Bombay : The Supreme Court on Monday rejected an appeal by Devas Multimedia Pvt. Ltd and its parent company Devas Employees Mauritius Pvt. Ltd against the orders of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) authorizing the liquidation of the company.
In January 2021, an NCLT bench had admitted a petition by the commercial arm of the Indian Space Research Organization (ISRO), Antrix Corp. Ltd, urging the court to authorize the liquidation of Devas Multimedia for fraud under sections 271 and 272 of the Companies Act. 2013. Subsequently, the NCLAT also upheld the NCLT order.
“We find all grounds of attack against the concurrent NCLT and NCLAT orders untenable. Therefore, Devas Multimedia’s appeals are dismissed,” said an SC bench headed by Justice V. Ramasubramanian and Hemant Gupta “We don’t know if Antrix’s action in seeking liquidation of Devas may send the wrong message to the investment community, but allowing Devas and its shareholders to reap the rewards of their fraudulent actions, may nevertheless send another erroneous message, namely that by adopting fraudulent means and bringing into India an investment of ₹579 crore, 133 investors can expect to get tens of thousands of crore rupees even after siphoning off ₹488 crore,” he added.
Devas was incorporated in December 2004 to deliver multimedia and information services via satellite to mobile devices for the consumer, commercial and social sectors.
The NCLT order said Devas Multimedia was formed with the fraudulent intent of collusion and conspiracy with former Antrix Corp officials. in order to obtain bandwidth from the company through a 2005 deal that was canceled by the government in 2011. It had also appointed a provisional liquidator of Devas Multimedia.
While upholding the NCLT’s order, the NCLAT observed that Devas entered into an agreement with Antrix “by fraud, misrepresentation or deletion”.
The termination of the agreement between the government and Devas prompted the media company to initiate commercial arbitration in India before the Arbitral Tribunal of the International Chamber of Commerce (ICC). Independently, the Mauritius-based investors have initiated arbitration proceedings under the India-Mauritius Bilateral Investment Treaty (BIT).
In 2015, the Central Bureau of Investigation filed a First Investigation Report (FIR) against Devas and his agents under the Prevention of Corruption Act 1988.
However, the ICC Arbitral Tribunal issued an award in August 2015, ordering Antrix to pay Devas $562.5 million, with interest at 18% per annum.
Nirav Shah, Partner, DSK Legal, said: “The liquidation controversy has now been settled by this Supreme Court verdict. Now that the appointment of the liquidator has been confirmed, it will be interesting to see the fate of the US lawsuit, which had been initiated by Devas against Antrix, which also resulted in the prosecution of various assets held by Air India around the world. world. It will be interesting to see what strategy the liquidator will adopt once he resumes this litigation against Antrix.
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