THE INTERNATIONAL tribunal that slapped a fine of $672 million (nearly Rs 4400 crore) on the Indian Space Research Organisation’s marketing arm for scrapping a contract with Devas Multimedia cited “a clear and irreconcilable conflict of interest” while rejecting a key argument of the government-owned Antrix Corporation.
The tribunal noted that the then Antrix chairman Dr K Radhakrishnan was also chairman of ISRO, chairman of the Space Commission and secretary, Department of Space (DoS), when the corporation terminated its commercial contract with Bangalore-based private firm Devas in 2011. All these organisations weighed in favour of scrapping the contract.
While the former ISRO chief held these positions in line with the government’s norms at the time, the tribunal concluded that Radhakrishnan, in his capacity as Antrix chairman, did not do “everything in his power” to prevent the cancellation of the agreement.
Radhakrishnan, who retired from ISRO in December 2014, did not respond to phone calls and text messages from The Indian Express seeking comments.
In 2005, Antrix entered into a commercial agreement with Devas for the lease of 90 per cent of transponder space on two satellites that ISRO planned to launch, along with 70 MHz of S-band spectrum to begin satellite-based multimedia services on handheld devices. The contract was terminated after which Devas resorted to arbitration, as provided for in the contract, seeking damages.
One of the pleas by Antrix during the arbitration that ended last month was that the termination happened because of a policy decision by the Government to use S-band as a strategic asset and not lease it out for commercial purposes.
Antrix argued, unsuccessfully, that the Cabinet decision of February 17, 2011 in this regard, was a “force majeure” event, an incident that was beyond its control which had rendered it unable to honour the contract.
Force majeure is a standard clause in most agreements and was part of the Antrix-Devas agreement as well. Specifically, a decision of the Government, acting in its sovereign capacity, was one of the explicitly-mentioned “force majeure” situations.
But the three-member arbitration panel, under the International Chambers of Commerce, rejected that argument and broadly agreed with Devas’s contention that in this case, “force majeure” was self-inflicted and could not be a justified explanation for the termination.
The panel observed that it was Radhakrishnan who, as ISRO chairman, had obtained advice from the Law Ministry on how to annul the contract and then informed the Space Commission that it was “inevitable” that the contract be scrapped. Then, he sat as chairman of the Space Commission that decided to terminate the contract, the panel noted.
It was Radhakrishnan again who, as Secretary of DoS, sought approval from the Cabinet Committee on Security (CCS) for the termination of the contract, it said.
Radhakrishnan would not have done so, the panel opined, if he been “personally lobbying and making representations to the DoS, ISRO and the Space Commission to ensure that the Devas Agreement remained on foot”, in his capacity as chairman of Antrix.
”He would not have taken those steps because they would have required him to adopt diametrically opposed positions in respect of the Devas agreement: on the one hand, that the agreement should remain on foot, and on the other, that it should be annulled. This would have created a clear and irreconciliable conflict of interest,” the order stated.
”Accordingly, the tribunal considers that if Dr Radhakrishnan had done everything in his power (as chairman of Antrix to prevent the annulment of the Devas Agreement, he would not have taken the(se) steps…They are the steps that led directly to the CCS’ decision to annul the agreement… As a result, in all probability the agreement would not have been annulled,” the order stated.
”Further, since Dr Radhakrishnan (acting in his capacity as Chairman of Antrix) could have prevented the CCS from being asked to annul the agreement, Antrix could have effectively prevented the CCS from making that decision, which means that the CCS’ decision was not beyond Antrix’s reasonable control,” the panel observed.
ISRO functions under the DoS whose Cabinet minister is the Prime Minister himself. After the case went into arbitration in February 2011, the Centre introduced “systemic reforms” on the recommendations of two committees that examined the deal, and appointed a full-time chairman-cum-managing director for Antrix five months later.
The Space Commission is the highest policy-making body in matters related to space exploration and has the National Security Advisor, Cabinet Secretary and the Principal Secretary to the Prime Minister amongst its members. Earlier this year, the Foreign Secretary was also inducted as a member for the first time.