Supreme Court Dismisses Devas Multimedia's Plea To Restrain Liquidator In Matter Against ISRO-Arm Antrix

The Supreme Court on Tuesday dismissed the plea filed by Devas Multimedia seeking directions to restrain the liquidator from taking any steps with regard to the pending arbitration proceedings before the Delhi High Court.

The plea before the Delhi High Court had been filed by Devas Multimedia for the enforcement of an award for $562.5 million, plus interest. However, on 25th May, the National Company Law Tribunal, Bengaluru Bench, directed for the forcible liquidation and winding up of the company by allowing a petition filed by Indian Space Research Organisation (ISRO)'s commercial arm, Antrix Corporation Limited.

Devas Multimedia approached the Supreme Court for an interim order seeking directions to restrain the liquidator from taking any steps with the arbitration pending, but a Bench of Justices Hemant Gupta and V. Ramasubramanian refused to entertain the matter and directed the Petitioner to approach the NCLAT.

The Tribunal in its 25th May order had held that Devas was incorporated in a "fraudulent manner to carry out unlawful purposes" and its management resorted to "fraudulent activities" in relation to the commercial contract with Antrix.

"The incorporation of Devas itself was with fraudulent motive and unlawful object to collude and connive with then officials of Antrix and to misuse/abuse process of law, to bring money into India and to divert it under dubious methods to foreign Countries", the Tribunal noted.

The Tribunal said that Antrix's petition satisfied that the requisite conditions under Section 271(1)(e) of the Companies Act 2013 to pass a winding-up order against Devas.

Under Section 271, the Tribunal can order the winding up of a company if it is of the "opinion that the affairs of the company have been conducted in a fraudulent manner or the company was formed for fraudulent and unlawful purpose or the persons concerned in the formation or management of its affairs have been guilty of fraud, misfeasance or misconduct in connection therewith and that it is proper that the company be wound up". Also, the Tribunal can order so if it is "of the opinion that it is just and equitable that the company should be wound up".

The NCLT has directed the Official Liquidator attached to the High Court of Karnataka to take expeditious steps to liquidate the company in order to prevent it from perpetuating its fraudulent activities and abusing the process of law by enforcing the arbitration tribunal award passed by the International Chamber of Commerce against Antrix in 2015.

It may be noted that the ICC had passed an award directing Antrix to pay 1.2 Billion dollars compensation to Devas for terminating the 2005 contract. In November 2020, the Supreme Court had stayed the proceedings to execute the award.

The order delivered by a Bench comprising Rajeshwara Rao Vittanala (Member-Judicial) and Ashutosh Chandra (Member-Technical) also observed "Devas failed to show any cogent reason as why it should not be wound up and to keep its name on the Registrar of Companies, Karnataka. The only reason apparent on record, by perusal of various pleadings raised in the instant petition is that it wants to prosecute enforcement of award in question, in the name of the company in courts".

It was on January 18 this year that 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.

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.