DEVAS VS.

ANTRIX

LEGAL ASPECTS OF BUSINESS

Submitted By-
Alisha Verma 21DM020
Rakshita Tiwari 21DM160
Rishika Jain 21DM232
Saksham Dhillon 21DM258
 HISTORY OF THE COMPANY

History of Antrix

Antrix Corporation Limited (ISO 15919) is an Indian

government-owned company under the administrative
control of the Department of Space. It was incorporated in
September 1992, as a commercial and marketing arm of ISRO
by prompting, commercially delivering, and marketing
products and services emanating from ISRO. It provides
primary technical consultancy services and transfers
technologies to the industry. Wholly owned by the
Government of India. It is administered by the Department of
Space (DoS). It had dealings with EADS Astrium, Intelsat,
Avanti Group, WorldSpace, Inmarsat, SES World Skies, Measat,
Singtel and other space institutions in Europe, the Middle East,
and South East Asia.

Devas history
A company set up by former ISRO officials in 2004, just one
year before the contract was signed. The Bangalore-based
start-up, founded in 2004, is headed by Dr. M.G.
Chandrasekhar, former Scientific Secretary at ISRO. He was
earlier Managing Director of the satellite radio company
WorldSpace, which shut shop in India last year. In 2008,
Deutsche Telekom picked up 17 percent stake in Devas for
about $75 million. Columbia Capital and Telekom Ventures are
other international investors. The board of directors includes
Kiran Karnik, a former President of Nasscom; Larry Babio, a
former vice-chairman of Verizon, and Gary Parsons, a former
Chairman of XM Sirius Satellite.
 BACKGROUND OF THE CASE

Antrix and Devas signed an agreement in 2005 under which

the latter would provide multimedia services using Antrix-
leased S-band satellite spectrum. Several foreign investors
had supported the Devas-Antrix project, including three
Mauritian investors (CC/Devas, who filed the first BIT claim
against India - CC/Devas v. India) and Germany's Deutsche
Telekom (DT), one of the world's leading
telecommunications companies (who brought the second
BIT claim against India – DT v. India).
The Devas-Antrix agreement quickly became embroiled in
controversy, with allegations of corruption and irregularities
leveled against the deal—of the S-band spectrum being
offered at throwaway prices; Devas (a company founded by
former ISRO officials in 2004, just one year before the
contract was signed) having secret knowledge about the
commercialization of the S-band spectrum; and ISRO's
serving officials colluding with Devas to facilitate a wrongful
termination.
The contract with Devas was canceled by the United
Progressive Alliance (UPA) government on February 17, 2011.
Internally, the decision had already been made: on 30 June
2010, the Department of Space recommended that the
Devas-Antrix agreement be terminated, which the Indian
Space Commission accepted on 2 July 2010. The decision,
however, was not communicated to Devas and was made
public in February 2011.
To be sure, the official reason for the annulment made no mention of
corruption or indiscretions in the transaction. Instead, the UPA
government's Cabinet Committee on Security (CCS) declared that the
deal was being canceled due to "an increased demand for allocation
of spectrum for national needs, including defense, paramilitary forces,
railways, and other public utility services, as well as societal needs." As
a result, Antrix notified Devas of the contract's cancellation as a result
of a force majeure event.
 DETAILS OF BOARD OF DIRECTORS

Devas Multimedia Private Limited has 7 directors and no

reported key management personnel.

1. Ramachandran Viswanathan (25 June, 2005)

2. Chandrasekhar Gangarudraiah Muthugadahalli (25 june,
2005)
3. Rajendra Singh (19 may, 2006)
4. Arun Kumar Gupta (19 May 2006)
5. Lawrence Thomas Babbio Junior (26 September 2007)
6. Garry Michael Parsons (26 September 2007)
7. Brijendra Kumar Syngal (28 January 2016)

Directors of Antrix Corporation Limited are

1. Jayanthi Gopalrao
2. Ajit Tavanappa Kalghatgi
3. Pundi Srinivasan Raghavan
4. Kamal Bali
 PROVISIONS RELATED TO CONTRACT ACT
OR OTHER APPLICABLE ACTS
Challenging an order of winding up
passed by the National Signature
Not Verified Digitally signed by Company Law Tribunal under Section

271(c) of the Companies Act, Jayant Kumar Arora Date: 2022.01.17

15:58:40 IST Reason:
2013 (for short the 2013 Act), which was confirmed by the National
Company Law Appellate Tribunal on appeals, the company in
liquidation, namely, Devas Multimedia Private Limited, through its ex‐­
Director has come up with an appeal in Civil Appeal No.5766 of 2021
and one of the shareholders of the company in liquidation, namely,
Devas Employees Mauritius Private Limited (hereinafter referred to as
DEMPL) has come up with another appeal in CA No.5906 of 2021.
The first respondent in these appeals, namely, Antrix Corporation
Limited (hereinafter referred to as Antrix), incorporated on 28.09.1992
under the Companies Act, 1956, is the commercial arm of the Indian
Space Research Organisation (ISRO for short) which is wholly owned
by the Government of India and coming under the administrative
control of the Department of Space. 3.2 On 28.07.2003, Antrix entered
into a Memorandum of Understanding with Forge Advisors, LLC, a
Virginia Corporation. The intent, as spelt out in the MOU, was 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”.
Apart from other things, the MOU contemplated Forge Advisors to
provide a broad array of advisory services that included near­term
tactical projects in the areas of sales, marketing, business
development, strategic partnership negotiations, and other related
business areas and long-term
projects in the areas of corporate strategy, market opportunity
assessment, business case development for new services, the launch
of new application services, etc. On 22.03.2004, 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). It was projected in the said proposal that DEVAS platform
will be capable of delivering multimedia and information services via
satellite to mobile devices tailored to the needs of various market
segments such as (i) consumer segment, comprising of
entertainment and information services to digital multimedia
consoles in cars and vehicles; (ii) commercial segment, comprising of
high-value information services to Commercial Information Devices
in commercial transport vehicles; and (iii) social segment, comprising
of Developmental Information Services to Rural Information kiosks in
underserved areas. On 17.12.2004 Devas Multimedia Private Limited,
(hereinafter referred to as ‘Devas’ or the ‘company in liquidation) was
incorporated as a private company under the Companies Act, of 1956.
In the meantime, the Central Bureau of Investigation (CBI) filed a
First Information Report on 16.03.2015, against the company in
liquidation namely Devas, as well as the officers of Devas and Antrix,
for offenses under Section 420 read with Section 120B of IPC and
Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption
Act, 1988. It was followed by a charge­sheet filed on 11.08.2016 and a
supplementary charge­sheet on 08.01.2019. Similarly the Enforcement
Directorate filed a report in ECIR No.12/BGZO/2015.
DEMPL simultaneously filed a writ petition in W.P. No. 6191 of 2021
before the Karnataka High Court challenging the constitutional
validity of Section 272(1)(e) of the Companies Act, 2013 and praying for
quashing the authorization dated 18.01.2021 granted by the Ministry
of Corporate Affairs to Antrix to initiate proceedings for winding up
Devas.
 FACTS OF THE CASE

The Supreme Court of India upheld the National Company

Law Appellate Tribunal (NCLAT) order winding up Devas
Multimedia Ltd on the grounds of fraud in Devas Multimedia
Pvt. Ltd v. Antrix Corporation Ltd. Devas is a multimedia
services company, and Antrix is the commercial arm of the
Indian Space Research Organisation (ISRO). The decision
comes at a critical juncture, as foreign investors in Devas are
attempting to seize Indian assets abroad. This brief examines
the history of the Devas-Antrix deal and the bilateral
investment treaty (BIT) disputes that India lost in this matter. It
examines India's failure to raise the fraud argument before the
arbitration tribunals. The Devas case teaches Indian
policymakers two important lessons: India must exercise its
regulatory power transparently and in accordance with due
process, and the country should have a clear and rigorous
litigation strategy in defending its interests before
international arbitration forums.
 JUDGMENT

Antrix initially refused to participate in the arbitration and

obtained and injuction from the Indian supreme court
enjoining the arbitration. After one year, the supreme court
lifted the injuction, allowing the arbitration to proceed.
Thereafter, Antrix participated fully in the arbitration. The Delhi
High Court has set aside a 2015 arbitral award directing Antrix
Corporation Limited, commercial and marketing arm of ISRO,
to pay US$ 562.2 million to Devas Multimedia Private Limited
over wrongful repudiation of contract.
 GROUP ANALYSIS
In view of the Supreme Court of India's order declaring Devas
to have been fraudulently incorporated in 2022, India may
claim that the Devas-Antrix deal is illegal since it was tainted
by fraud. The Supreme Court further stated in the case that "
[I]f 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 fraudulently obtained
item is against public policy in any nation, including India.

The next question is whether India can use this judgement to

oppose the legal actions being taken to seize its assets in
several foreign countries. This argument may or may not be
accepted by foreign courts, and each court's strategy will
differ depending on its jurisdiction. Courts like to refrain from
delving into the merits of the case and typically limit their
consideration of the decision to solely procedural issues,
especially in nations that are thought to be pro-arbitration.
However, courts in several jurisdictions have recently relaxed
their stance of giving arbitral awards a great deal of
deference. In France, for instance, courts frequently nullify
arbitral verdicts if there is evidence of dishonest coordination
between the investor and public authorities of the host state
in gaining the underlying contract. This is true particularly in
corruption cases.
 GROUP RECOMMENDATIONS
In the area of investment treaty arbitration, we analyzed that it is
important for India to build the capacity of different government
departments. Currently, the finance ministry plays a pivotal role in
defending India in these claims. However, for better coordination
between different ministries—including developing a robust
litigation strategy and identifying the appropriate law firms to
represent India in these claims and liaising with them—India must
develop an institution similar to the United States (US) Office of the
Assistant Legal Adviser for International Claims and Investment
Disputes. The US Office represents the country in investment
claims and coordinates activities within and outside the
department related to all aspects of international claims and
investment disputes. Such an institution with in-house expertise in
investment treaty arbitration can bolster India’s preparedness in
handling these BIT claims.
Analysis tells us that BIT arbitration is an exorbitant affair, not only
in terms of the amounts that need to be paid to the investor in case
the country loses, but also in terms of litigation expenses. Thus, in
these disputes, there should always be a clear litigation strategy
and complete coordination between the different ministries
involved to avoid such costly mistakes.
"Finding of the Tribunal, (a) that a public largesse was doled out in
favour of Devas, in contravention of the public policy in India; (b)
that Devas enticed Antrix/ISRO to enter into an MoU followed by an
Agreement by promising to provide something that was not in
existence at that time and which did not come into existence even
later; (c) that the licenses and approvals were for completely
different services; and (d) that the services offered were not within
the scope of SATCOM Policy etc. are actually borne out by records, "
the SC stated.
 LIMITATIONS

The Antrix-Devas case presents India with two restrictions.

India must first follow the law and exercise its regulatory
authority openly. The Devas case is a prime example of the
nation's inadequate administration and regulation. The
government in power at the time did not disclose the
anomalies in the Antrix-Devas transaction to annul the
contract, despite them becoming obvious a few years after
the agreement was signed. Instead, it used the justification of
"national security" to conceal its errors. The S-band spectrum
was once again purchased without following the proper
procedures or being completely clear about its intended use,
and India did not foresee that these activities would
eventually be opposed worldwide in BIT arbitration tribunals.
India must immediately put into place a transparent,
understandable, and predictable regulatory framework built
upon the complete internalization of the obligations under
international law inherent in BITs.

Two, when defending its interests before international

arbitration forums, India must adopt a precise and strict
litigation approach. The NDA administration says that as the
BIT claims progress, it would become clear that India made a
mistake in its legal strategy by failing to raise the
jurisdictional objection of fraud and corruption before the BIT
arbitration panels. India also ought to have sped up the
criminal investigation process. The involvement of numerous
ministries and agencies may be in part to blame for the
failure to bring up the corruption and fraud issue. Therefore, it
is necessary to address the improper lack of coordination
between these agencies.