A money laundering case brought by the Enforcement Directorate (ED) against a former executive director of the Antrix Corporation, a commercial arm of the Indian Space Research Organization, over a satellite deal with the start-up firm Devas Multimedia Pvt Ltd, has been quashed by the Karnataka High Court on the grounds that the deal was authorised by the Antrix board.
A single judge bench on Friday quashed the case brought under the Prevention of Money Laundering Act, 2012, against K R Sridharamurthi, citing the fact “that the lease of space segment to Devas Multimedia was on the instruction and directions of the board of directors of Antrix Corporation and special invitees”.
Sridharamurthi is among 10 individuals and entities accused of money laundering in the Devas Multimedia-Antrix Corp deal of 2005, for which the ED filed a chargesheet in July 2018.
The other accused are Devas Multimedia CEO and founder Ramachandran Viswanathan, director M G Chandrashekar, Devas CTOs Desaraju Venugopal and Nataraj Dakshinamurthy, finance director Ranganathan Mohan, and three Devas subsidiaries.
The former Antrix Corp executive director and Devas Multimedia officials were accused of allegedly diverting 85 per cent of Rs 579 crore of foreign investment it received to the US following the 2005 satellite deal. The funds were allegedly transferred after the satellite deal was annulled in 2011 by the UPA government.
Indian agencies like the ED and CBI have alleged that the Devas-Antrix deal involved fraud on account of Devas Multimedia being created under fraudulent circumstances. The National Company Law Tribunal liquidated Devas Multimedia for alleged fraud and the Supreme Court has upheld the order.
In the ED case against Sridharamurthi, who is also accused by the CBI in a corruption case over the 2005 deal, the Karnataka High Court on Friday ruled that he acted on the instructions of the board of Antrix Corp to clear the satellite deal with Devas and not in his individual capacity. The HC also ruled that since there was no allegation of fraud or money laundering against Antrix Corp itself, the former executive director of the firm cannot be accused of money laundering.
“Perusal of minutes of board meeting and communication issued (by the Antrix Corp official) reveals that the lease of space segment to Devas Multimedia was on the instruction and direction of the board of directors of Antrix Corporation and also special invitees like the Chairman of ISRO who was part of the meetings. The communication by A10 (Sridharamurthi) also indicates that directors of departments concerned were informed about the leasing of the space segment to Devas Multimedia,” Justice Hemanth Chandangoudar said.
“This shows that A10 on due authorisation by a board of directors and directors of departments concerned entered into agreement with Devas Multimedia and the allegation that (Sridharamurthi) entered into agreement fraudulently cannot be made,” the HC said.
The board of directors of the Antrix Corp. consisted of top Indian space officials and industrialists like Ratan Tata and Jamshedji Godrej when the agreement with the founders of Devas Multimedia was approved and executed in the 2004 to 2011 period.
On September 15, 2022, a special court in Bengaluru hearing the PMLA case pertaining to Devas Multimedia ordered the issuance of a notice under the Fugitive Economic Offenders Act, 2018 to the US-based founder CEO of Devas Multimedia Pvt Ltd, Ramachandran Viswanathan, on the basis of an application filed by the ED to declare Viswanathan a fugitive economic offender.
Viswanathan is a satellite communications entrepreneur in the US and is now the president of Omnispace LLC, a satellite communications start-up in the US, which is putting together a constellation of satellites to power 5G from space – especially to provide connectivity to remote areas where terrestrial mobile networks do not work. Indian companies like the Tata Group owned Nelco Ltd have signed agreements with Omnispace to provide 5G connectivity through non terrestrial networks.
The case against Devas Multimedia officials and the former Antrix Corp director has roots in a January 2005 deal between the start-up Devas Multimedia and ISRO’s Antrix Corp. to use two ISRO communication satellites to provide multimedia services to mobile devices in remote areas where conventional, terrestrial telecom networks do not have reach.
Under the 2005 satellite deal with Devas, the Indian space agency ISRO was contracted to lease two communication satellites for 12 years at a cost of Rs 167 crore to Devas Multimedia. The start-up was to provide video-audio services to mobile platforms in India using the space band or S-band spectrum transponders on ISRO’s GSAT 6 and 6A satellites built at a cost of Rs 766 crore by the space agency.
The Devas Multimedia-Antrix Corp agreement was annulled by the UPA government in February 2011 following allegations of the contract being a “sweetheart deal” in the backdrop of the 2G scam. After the NDA government came to power in 2014 the Central Bureau of Investigation (CBI) and ED began full-fledged investigations of the 2005 satellite deal.
The ED and the CBI have filed charge sheets alleging corruption and money laundering in the matter.
The CBI filed a charge sheet in 2016 against Devas and Antrix and their executives including former ISRO chairman G Madhavan Nair on charges of corruption.
Following the cancellation of the 2005 deal, Devas Multimedia and its foreign investors approached international arbitration tribunals to seek compensation for losses they incurred. Devas and its foreign investors have been awarded compensation by three arbitration tribunals over the failed deal.
The biggest compensation award has been a September 14, 2015 ICC tribunal award of over $ 1.2 billion which was confirmed by a US federal court on October 27, 2020. Antrix Corporation has filed an appeal against this order in the US Court of Appeals for the Ninth Circuit.
Based on the CBI and ED cases against Devas Multimedia, the National Company Law Tribunal in India ordered the liquidation of Devas in May 2021 on charges that the company was created in a fraudulent manner. This order was upheld by the Supreme Court of India in January this year.
Further on August 29 this year, the Delhi high court year set aside the ICC tribunal arbitration award of $ 1.2 billion compensation to Devas and its investors and said that “the impugned award dated 14.09.2015 suffers from patent illegalities and fraud and is in conflict with the public policy of India”.
Devas Multimedia and its investors – including the German telecom major Deutsche Telekom – are involved in a protracted legal battle across the world over the decision of the Government of India in 2011 to annul the 2005 satellite deal between Devas and Antrix.