has to pay a total of $1.29 billion in damages.
A French court has recently ordered freezing of an Indian government property in Paris on a plea by Devas shareholders who are seeking to enforce a $1.3 billion arbitration award over a cancelled satellite contract.
The court allowed Devas shareholders to register a “Hypotheque Judiciaire” or a judicial mortgage on a Paris apartment in the posh 16th arrondissement.
Devas shareholders include US investment groups Columbia Capital and Telecom Ventures as well as Deutsche Telekom.
The Supreme Court on Monday upheld the winding up of Devas Multimedia saying,” it is a case of fraud of a huge magnitude which cannot be brushed under the carpet, as a private lis”.
A bench of Justices Hemant Gupta and V Ramasubramanian dismissed the appeal filed by Devas Multimedia Pvt Ltd and said when two forums namely NCLT and NCLAT have recorded concurrent findings on facts, it is not open to this Court to reappreciate evidence.
The National Company Law Appellate Tribunal (NCLAT) had upheld the earlier order of the Bengaluru bench of the National Company Law Tribunal (NCLT), which had on May 25, 2021, directed the winding up of Devas Multimedia and appointed a provisional liquidator for the purpose.
The NCLT’s direction came over a petition filed by Antrix Corporation, the commercial arm of the Indian Space Research Organisation (ISRO).
The NCLT had said Devas Multimedia was incorporated with a fraudulent motive to collude and connive with the then officials of Antrix Corporation to get bandwidth from it by entering into an agreement in 2005, which was subsequently cancelled by the government.
This order was challenged by Devas Multimedia and its shareholder Devas Employees Mauritius Private Ltd before the Chennai bench of NCLAT, which dismissed the petition.
According to Devas, what this agreement intended to achieve was first-of-its-kind and tremendous innovation. As a result, Devas introduced and utilised technologies like never before and was a huge revenue generator for Antrix.
Devas Multimedia was incorporated on December 17, 2004.
According to the winding-up petition filed by the commercial arm of ISRO before NCLT, the then officials of Antrix Corporation including its then chairman had executed a contract dated January 28, 2005.
This was terminated on February 25, 2011, as it was obtained fraudulently in connivance of the then officials and in accordance with the Agreement, which provides for termination on the ground of force majeure (unforeseeable circumstances).
It was stated in the said letter that the Government of India had taken a policy decision not to provide orbital slots in SBand for commercial activities.
Investigating agencies CBI and Enforcement Directorate has unearthed fraud in executing the agreement, Antrix had said.
The CBI had later filed a charge sheet and ED had initiated PMLA proceedings.
The Ministry of Corporate Affairs (MCA) had also initiated an investigation into the affairs of Devas Multimedia but a stay was granted by the Delhi High Court.
