An Adjudicating Authority under Foreign Exchange Management Act (FEMA) has slapped Devas Multimedia Pvt Ltd (DMPL) with a penalty of Rs 1,585 crore for violation of forex laws in the Antrix-Devas deal case.
The case has been under investigation by the CBI and the Enforcement Directorate (ED) and relates to the leasing of S-Band, restricted wavelength of INSAT satellites for delivering videos, multimedia and information services to mobile receivers to a private company, Devas Multimedia, by Antrix, the commercial arm of ISRO.
How Devas Multimedia was formed
Devas Multimedia Pvt Ltd (DMPL) was incorporated in 2004 by a few former employees of ISRO. It entered into agreement with ANTRIX Corporation Ltd., a government-owned PSU under the control of ISRO and which functions as the space agency’s commercial arm. As per the agreement, Antrix agreed to provide bandwidth in two proposed satellites for services to be offered on a commercial basis in Digital Media and Broadcasting by DMPL.
It was alleged in an FIR that the lease was given in violation of rules, causing an undue gain of Rs 578 crore to Devas Multimedia, and a corresponding loss to the exchequer. The CBI filed its chargesheet in the case in 2016.
“Adjudication Authority under FEMA held DMPL, its Directors and foreign investors guilty in the case of illegal foreign Investment of Rs 579 crore (approx.) in contravention of Section 6(3) of FEMA, 1999 by imposing penalty totaling to Rs 1585.08 crore,” the ED said.
According to ED, which was probing the case under FEMA and Prevention of Money Laundering Act (PMLA), investigation was initiated on the basis of reliable information that investments received by DMPL from people residing abroad were in contravention of FEMA’s provisions.
The ED stated: “Investigation revealed that an amount of around Rs 579 crore was brought into the company by various foreign companies in violation of the conditions of FIPB approval and provisions of Section 6(3)(b) and 6(3)(d) of FEMA read with Foreign Exchange Management Regulations. Accordingly, show cause notice under FEMA was issued. After completion of the adjudication proceedings a total penalty of Rs 1,585.08 crore has been imposed on DMPL, the foreign companies (investors), Indian and foreign directors of DMPL.”
Meanwhile, a special court on Friday took cognizance of ED prosecution complaint in the case under PMLA. The complaint had been filed against DMPL and others for illegally entering into an agreement with Antrix by fraudulently claiming that it had the ownership and intellectual property rights to use the technology for delivering multimedia services and entering into an agreement with Antrix for providing multimedia services in India.
Properties worth Rs 79.76 crore of DMPL have already been attached under PMLA in the case.