Devas Multimedia money laundering case: court refuses to accept ED’s plea to review its order denying the divided trial

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A special court in Bangalore has refused a request from the Directorate of Enforcement (ED) to recall the court’s refusal on September 4 to split the trial in a money laundering case brought against officials of the start-up. up Devas Multimedia following a failed satellite agreement in 2005 with Antrix Corporation, the commercial arm of ISRO.

The special court, which is hearing the money laundering case against Devas Multimedia, fired the ED for trying to split the trial in the case after failing to serve a subpoena on a US-based CEO. United States of the company Ramachandran Vishwanathan and of an American subsidiary Devas. Multimedia America Incorporated.

The court called the ED’s plea to two separate trials a “short cut” taken by the investigative agency without serious efforts to serve a subpoena.

On September 4, the special court dismissed the ED’s plea to split the trial in the alleged money laundering case on the grounds that the ED failed to issue a subpoena to a U.S. the company and a US subsidiary. The ED then filed a plea for a recall of the order, saying the court, in an order dated May 24 this year, indicated the possibility of a split trial.

In a September 23 order, the court again dismissed the ED’s plea and suspended the agency.

“Here, one cannot consider that the defendants n ° 2 and 7 are not traceable or do not appear. In fact, there has been no constructive effort to summon or secure defendants Nos. 2 and 7 by the plaintiff, ”the special court said.

“It is also relevant to specify that the segregation of the case is not a simple formality which one can resort to as and when the complainant or the prosecution so wish. Each defendant has the right to receive the summons from the court and therefore has the right to participate in the proceedings, ”the court said.

“If the courts were to divide the cases as the prosecution needed, the litigation would not end. In the present case, defendants no. 2 and 7 received no meaning or any concrete effort – with the exception of the receipt of letters rogatory – from the complainant. If each case is split up just because it is difficult to serve the accused, it would lead to a multiplicity of proceedings, ”the court said.

The court said that “it appears that the plaintiff does not want to go through the hassle of Sections 55-61 of the PML Act and therefore wishes to take a shortcut and sue the available accused. Such shortcut methods can never be appreciated.

The court also highlighted all the measures available to ensure the presence of an accused which must be exhausted. “It is only after exhausting these measures and failing to guarantee the presence of the defendants that the court can consider segregating the case against these defendants,” the court said while refusing the ED’s plea. to split the trial.

“In summary, the complainant wants the orders of 4.9.2021 to be annulled by issuing a recall. Regardless of the terminology used by the complainant, a review of the orders would certainly amount to a review, not a recall, ”the court said.

The ED filed an indictment in 2018 under the Money Laundering Prevention Act against the CEO of US-based Devas Multimedia, Ramachandran Viswanathan, CEO of MG Chandrashekar, Devas CTOs Desaraju Venugopal, Nataraj Dakshinamurthy, CFO Ranganathan Mohan, three branches of Devas. in Bengaluru and the United States and KR Sridharamurthy, the former executive director of ISRO’s commercial arm, Antrix Corporation.

In its indictment sheet, the ED alleged that Devas Multimedia transferred 85 percent of the 579 crore rupees in foreign funding it received under a 2005 deal with ISRO to the United States. under various claims.

Despite the passage of three years since the indictment was filed, the ED reported that it had not been able to serve a subpoena on two of the defendants in the case who are in the courts. United States, which resulted 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 the grounds that they had not received a subpoena and to open the trial against the other eight in the interests of justice.

The special court, in its order of September 4, rejected the ED’s request, stating: “Since the fate of the previous summons to defendants Nos. 2 and 7 is not known, it would be premature to separate the case against the accused n ° 2 and 7 “.

On September 9, the court also ordered the issuance of letters rogatory in Singapore and Mauritius after the ED alleged that foreign investments amounting to Rs 579 crore had reached Devas Multimedia, following a satellite agreement in 2005 with the commercial arm of ISRO. Antrix Corporation, was obtained from questionable sources in the United States. The ED alleged that questionable funds were channeled through Singapore and Mauritius and then returned to the United States.

Of the 579 crore of FDI received by Devas Multimedia in India via the Mauritian route – from investors like Columbia Capital and Deutsche Telekom – an amount of 76.19 crore of rupees was transferred to a US subsidiary called Devas Multimedia America Inc in as an investment while an amount of Rs 180.77 crore was transferred to the branch under the pretext of providing business support services and another Rs 230.11 crore was spent on legal fees a significant portion being transferred to the United States, alleged ED.

“The main objective of entering into the agreement with ISRO / ACL was to raise foreign investment on the basis of the agreement with ISRO, and then to siphon the investments raised out of India under the guise investments in a subsidiary, business support services and legal services. fresh, ”the ED said in a 2017 statement while tying up the assets of Devas.

The ED investigation into money laundering against Devas Multimedia is a consequence of a failed 2005 agreement between Devas Multimedia and Antrix Corporation for the launch of two communications satellites. As part of the 2005 agreement, ISRO was contracted to lease two communications 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 space band or S-band spectrum repeaters on ISRO’s GSAT 6 and 6A satellites built at a cost of Rs 766 crore by ISRO.

The Devas Multimedia-Antrix Corporation (ISRO) deal was canceled by the UPA government led by Manmohan Singh in February 2011 over allegations that the contract was a “soft deal” – in the context of the 2G scam in the telecommunications industry. The UPA canceled the deal citing defense demand for S-band spectrum. After the NDA government came to power in 2014, the CBI and ED were asked to investigate the 2005 deal.

After the 2005 agreement was canceled in 2011, foreign investors from Devas Multimedia – German telecommunications company Deutsche Telekom, three Mauritius-based foreign investors and Devas Multimedia – approached international courts to seek damages for failure of the agreement.

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

The $ 1.3 billion compensation awarded to Devas Multimedia was upheld by the US Federal Court for the Western District of Washington on October 27, 2020. Antrix Corporation has appealed to a US court against this order and the Supreme Court of Canada. India requested the ICC tribunal’s sentence must be kept in abeyance by an order of November 4, 2020.

Mauritian investors in Devas have also asked a court in the Southern District of New York to declare Air India an alter ego of India and allow the seizure of Air India properties in order to demand the payment of compensation. granted by UNCITRAL.

The National Company Law Court in India ordered the liquidation of Devas Multimedia on May 25 following a plea by Antrix Corporation. Devas Multimedia’s NCLT liquidation order was recently upheld by the NCL Appeals Tribunal.


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