Antrix deal: NCLT orders winding up of Devas for indulging in fraud

The National Company Law Tribunal (NCLT) has ordered liquidation of Devas Multimedia Pvt Ltd whereas declaring that the corporate was not solely included in a fraudulent method to hold out illegal functions and its administration is constant to resort to fraudulent actions in relation to its 2005 controversial contract to get bandwidth from Antrix Corporation, ISRO’s industrial arm.

The NCLT has directed the Official Liquidator (OL) to take expeditious steps to liquidate the corporate in order to forestall it from perpetuating its fraudulent actions and abusing the method of legislation in implementing the award handed in 2015 by the arbitration tribunal of the International Chamber of Commerce (ICC), and submit a report by July 7.

“The incorporation of Devas itself was with fraudulent motive and unlawful object to collude and connive with the then officials of Antrix and to misuse/abuse process of law, to bring money to India and divert it under dubious methods to foreign countries,” stated Bengaluru Bench of NCLT stated in its verdict delivered on May 25.

A Bench comprising Rajeshwara Rao Vittanala (Member-Judicial) and Ashutosh Chandra (Member-Technical) delivered the decision whereas permitting an organization petition filed Antrix on January 19, 2021 after acquiring sanction from the Central authorities to liquidate Devas (acknowledged by two former workers of ISRO) on the costs of fraud in execution of contract.

The NCLT discovered that “Devas is not carrying out any business operations after termination of contract with Antrix. Admitted Devas hardly has any other business except to grab PS-1 and PS-2 [satellites] from Antrix in terms of agreement and to carry out its illegal object to divert money. Devas failed to show any cogent reason as why it should not be wound up and to keep its name on the Registrar of Companies (RoC), Karnataka. The only reason apparent on record, by perusal of various pleading raised in the instant petition is that it wants to prosecute enforcement of award in question, in the name of the company in the courts of India and aboard by abusing the process of law.”

“Therefore, the intention of Devas in opposing the instant petition by raising untenable baseless grounds is to abuse the rights conferred by virtue of law, on the company and to abuse the process of law,” the NCLT stated whereas mentioning that its shareholders of Devas don’t have any function in the moment proceedings at this stage as fraudulent actions are attributed to Devas and its officers from the date of its incorporation.

“A statement of financial position and working results of Devas from 2010-11 to 2018-19, as per balance sheets and annual reports filed with ROC, Karnataka, inter-alia shows, revenue (sale of service) for the year 2011 to 2014 are a mere ₹79,115, ₹58,429, ₹36,489 and ₹7,566 respectively, and nil for the years 2015-19. Similarly, its fixed assets are negligible, and it is totally nil for the years 2018-19,” the NCLT identified.

About settlement of Devas singled with Antrix, the NCLT famous that one S.R. Gururaj, who was an Article Clerk in the workplace of Chartered Accountant M. Umesh (a director of Devas) had signed on behalf of Devas although Mr. Gururaj was not related to Devas in any method. Mr. Gururaj had given a press release to the investigating businesses that he signed the settlement on the instruction of Mr. Umesh.

“The above facts clearly establish that even the idea to incorporate Devas was with fraudulent intentions coupled with mala fide objects to enter into agreement with Antrix with no responsibility at all. It is unknown to law that such a prestigious agreement with Government-owned company was got signed by a clerk, paying remuneration for the same,” the NCTL stated.

The NCLT stated that Devas, which sighed settlement inside 45 days of its incorporation, didn’t possess minimal expertise even to qualify to take part in siuch contract, a lot much less to acquire it. Devas didn’t cease its fraudulent actions even after termination of the contract because it resorted to misuse the arbitration clause in settlement with out opting to settle dispute involving senior administration of Devas and Antrix previous to invoking arbitration clause.

Devas has efficiently taken arbitration out of the nation opposite to the settlement and continued to misuse course of of legislation earlier than courts in India and overseas to its benefit, the NCLT noticed.

On competition of Devas that fraud was neither declare in termination letter of 2011 nor earlier than the ICC throughout arbitration, the NCLT observed that fraud was emerged put up 2016 when Central Bureau of Investigation (CB) carried out probe and adopted by investigations by Enforcement Directorate for violation of provisions of the Prevention of Money Laundering Act and the Foreign Exchange Management Act.

The NCLT has stated that liquidation continuing was impartial one irrespective of the felony and the civil proceedings pending in opposition to Devas earlier than different authorities and the courts.