After the Supreme Court upheld the National Company Law Appellate Tribunal (NCLAT) order winding up Devas (Digitally Enhanced Video and Audio Services) Multimedia Private Limited, Union Finance Minister Nirmala Sitharaman held a press conference to brief on the controversial Antrix-Devas issue of the UPA era and charged the Congress party of committing fraud against the country.
Hauling Congress over the coals, Sitharaman said the Antrix-Devas deal is a fraud by Congress, of Congress, for Congress.
Watch Live: Smt @nsitharaman addresses a press conference at National Media Centre in New Delhi. https://t.co/w3NexRGT3U
— NSitharamanOffice (@nsitharamanoffc) January 18, 2022
Slamming the UPA govt over the 2005 “fraud” deal between Antrix and Devas which they took six years to cancel in 2011, the Finance Minister said, “Antrix appeared in agreement with Devas in 2005 during the UPA government. It was a fraud deal. Fraud on people of India. Fraud against the country. This fraudulent case is a characteristic of the UPA government and the case has become a big legal issue today. Prime Minister Narendra Modi is fighting in court to ensure justice.”
I would like to talk on Supreme Court judgment on Devas-Antrix issue. SC has given a comprehensive order. UPA got cancelled this deal in 2011. It was a fraud deal: Finance Minister Nirmala Sitharaman pic.twitter.com/DyhcpFchkh
— ANI (@ANI) January 18, 2022
“In 2011, when the whole thing was cancelled, Devas went to international arbitration. The government of India never appointed an arbitrator, was reminded to appoint an arbitrator within 21 days, but the government did not appoint,” she said accusing Congress-led UPA of entering into a “fraud” and “scandalous” deal with Devas Multimedia by allocating S-band spectrum used by the defence for “pittance”.
“Master game players in this [Devas fraud] are the Congress; with this SC order [on Antrix-Devas issue] we’re able to see that. Now it should be Congress’ turn to answer how Cabinet was kept in dark. They should have no moral right to speak about crony capitalism”, Sitharaman added, further reminding how a couple of months before the cancellation of the agreement a sitting UPA minister was arrested in the scandal related to the deal.
Master game players in this are the Congress & with this SC order we’re able to see that…Now it should be Congress’ turn to answer how cabinet was kept in dark. They should have no moral right to speak about crony capitalism: Finance Min Nirmala Sitharaman on Devas-Antrix issue pic.twitter.com/dpqmgc8au3
— ANI (@ANI) January 18, 2022
Nirmala Sitharaman accuses Congress of fraud in entering into Antrix-Devas deal, cites SC judgment
Sitharaman said this kind of selling of primary endowments like wavelengths, satellites or spectrum band, giving it away to private parties and making money from private parties and making a deal out if it marks the feature of the Congress governments. This today. after nearly 10-11 years of struggle, we’ve had the Supreme Court come out with a comprehensive order. This is proof of how the Congress party, when in power, misuses its position, remarked the FM.
Further apprising how the Congress had tried to wash off its hands from the fraudulent deal, Nirmala Sitharaman said that in 2011 in an interview to a television channel, the telecom minister then, Kapil Sibal had said that the cabinet was not even aware of the details of the Antariksh Devas, adding that it was surprising considering ISRO comes under the PMO.
She also quoted the then PM Manmohan Singh as saying on February 24, 2011, that “there was no question of the PMO office to approve this deal. It never came to that level”.
Speaking about the extent of fraud involved in the agreement, Nirmala Sitharaman read out para 12.8 of the SC order which stated that a total investment of Rs 579 crore was brought in by Devas, but almost 85 per cent of the said amount was siphoned out of India partly towards the establishment of the subsidiary in the USA, partly towards business support services and partly towards litigation expenses. “You bring in the money and take it out to fight all the arbitration and call it bringing in investment to the country,” said the FM explaining how the “fraud” was masterminded.
She further read an excerpt from the SC judgement which read that the manner in which a misleading note was out to the cabinet and the manner in which the minutes of the DAG were manipulated highlighted by the Tribunal also shows that the affairs of the company were conducted in a fraudulent manner.
Confirming that the liquidation process (for Devas Multimedia) will begin soon, the FM informed that the arbitration tribunals have awarded USD 1.2 bn plus cost and interest on pleas by Devas shareholders against cancellation of Antrix deal.
Liquidation process (for Devas Multimedia) will begin: Finance Minister Nirmala Sitharaman on Devas-Antrix issue after Supreme Court order dismissed Devas’ appeal against National Company Law Tribunal and National Company Law Appellate Tribunal pic.twitter.com/sA0qszIees
— ANI (@ANI) January 18, 2022
“We are fighting in all courts to save taxpayers’ money which otherwise would have gone to pay for the scandalous Antrix-Devas deal”, added Nirmala Sitharaman during the press conference.
SC upholds liquidation of Devas Multimedia on grounds that it was incorporated with fraudulent intention
It may be noted that the Supreme Court bench Justices Hemant Gupta and V Ramasubramanian Monday, upheld the National Company Law Appellate Tribunal (NCLAT) order winding up Devas (Digitally Enhanced Video and Audio Services) Multimedia Private Limited, which in association with ISRO’s space arm Antrix Corporation aimed to deliver video, multimedia and information services via satellite to mobile receivers in vehicles and mobile phones across India.
The court stated that it is a case of “fraud of a huge magnitude which cannot be brushed under the carpet, as a private lis (suit)”.
The National Company Law Tribunal had ordered the winding up of Devas on May 25, 2021, on a petition by Antrix. This was affirmed by NCLAT on September 8, 2021. It also appointed a provisional liquidator, saying Devas was incorporated with a fraudulent motive to collude with the then officials of Antrix Corporation.
A Supreme Court has junked the Devas’ case against the NCLAT. The bench also upheld the tribunal’s order from September last year making it the first case of winding up on a company on grounds of fraud.
The Antrix-Devas multimedia deal
Devas Multimedia and Antrix, the commercial arm of the Indian Space Research Organisation (ISRO), struck an agreement in 2005 to provide multimedia services to mobile subscribers utilising the leased S-band satellite spectrum. The agreement was terminated in 2011 on the grounds that the broadband spectrum auction had been tainted by fraud, and the government required the S-band satellite spectrum for national security and other social reasons.
The scandal first surfaced when The Hindu revealed in 2011 that there were some inconsistencies in Antrix and Devas’ agreement. They presented the findings of a draught audit report, highlighting irregularities such as financial mismanagement, conflicts of interest, rule violations, and favouritism. This revelation came at the heel of the 2G spectrum scam which was condemned for the high level of corruption.
The government finally cancelled the deal on 17 February 2011. Devas then took Antrix and the Government to International Court for cancelling its contract by the Cabinet Committee on Security in 2011.
Devas Multimedia filed a complaint with the International Chambers of Commerce to get the annulment overturned (ICC). Under the Bilateral Investment Treaty (BIT), Mauritius investors in Devas Multimedia filed a claim under the India-Mauritius BIT, while Deutsche Telekom, a German business, filed a claim under the India-Germany BIT.
All these proceedings led to adverse awards given against India. India was ordered to pay a total of USD 1.29 billion in damages after losing all three cases.
This led to courts in France and Canada ordering attachment of India’s assets in these countries to recover the dues. Canada even started seizing the Airports Authority of India and Air India’s assets for recovery. These steps have severely dented India’s image abroad. Now that the Supreme Court has ordered the liquidation of Devas Multimedia company describing it as fraudulent, India will have to fight its cases again.
In 2015, the Central Bureau of Investigation registered a First Investigation Report (FIR) against Devas and its officers under the Prevention of Corruption Act, 1988.
Congress’ involvement in the Antrix-Devas deal
When the United Progressive Alliance (UPA) came to power in 2004, the game began just months after the new administration entered office. Dr M Chandrashekhar, a former ISRO employee, established a start-up company with the goal of defrauding the Indian government. The goal was to secure the S-band spectrum from the government, and investors came from the United States, Canada, France, and Germany.
Next year, Devas struck a partnership with Antrix Corporation to build two satellites and provide digital and multimedia services in India. The startup company requested an S-band spectrum in exchange for Rs 1,000 crore in multimedia services, and the Centre agreed to grant the company with S-band spectrum.
The same government, on the other side, requested Rs 12,500 crore for the S-band spectrum for its own firms, BSNL and MTNL. Meanwhile, the fledgling company did not begin work, and the Rs 1.75 lakh crore 2G telecom scandal surfaced in 2011. The Antrix-Devas transaction was quickly cancelled by the Manmohan Singh government, which was preoccupied with the 2G scandal.
Hearings in the International Chamber of Commerce (ICC) arbitration court commenced for Devas. Manmohan Singh’s government did not even send a lawyer to the arbitration court to defend India. The ICC chose a lawyer to represent India on its own, but bizarrely, the UPA government did not even furnish the lawyer with information on the case. Finally, the ICC arbitration court ordered the Indian government’s assets abroad to be attached in order to recover dues. Devas investors filed lawsuits in the United States, France, Germany, and Canada.
When the Modi government took up office in 2004, it quickly requested that the CBI and ED investigate the matter, and it dispatched its counsel to overseas courts.
Antrix Corporation sought the NCLT liquidate Devas Multimedia company on the Centre’s directives, claiming that it was set up with the intent to cheat the exchequer. NCLT ordered the company’s liquidation, which Devas challenged in court, but NCLAT affirmed the decision. Devas took its case to the Supreme Court, which dismissed it on Monday.
