Antrix Devas Deal: Delhi High Court Upholds Single Judge's Decision Of Setting Aside 2015 Arbitral Award, Says Fraud 'Serious And Complex'

The Delhi High Court on Friday dismissed an appeal against single judge’s order setting aside a 2015 arbitral award by which Antrix Corporation Limited, commercial and marketing arm of ISRO, was required to pay US$ 562.2 million to Devas Multimedia Private Limited over wrongful repudiation of a contract.A division bench of Chief Justice Satish and Justice Subramonium Prasad in its judgment on the appeal moved by Devas Employees Mauritius Private Limited said it is "well established" that Devas was incorporated with fraudulent intentions so that it could enter into the agreement with Antrix.The court said it sees no perversity in Single Bench's decision to set aside the arbitral award on the grounds of fraud and it being with in conflict with the public policy of India. Permitting Devas and its shareholders to reap the benefits of the ICC Award would amount to the court perpetuating the fraud, said the court."Accordingly, the challenge to the Impugned Judgment by the Appellant, on the ground that the Ld. Single Judge could not consider the grounds of public policy and fraud under Section 34 fails," said the court.Justice Sanjeev Sachdeva in August last year had allowed the plea filed of Antrix under section 34 of the Arbitration and Conciliation Act, 1996. The single judge held that the arbitral award dated September 14, 2015 suffered from patent illegalities and fraud and was also in conflict with the public policy of India.Pertinently, while the arbitration proceedings were pending, Antrix had sought winding up of Devas before the National Company Law Tribunal alleging that Devas was formed for a fraudulent and unlawful purpose and its affairs had been conducted in a fraudulent manner. In 2021, a Provisional Liquidator was appointed by the NCLT and NCLT had allowed winding up of Devas.The order of winding up was challenged before the National Company Law Appellate Tribunal, appeals for which were dismissed. Thereafter, the orders were assailed before the Supreme Court which upheld the order passed by NCLAT.The division bench today said Devas could manage to enter intro agreement with Antrix only by conniving and colluding with the then officials of Antrix."The collusion between the officials of DoS and Antrix is borne out from the Note for the 104th Space Commission which did not contain any references to the Devas Agreement. The Cabinet Note dated 17.11.2005, which were prepared ten (10) months after the signing of the Devas Agreement, did not make any mention about Devas or the Agreement, but the cabinet proceeded on the basis that ISRO had received multiple expressions of interest from various entities. Therefore, the Cabinet was kept completely in the dark and material information was suppressed by Devas when Cabinet approval was obtained by Devas," said the court.The court also said the Cabinet was misled to believe there are several firm expressions of interest before ISRO, even though the agreement was granted only to Devas."Devas has thus not only suppressed, but also misrepresented information in order to pursue its fraudulent activities in India," it added.The court also said that Devas Agreement is an agreement of huge magnitude pertaining to the leasing out of transponders by Antrix, to Devas, on the Primary Satellite-I, without the same being preceded by any auction or tender process."It is also established that the minutes of the meeting of the Sub Comittee dated 06.01.2009 were manipulated and an experimental license was granted on 07.05.2009 and the original minutes were restored on 20.11.2009 after protest," it observed.The court said the facts clearly establish that the fraudulent conduct of Devas begins from the very incorporation of the company and extends to the Devas Agreement, in its entirety, and all other actions pursued by it."The nature of fraud is so serious and complex that it not only resulted in the company being wound up under the Companies Act, 2013, but also led to a criminal investigation against the company and its officers. The Devas Agreement itself has been obtained through the process of fabrication of documents and misrepresentation and constitutes a clear case of fraud. Such is the extent of the fraud that it permeates through every agreement, transaction or award entered into by Devas. The fraud propagated by Devas is not only against Respondent No. 1, but against the State as a whole, inasmuch as it attempts to obtain monetary benefits from the State itself, by attempting to enforce an arbitral award, which itself is arising out of fraud. A fraud of such scale would certainly render the award to be in conflict with the public policy of India." The court said nothing prevented the Single Judge from relying on the findings of the Supreme Court and using them for the purposes of setting aside the award under Section 34 of Arbitration Act on the ground that the agreement itself was a product of fraud and, therefore, the making of award is automatically induced by...

Antrix Devas Deal: Delhi High Court Upholds Single Judge's Decision Of Setting Aside 2015 Arbitral Award, Says Fraud 'Serious And Complex'

Nupur Thapliyal

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