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Monday, October 25, 2021

Devas Multimedia money laundering case: Court refuses to accept ED plea to relook its order refusing split trial

The special court, which is hearing the money laundering case against Devas Multimedia, has pulled up the ED for seeking to split the trial in the case after failing to serve summons on a US-based CEO of the firm Ramachandran Vishwanathan and a US subsidiary Devas Multimedia America Incorporated.

By: Express News Service | Bengaluru |
September 25, 2021 9:26:59 pm
The court has called the ED plea for two separate trials “a shortcut” taken by the investigating agency without serious efforts to serve summons. (Representational)

A special court in Bengaluru refused a plea by the Enforcement Directorate (ED) to recall the court’s September 4 refusal to split up the trial in a money laundering case brought against officials of the start-up firm Devas Multimedia following a failed 2005 satellite deal with ISRO’s commercial arm Antrix Corporation.

The special court, which is hearing the money laundering case against Devas Multimedia, has pulled up the ED for seeking to split the trial in the case after failing to serve summons on a US-based CEO of the firm Ramachandran Vishwanathan and a US subsidiary Devas Multimedia America Incorporated.

The court has called the ED plea for two separate trials “a shortcut” taken by the investigating agency without serious efforts to serve summons.

On September 4, the special court rejected a plea by the ED to split the trial in the alleged money laundering case on account of the ED failing to issue summons to a US-based official of the firm and a US subsidiary. The ED subsequently filed a plea for a recall of the order saying the court in a May 24 order this year had indicated the possibility of splitting the trial.

In an order on September 23, the court rejected the ED plea again and pulled up the agency.

“Here it cannot be held that accused No 2 and 7 are either not traceable or are not appearing. In fact, there has not been any constructive effort to summon or secure accused No 2 and 7 by the complainant,” the special court said.

“It is also relevant to state that the segregation of the case is not a mere formality that can be resorted to as and when the complainant or the prosecution so desire. Every accused has a right to receive the summons from the court and thereupon has a right to participate in the proceedings,” the court stated.

“If the courts were to split up the cases as and when so required by the prosecution, there would be no end to the litigation. In this case, accused No 2 and 7 have neither been served nor any concrete effort — except for taking Letters of Requests — made by the complainant. If every case is split up merely because it is difficult to serve the accused it would lead to multiplicity of proceedings,” the court said.

The court said that “it appears that the complainant does not want to go through the hassles of Section 55 to 61 of PML Act and hence wants to take a shortcut and proceed against the available accused. Such shortcut methods can never be appreciated.”

The court also pointed out all available measures to secure the presence of an accused that must be exhausted. “Only after exhausting these measures and failing to secure the presence of accused, can the court consider the segregation of the case against such accused,” the court said while refusing the ED plea to split the trial.

“In a nutshell, the complainant wants the orders dated 4.9.2021 reversed by making a recall. By whatever terminology the complainant calls it, reconsidering the orders would certainly amount to a review and not a recall,” the court said.

The ED filed a chargesheet in 2018 under the Prevention of Money Laundering Act against the US-based CEO of Devas Multimedia Ramachandran Viswanathan, a director of the firm M G Chandrashekar, Devas CTOs Desaraju Venugopal, Nataraj Dakshinamurthy, finance director Ranganathan Mohan, three Devas subsidiaries in Bengaluru and the US and K R Sridharamurthy, the former executive director of ISRO’s commercial arm Antrix Corporation.

In its chargesheet, the ED has alleged that Devas Multimedia transferred 85 per cent of Rs 579 crore of foreign funding it received through a 2005 deal with ISRO to the US under various claims.

Despite the passage of three years since the filing of the chargesheet, the ED reported that it has not been able to serve summons on two of the accused in the case who are in the US, resulting in the stalling of the trial in the case. The ED asked the special court to split the case against Ramachandran Vishwanathan and DMAI on account of them not being served summons and to begin the trial against the remaining eight in the interest of justice.

The special court in its September 4 order rejected the ED demand saying, “Since, the fate of earlier summons to accused No 2 and 7 is not known, it would be premature to segregate the case against accused No 2 and 7.”

The court on September 9 had also ordered the issuance of letters of request to Singapore and Mauritius after the ED alleged that foreign investments to the tune of Rs 579 crore that came to Devas Multimedia, in the aftermath of a 2005 satellite deal with ISRO’s commercial arm Antrix Corporation, was obtained from dubious sources in the US. The ED has alleged that dubious funds were routed via Singapore and Mauritius and later routed back to the US.

Out of the Rs 579 crore FDI received by Devas Multimedia in India via the Mauritius route — from investors like Columbia Capital and Deutsche Telekom — an amount of Rs 76.19 crore was transferred to a US subsidiary called Devas Multimedia America Inc as investment while an amount of Rs 180.77 crore was transferred to the subsidiary under the pretext of providing business support services and a further Rs 230.11 crore was spent as legal fee with a major portion being transferred to the US, the ED has alleged.

“The main purpose of entering the agreement with ISRO/ACL was to raise foreign investments on the strength of the agreement with ISRO and thereafter siphon off the investment raised, out of India in the guise of investment in subsidiary company, business support services and legal fee,” the ED said in a 2017 statement while attaching Devas’ assets.

The ED investigation of money laundering against Devas Multimedia is a fall out of a failed 2005 deal between Devas Multimedia and Antrix Corporation for launch of two communication satellites. Under the 2005 deal, ISRO was contracted to lease two communication satellites for 12 years at a cost of Rs 167 crore to Devas Multimedia.

The start-up company 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 ISRO.

The Devas Multimedia-Antrix Corporation (ISRO) agreement was annulled by the Manmohan Singh-led UPA government in February 2011 following allegations of the contract being a “sweetheart deal” — in the backdrop of the 2G scam in the telecom sector. The UPA annulled the deal citing demand for the S-band spectrum by the defence sector. After the NDA government came to power in 2014, the CBI and ED were asked to investigate the 2005 deal.

After the cancellation of the 2005 deal in 2011 foreign investors in Devas Multimedia — the German telecom major Deutsche Telekom, three Mauritius based foreign investors and Devas Multimedia — approached international tribunals seeking damages for the failed deal.

While Deutsche Telekom was awarded a compensation of $101 million plus interest by the Permanent Court of Arbitration in Geneva on May 27, 2020, the Mauritius investors were awarded a $111 million compensation (plus interest) by the United Nations Commission on International Trade Law tribunal on October 13, 2020 and Devas Multimedia was awarded a compensation of $1.3 billion by an International Chamber of Commerce tribunal on September 14, 2015.

The $1.3 billion compensation awarded to Devas Multimedia was confirmed by the US federal court for the western district of Washington on October 27, 2020. Antrix Corporation has gone in appeal to a US court against this order and the Supreme Court of India has asked for the ICC tribunal award to be kept in abeyance through a November 4, 2020 order.

The Mauritius investors in Devas have also approached a Southern District of New York court with a plea to declare Air India an alter ego of India and to allow attachment of Air India properties in order to enforce payment of compensation awarded by the UNCITRAL.

The National Company Law Tribunal in India ordered the liquidation of Devas Multimedia on May 25 following a plea by Antrix Corporation. The NCLT order for winding up Devas Multimedia was recently upheld by the NCL Appellate Tribunal.


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