NCLT Admits ISRO-Arm Antrix's Plea To Wind Up Devas Multimedia; Appoints Provisional Liquidator

The National Company Law Tribunal, Bengaluru, on Tuesday admitted the petition filed by Indian Space Research Organization's commercial arm Antrix Corporation Ltd to wind up Devas Multimedia under Sections 271 and 272 of the Companies Act 2013.

Antrix Corporation sought the winding up of Devas Multimedia on the grounds that the Bengaluru-based company's affairs were being have been conducted in a "fraudulent manner", "the company was formed for fraudulent and unlawful purpose", "the persons concerned in the formation or management of its affairs have been guilty of fraud, misfeasance or misconduct".

Antrix and Devas are in the middle of multiple legal proceedings over the former terminating the 2005 contract with the latter in 2011. In November 2020, SC had stayed the execution of a US award which asked Antrix to pay 1.2 Billion $ compensation to Devas.

On January 18, the Central Government had authorized Shri.Rakesh Shashibhushan, Chairman-cum-Managing Director of Antrix to present a petition to wind up Devas multimedia on the grounds specified under Section 271(1)(c) of the Companies Act.

After hearing the arguments of Solicitor General Tushar Mehta and ASG N. Venkataraman for Antrix, the Tribunal entered a prima facie finding that Devas "resorted to various frauds, misfeasance, connivance with officials in obtaining contract dated 28.01.2005 from Antrix".

"By perusal of investigation reports by CBI and the actions taken by other statutory Authorities, we are of prima facie opinion that the incorporation of R1 Company and obtaining a contract in a fraudulent manner that too within a short time, without having requisite experience, would not justify its continuance on the rolls of Registrar of Companies, Bangalore", the Tribunal said.

The NCLT said that though various proceedings are pending against the US Award passed in the Antrix-Devas dispute in question, there is no bar to initiate the present proceedings.

"It is unheard that a Company incorporated hardly one and half months earlier, can able to get a Contract from the Govt. of India, that too without having any technical experience in the relevant field. Therefore, without prejudice to the rights of Parties in the litigation pending before the Hon'ble High Court of Delhi and the Hon'ble Supreme Court, the Tribunal can exercise powers conferred on this Tribunal, under Chapter XX Part 1 of Companies Act, 2013, to appoint provisional Liquidator before passing final winding up order, which would be decided after hearing the Parties", the order said.

"Since the R1 Company has suffered various adverse findings with cogent evidence at the hands of various Statutory Authorities, as detailed supra, it would not be proper to permit Ri Company to continue its name on the rolls of Registrar of Companies, Bangalore", the judicial member Rajeswara Rao Vittanala noted in the order.

Senior Advocate Sajan Poovayya and Rajiv Nair accepted notice for Devas and sought time to file a short reply.

Holding that the petitioner has made out a prima facie case, the Tribunal admitted the winding up petition and appointed a Provisional Liquidator for Devas.

The management of Devas has been directed to extend full cooperation to the Provisional Liquidator

The Provisional Liquidator is permitted to initiate appropriate action in accordance with extant provisions of Companies Act, to take control of Management of Devas and to take custody or control all the property, effects and actionable claims to which the Devas Company is or appears to be entitled to and take such steps and measures, as may be necessary, to protect and preserve the properties of the Devas Company and to avoid misuse of its property.

The matter will be next considered on February 8, 2021.

In 2011, the Devas-Antrix agreement of 2005 was annulled by the Centre in the backdrop of the 2G scam and allegation. On October 27, 2020, a federal court in the US had confirmed a $1.2 billion compensation awarded to Devas by an arbitration tribunal of the International Chamber of Commerce over the cancellation of the 2005 agreement between Antrix and Devas to build and launch two satellites to provide multimedia services. The Supreme Court of India had in November, until further orders, kept in abeyance the implementation of the US federal court order.

Click here to read/download the order