On a plea by the Enforcement Directorate (ED), a special court has advanced by two months hearings in a case against start-up firm Devas Multimedia, which is embroiled in a legal battle with the Indian government over a failed 2005 satellite deal.
The special court to hear Prevention of Money Laundering Act cases Monday advanced hearings to June 8 from August 19, after the ED approached it last week, citing “national importance”. The agency told the court that the arbitration and compensation payment process initiated by Devas in foreign courts was causing embarrassment to the country.
Advocates for Devas Multimedia pleaded that hearings cannot begin since summons had not been served for appearance of Ramachandran Vishwanathan, the US-based CEO founder of the firm, and officials of Devas Multimedia America Inc, a US subsidiary of Devas, to which foreign investments were allegedly illegally diverted by the firm.
The special court however rejected Devas’s arguments.
On May 6, three Mauritius-based foreign investors in Devas had issued a notice to the Indian government, including Prime Minister Narendra Modi, seeking an amicable settlement of the dispute, while expressing intent to initiate fresh arbitration over alleged violation of a bilateral investment treaty with Mauritius, in the treatment of Devas.
The Mauritius investors also stated in the notice that Indian authorities were trying to evade the arbitration awards by various tribunals, over the failed deal between Devas and ISRO’s commercial arm Antrix.
On October 27, 2020, a US federal court had confirmed the 2014 arbitration award by the International Chamber of Commerce (ICC) for payment of $1.3 billion to Devas by Antrix Corp. The Mauritius investors said in the notice that, “On the same day that the US court confirmed the ICC award, India even purported to change its law, with retrospective effect, to allow award-debtors to stay arbitration enforcement proceedings without posting security on the basis of ‘prima facie’ fraud allegations — which Antrix promptly invoked.”
Separately, Deutsche Telekom, another foreign investor in the start-up, has moved a US court against the Indian government for confirmation of damages to the tune of over $100 million ordered by a Geneva arbitration court in May last year over the 2005 deal.
The dispute between the government and Bengaluru-based Devas Multimedia dates back to a 2005 deal between Devas and Antrix Corp. Under the deal, ISRO was to lease two communication satellites for 12 years at a cost of Rs 167 crore to Devas. The start-up company was to provide video-audio services to mobile platforms in India using the S-band spectrum transponders on ISRO’s GSAT 6 and 6A satellites built at a cost of Rs 766 crore by ISRO.
The agreement, however, 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 in the telecom sector. The government claimed the S-band spectrum was needed by the defence sector.
After the NDA came to power in 2014, the CBI and ED were tasked with investigating the 2005 deal.
The ED and CBI, which has filed a corruption case against Devas and former ISRO officials, including then chairman G Madhavan Nair, have been attempting to bring the US-based Indian-origin executives of Devas to trial.
The ED chargesheet accuses Devas officials as well as a former senior executive of Antrix of transferring 85% of the Rs 579 crore foreign funding it received through the 2005 deal with ISRO to Devas Multimedia America Inc, under various claims.
Apart from Vishwanathan, the chargesheet names another US-based Devas Multimedia director, M G Chandrashekar, CTOs Desaraju Venugopal and Nataraj Dakshinamurthy, finance director Ranganathan Mohan, four Devas subsidiaries in Bengaluru and the US, and K R Sridharamurthy the former executive director of Antrix Corporation.