It is genuinely unfortunate that, with Isro’s industrial arm Antrix Corporation losing its second arbitration case against Devas Multimedia, and getting ordered to spend the latter $1.2bn, the government is attempting to wind up Devas on grounds of fraud. Indeed, the National Company Law Tribunal (NCLT) has acted with alacrity on Antrix’s winding-up petition and currently appointed a provisional liquidator for Devas. The causes cited for the demand to wind up Devas are intriguing the government is arguing that Devas committed a fraud against Antrix and so wants to be wound up if that occurs, the liquidator who requires charge of Devas can even cease the company’s demand against Antrix or, alternately, the government can petition Indian courts to overturn the international awards on grounds of fraud.
The dilemma with the move is that offered the government’s wealthy history of not honouring international arbitration awards—and this is not special to just the existing establishment—few international investors are going to think the arguments certainly, it will be viewed as one more try by India to stay away from honouring international awards. Prior to the winding-up petition, as it occurs, Devas was investigated by each the CBI and the Enforcement Directorate and, at a single point, a fine of Rs 1,585 crore was imposed on it on grounds that the FDI it brought in—Rs 579 crore—violated India’s Fema guidelines. The winding-up petition argues more fraud and says that Antrix in no way even had the technologies it claimed to have and that the technologies to provide net services working with satellites did not even exist when Devas signed the deal with Antrix to construct satellites for it.
There are various troubles with the method. For a single, as the Delhi High Court ruled in the Tata Docomo award case, even it was correct that Tata paying Docomo violated Fema rules—in that case as well, the government argued that the original agreement involving Tata and Docomo was illegal—the award would have to be complied with, and the Tatas could spend the Fema fine as nicely. Two, the investigating authorities alleging fraud and proving it are two distinctive factors certainly, their track record in proving instances is hardly inspiring. Also, the government would surely have argued fraud in each the arbitration hearings, but their awards recommend this did not reduce a lot ice it will now have to prove this in different courts, beginning from the NCLT to the NCLAT, and, lastly the Supreme Court. Three, if Devas did not have the technologies to provide terrestrial net services working with satellite signals at that time, that was its dilemma, not Antrix’s.
It is unfortunate aside that the allegation of fraud tends to make a mockery of the arguments created by prime Isro officials, such as its then chief G Madhavan Nair, at the time that the space spectrum it was promoting Antrix was, in itself, not worth a lot, and that the CAG, which had raised an alarm more than it—that is why the government cancelled the contract, right after which Antrix went to arbitration courts—had got it rather incorrect. It was argued that, even though it was correct the spectrum became more beneficial when it was used to provide terrestrial services like broadband net, the telecom division would have charged Devas a license charge at that time.