Supreme Court Stays International Award Asking ISRO Arm Antrix To Pay Compensation To Devas [Read Order]

The Supreme Court has put on hold an international award which had directed Antrix Corporation, (the commercial arm of ISRO) to pay compensation of USD 1.2 billion (INR 8,88,65,100,000) to Bengaluru-based startup "Devas Multimedia", for cancelling a satellite deal of 2005.

A bench of Chief Justice SA Bobde, Justices AS Bopanna & V. Ramasubramaniun also transferred the pending application under Section 34 of the Arbitration and Conciliation Act against the award from Bengaluru to Delhi High Court.

As per the agreement executed between the two companies, in January 2005, Antrix had agreed to build, launch and operate two satellites as well as to make available ,70 MHz of S-band spectrum to Devas, which the latter planned to use for hybrid satellite and terrestrial communication services throughout India.

On October 27, a US court had ruled that Antrix Corporation shall pay a compensation of USD 562.5 million to Devas Multimedia Corporation and the related interest rate amounting to a total of USD 1.2 billion.

Solicitor General Tushar Mehta appeared for Antrix Corporation seeking a stay on the October 27 order.

The bench also put it to the parties whether mediation is something they would be willing to explore.

However, Mr. K. K. Venugopal, Attorney General for India, specifically denied the possibility of mediation on the ground that the Union of India had discovered a serious fraud in the entire series of transactions leading up to the disputes including the arbitration agreement.

Mr. Mukul Rohatgi, learned Senior Counsel appearing for Devas Multimedia, however, strongly denied the allegations.

Matrix of events:

Antrix Corporation Limited preferred an application under section 9 of the Arbitration and Conciliation Act, 1996 before the City Civil Court, Bangalore.

On the other hand, the SLP petitioner, Devas Multimedia Private Limited, filed an application under section 9 of the Act for securing the sum in the Award before the Delhi High Court on September 25, 2015.

Following this, Antrix Corporation Limited amended the application under section 9 of the Act pending before the City City Court, Bangalore to restrain the Devas Multimedia Private Limited, from implementing or enforcing the award (of the USA Court). Antrix also went on to file objections to the award under Section 34 before the Bangalore Civil Court.

On February 28, 2019, the Delhi High Court held that the application filed by Devas was maintainable. A division bench subsequently set aside this judgment of the single bench on May 30, 2018, thereby giving a green signal to the Civil Court in Bangalore to proceed.

Thereafter, Devas Multimedia Private Limited, filed the instant Special Leave Petition and on November 19, 2018, top Court stayed the proceedings under section 9 and 34 of the Act filed by the  Antrix Corporation Limited before the City Civil Court, Bangalore.

The court thereafter dealt with interlocutory application for directions thereafter.

It is pertinent to note that execution proceedings in the USA were also filed and though the foreign court stayed the execution proceedings before it for a period of about one year to enable the parties to settle the matter, it then went on to lift the stay and confirm the Award on September 19, 2020 in favour of Devas Multimedia Private Limited. 

This led to compensation to the tune of USD 1.2 billion (INR 8,88,65,100,000) accruing upon Antrix Corporation, payable to Bengaluru-based startup "Devas Multimedia".

Issue:

The Top court noted that the issue before it was whether the application under section 34 of the Act should be heard by the court at Delhi or the court at Bangalore. 

What the Top Court Held:

The Supreme Court observed that it considered it highly iniquitous to permit Devas Multmedia Ltd. to go ahead with execution without the objections it had filed under section 34 of the Act to the Award.

"Having regard to the overall circumstances of the case, we are of the view that pending decision in the present special leave petition, it would be highly iniquitous to permit the petitioner - Devas Multimedia Private Limited to obtain the fruits of the Award by execution under any law or convention after obtaining a stay from this Court restraining the respondent - Antrix Corporation Limited from pursuing its objections under section 34 of the Act against the Award."

Further, the Court transferred the application filed by Antrix Corporation under Section 34 before the Bangalore Civil Court to Delhi High Court for consideration, thereby holding that Delhi High Court would be the appropriate forum for considering the lis between parties.

"The application filed by the respondent under Section 34 of the Act stands transferred to the Delhi High Court. The final award dated 14.09.2015 bearing case No. 18051/CYK titled as Devas Multimedia Pvt. Ltd. Vs. Antrix Corporation Ltd., shall be kept in abeyance till the Delhi High Court decides the application for stay in the Application under Section 34. The application for stay shall be decided on its own merits in accordance with law"

Apropos this, the court also noted that Devas Multimedia shall be entitled to seek a deposit of the sum awarded or a part thereof before Delhi High Court.

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