Supreme Court: The bench of Hemant Gupta and V. Ramasubramanian, JJ has upheld NCLAT’s order of winding up of Devas Multimedia Private Limited and has observed that allowing Devas and its shareholders to reap the benefits of their fraudulent action, may send another wrong message that by adopting fraudulent means and by bringing into India an investment in a sum of INR 579 crores, the 133 investors can hope to get tens of thousands of crores of rupees, even after siphoning off INR 488 crores.
Antrix Corporation Limited, the commercial arm of the ISRO, entered into a Memorandum of Understanding with Forge Advisors, LLC, a Virginia Corporation to make both parties become “strong and vital partners in evaluating and implementing major new satellite applications across diverse sectors including agriculture, education, media and telecommunications”.
In furtherance of this Agreement, Forge Advisors made a presentation proposing an Indian joint venture, to launch what came to be known as “DEVAS” (Digitally Enhanced Video and Audio Services) for delivering multimedia and information services via satellite to mobile devices tailored to the needs of various market segments.
Hence, DEVAS was incorporated as a private company and Antrix immediately entered into an Agreement i.e. “Agreement for the lease of space segment capacity on ISRO/Antrix SBand spacecraft by DEVAS” with the said company on 28.01.2005.
Alleging that Devas offered services which were nonexistent, through a device which was not available and that even the socalled intellectual property rights over the device were not available, Antrix asserted that the aforementioned agreement as a result of a fraudulent and criminal conspiracy between the persons in management of the affairs of the company and the officials of Antrix/Government of India, to award a lease of scarce and valuable Sband spectrum, without obtaining necessary approvals and without following applicable norms and procedures.
It was alleged that the company which was formed with an authorized share capital Rs. 1,00,000/¬ in December, 2004, managed to secure a contract for a stated consideration of an “up-front capacity reservation fee” in the region of US, $ 20 million per satellite, apart from annual license fee of around US $ 9 million per satellite.
Not just the investors and the share¬holders concerned in the formation and the management of its affairs but also some of the then officials of Antrix and the Government of India were guilty of fraud, corrupt practices and money laundering.
Noticeably, not just the winding up proceedings but criminal proceedings also came to be initiated by CBI when the criminal conspiracy, fraud and corrupt practices came to light.
The Supreme Court noticed that when two forums namely NCLT and NCLAT have recorded concurrent findings on facts, borne out by documents, none of which is challenged as fabricated or inadmissible, the orders did not warrant any interference.
“If the seeds of the commercial relationship between Antrix and Devas were a product of fraud perpetrated by Devas, every part of the plant that grew out of those seeds, such as the Agreement, the disputes, arbitral awards etc., are all infected with the poison of fraud. A product of fraud is in conflict with the public policy of any country including India. The basic notions of morality and justice are always in conflict with fraud and hence the motive behind the action brought by the victim of fraud can never stand as an impediment.”
[DEVAS Multimedia Pvt. Ltd.v. Antrix Corporation Ltd., 2022 SCC OnLine SC 46, decided on 17.01.2022]
*Judgment by: Justice V. Ramasybramanian
For DEVAS: Senior Advocate Mukul Rohtagi,
For shareholder¬appellant: Senior Advocate Arvind P. Datar,
For Antrix: Additional Solicitor General N. Venkataraman
For UPI: Additional Solicitor General Balbir Singh