Updated: January 19, 2022 1:30:51 am
A day after the Supreme Court upheld the National Company Law Appellate Tribunal’s order to wind up Devas Multimedia, Union Finance Minister Nirmala Sitharaman tore into the Congress, calling the 2005 Antrix-Devas agreement a “fraud of the Congress, by the Congress, for the Congress”.
Accusing the then UPA government of undertaking a “fraud deal” and allocating the rare S-band spectrum for a “pittance”, Sitharaman told a press conference that the government will use the Supreme Court ruling to counter seizure of its properties overseas.
She said “no country which respects rule of law will ignore these facts” pointed out by the Supreme Court.
In 2005, Antrix Corporation, the government-owned commercial arm of ISRO, signed an agreement with Bangalore-based Devas Multimedia for a 12-year lease of 90% transponder space on two satellites, G-SAT6 and G-SAT6A that were yet to be launched.
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Of the 150 MHz of space that ISRO owned in the S-band spectrum, Devas was allowed the use of 70 MHz to launch satellite-based applications on mobile devices. Devas, which had a few former ISRO scientists in its top management, was supposed to pay $300 million to Antrix over the 12-year period.
The agreement was cancelled by the then UPA government in 2011 after allegations of it being a quid pro quo “sweetheart deal” surfaced. In 2014, the CBI and Enforcement Directorate were asked to probe the deal.
In its judgement Monday, the Supreme Court also upheld the liquidation of Devas Multimedia, and said the contention of Antrix that fraud had happened “stood established”. It also dismissed Devas Multimedia’s claim that the real motive of liquidating the company was to deprive it of the “unanimous awards” of the arbitral tribunals.
“If the seeds of the commercial relationship between Antrix and Devas were a product of fraud perpetrated by Devas, every part of the plant that grew out of those seeds, such as the agreement, the disputes, arbitral awards etc., are all infected with the poison of fraud. A product of fraud is in conflict with the public policy of any country including India,” the top court said in its ruling.
Citing the judgement, Sitharaman said: “Antrix appeared in agreement with Devas in 2005 during the UPA government. It was a fraud deal. UPA government cancelled this deal in 2011… Devas went to international arbitration. The Government of India never appointed an arbitrator, was reminded to appoint an arbitrator within 21 days, but the government did not appoint.”
“The Antrix-Devas deal was against the security of the country and led to a major scandal. The UPA government took six years to repeal it. The then Cabinet was not even aware of this deal… the (spectrum) bands used by the Defence Ministry were sold to a private company. The right to use the satellite was sold to a private company even before it was launched,” she said.
The counter, dismissal
In its appeal before SC, Devas said the motive behind the wind-up move was to deprive it of the ICC Tribunal award. It said this would send a wrong message to investors. But the SC found no merit in the argument.
Calling the Congress party a “master of corruption”, she said the government is still fighting in many international courts because of the “greed” of the UPA.
“This kind of selling of primary endowments like wavelengths, satellites or spectrum bands, giving it away to private parties and making money from private parties and making a deal out of it, marks the feature of Congress governments,” she said.
Arbitration tribunals have awarded $1.2 billion along with cost and interest on pleas by Devas shareholders against cancellation of the Antrix deal. Sitharaman said the government was fighting in all courts to save taxpayers’ money that otherwise would be going towards payment of awards on “such a fraud deal”.
A senior government official said since it’s a first-of-its-kind case, the Ministry of Corporate Affairs will seek legal advice and inter-department discussions will be held to arrive at a strategy to deal with the liquidation process and legal challenges overseas.
“A provisional liquidator was appointed, who has got control of the company, its property and effects under Section 283 of The Companies Act. Now the liquidation process will begin. The government has powers under company law to affix unlimited financial liability on individuals in event of a fraud. A decision on these issues will be taken in due course,” the official said.
In May 2021, the Bengaluru bench of National Company Law Tribunal (NCLT) ordered liquidation of Devas Multimedia on the ground that the company was incorporated in a fraudulent manner, aimed at just siphoning funds from India to various foreign accounts.
It observed that Devas was only incorporated to collude with officials to “bring money into India and to divert it under dubious methods to foreign countries”.
In September last year, the National Company Law Appellate Tribunal (NCLAT) upheld an order of the NCLT and said: “The fact that fraud has been committed is apparent on the face of every record available before this Tribunal. A trial would indicate who was responsible for committing the fraud.”
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