OPEN APP
Home / Companies / News /  HC sets aside $562.2 million arbitral award in Devas case
Listen to this article

NEW DELHI : The Delhi high court on Monday set aside an arbitral award of over $562.2 million in favour of Devas Multimedia Pvt. Ltd, over the sudden termination of its agreement with the Indian Space Research Organisation’s (Isro’s) commercial arm Antrix, offering relief to the government.

Deciding Antrix’s plea against the arbitral award, Justice Sanjeev Sachdeva held that the arbitral award dated 14 September 2015 suffered from patent illegalities and fraud and was also in conflict with the “public policy of India".

Devas and Antrix signed a deal in 2005 under which Antrix had to build and launch two Isro satellites and lease S-band satellite spectrum on them to Devas, which in turn would use it to provide multimedia services. However, after reports of procedural and regulatory irregularities, Antrix cancelled the contract in 2011 by invoking the force majeure (extraordinary circumstances) clause, prompting Devas to approach arbitral tribunals for damages.

On 14 September 2015, an arbitral tribunal constituted by the International Chamber of Commerce awarded 15,000 crore as damages and interest to Devas, allowing their claim.

On 17 January, the Supreme Court cleared the decks for winding up of Devas at the instance of Isro’s commercial arm Antrix, as it affirmed the findings of the National Company Law Appellate Tribunal that Devas was set up for a “fraudulent and unlawful purpose" of “unjust enrichment". Setting aside the award, Justice Sachdeva held that being a product of fraud, Devas and its shareholders cannot be allowed to reap the benefits of their fraudulent action as it would send a wrong message to society.

The court also cited the apex court’s judgement of 17 January, where it held that the “very seeds of the commercial relationship between Antrix and Devas were a product of fraud perpetrated by Devas and, thus, 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".

“It (SC) has held that 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 allowing Devas and its shareholders to reap the benefits of their fraudulent action would send another wrong message, namely that by adopting fraudulent means and by bringing into India an investment of 579 crore, the investors can hope to get tens of thousands of crores of rupees, even after siphoning off 488 crore," the court said in an 87-page judgement.

The judge said the findings on fraud returned by the apex court on 17 January clearly establish that the arbitral award contravenes the fundamental policy of Indian law being in conflict with the most basic notions of justice and is also contrary to the national economic interest.

“The action by the Delhi high court is a mockery of the international arbitration system and a warning that the Indian judiciary is being weaponized by the government against those who assert their legal rights abroad. Devas’ shareholders will not waver or be deterred from pursuing their rightful claims in every impartial court around the world until the multiple arbitration awards are fully satisfied," Matthew D. McGill, counsel to Devas shareholders.

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout