The Devas-Antrix deal and its aftermath

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Last Updated19/01/2022

The Supreme Court affirmed the NCLAT's ruling to wind up Devas (Digitally Enhanced Video and Audio Services) Multimedia Private Limited on Monday.
Devas sought to bring video, multimedia, and information services via satellite to mobile receivers in cars and mobile phones across India in collaboration with ISRO's space branch Antrix Corporation.

In 2005, Devas Multimedia Pvt Ltd signed an ""Agreement for the Lease of Space Segment Capacity on ISRO/Antrix S-band Spacecraft.""
As per the deal, ISRO will lease two communication satellites (GSAT-6 and 6A) to Devas for a period of 12 years for Rs 167 crore.
Devas will use S-band transponders on satellites to deliver multimedia services to mobile platforms in India, with ISRO leasing 70 MHz of the S-band spectrum.
The partnership ran smoothly for six years before being terminated by the UPA government in 2011, after a decision by the Cabinet Committee on Security to end the agreement to utilize the S-band for security purposes.

Devas and its foreign investors sought reimbursement from several international tribunals and courts.
In 2015, an International Chamber of Commerce tribunal awarded Devas $1.2 billion in compensation, in 2020, the Permanent Court of Arbitration in Geneva awarded Deutsche Telekom $ 101 million-plus interest, and in 2020, the Mauritius investors were awarded $111 million by the UN Commission on International Trade Law tribunal.
German investors sought compensation for a breach of an India-Germany bilateral investment treaty, while Mauritius investors sought compensation for a breach of an India-Mauritius BIT.
Antrix has filed an appeal against this ruling in a US court, and the Supreme Court has requested that the tribunal award be put on hold until November 4, 2020.

The Supreme Court recently confirmed the National Company Law Tribunal's (NCLT) decision to liquidate Devas on the grounds that the company was formed fraudulently.
The judgment came as three Mauritius-based investors and a German telecoms company sought to take assets tied to the Indian government, including those of Air India, in federal courts in the United States.
Separate compensation awards were made to the investors in foreign courts, including a $1.2 billion award on September 14, 2015, by an International Chamber of Commerce (ICC) tribunal. The $1.2 billion awards have been put on hold by the Supreme Court.

According to the NCLAT, Devas received every benefit or advantage under the 2005 agreement ""via fraud, deception, or concealment.""
The NCLAT further stated that the primary players in the scam remained out of the spotlight for the whole time and that they only came to the fore once the agreement was struck to perpetrate the crime.
According to the NCLAT, The fact that the 2005 agreement was signed by a clerk who ""had no experience in science and technology"" and was completely unaware of Devas' services is evidence of this.
The NCLAT considered it unusual that the clerk was only paid ""remuneration for signing the agreement.""
The NCLAT has also questioned how the Indian Space Research Organisation (ISRO's commercial arm )'s subsidiary Antrix permitted the agreement to be signed by a clerk.
ANTRIX is unquestionably the ISRO's commercial arm, with the Indian government owning 100% of the company.
As a result, since ANTRIX signed such a crucial agreement on its behalf, the signatory to the agreement and their power to sign it were likewise crucial,"" the NCLAT noted.

After a high-level committee led by a former Central Vigilance Commissioner indicated that ""the ownership structure of the firm and of the Mauritius-based entities needs to be looked into by an appropriate investigative body,"" the Enforcement Directorate was requested to investigate into Devas' finances in 2013.
In 2018, the ED filed a charge sheet under the Money Laundering Prevention Act against a former managing director of Antrix and five Devas executives, alleging that Devas transported 85% of its Rs 579 crore foreign money to the US under different claims.

In January 2021, Antrix filed a petition with the National Company Law Tribunal seeking the dissolution of Devas in India, which it said was formed fraudulently.
The NCLT ordered the liquidation on May 25, and the National Company Law Appellate Tribunal affirmed it on September 8, 2021, and the Supreme Court upheld it Recently.
According to the NCLT order, The start-up was ""incorporated in a fraudulent manner and for unlawful purposes,"".
According to the report, a clerk from the office of an ex-ISRO employee who registered Devas Multimedia with another ex-ISRO employee signed the transaction with Antrix on behalf of Devas.