Antrix Devas dispute: Division bench of Delhi HC upheld single bench order, dismisses appeal of DEMPL

New Delhi [India], March 17 : The Division Bench of Delhi High Court on Friday dismissed the appeal moved by Devas Employees Mauritius Pvt Ltd challenging the single bench order dated August 29, 2022, which allowed Antrix Corporation Ltd's plea and sets aside the Arbitral award dated September 14, 2015, passed by the Arbitral Tribunal allowing the claim of Devas Multimedia Private Limited.
The Division Bench of Chief Justice Satish Chander Sharma also comprising Justice Subramonium Prasad said, the Single Judge has not made an error in setting aside the ICC Award on the grounds of fraud and it is in conflict with the public policy of India.
Accordingly, the challenge to the Judgment by the Appellant, on the ground that the Single Judge could not consider the grounds of public policy and fraud under Section 34 fails, said the Division Bench.
The principle of fraud vitiates all solemn acts and is applicable not only to the primary proceedings but also to all collateral proceedings that arise out of the same facts and circumstances. The act of fraud is an anathema to all equitable principles and every transaction tainted with fraud must be viewed with disdain by Courts, said the division bench.
In the instant case, the Supreme Court in the Civil Appeal has held that the commercial relationship between Devas and Antrix is a product of fraud, and as a consequence, the Devas Agreement, the ICC Award, and all other disputes arising out of the transaction would be tainted by fraud. Permitting Devas and its shareholders to reap the benefits of the ICC Award would amount to this Court perpetuating the fraud. Such a view would be against all principles of justice, equity and good conscience, noted the bench headed by the Chief Justice of Delhi.
The Appellant Devas Employees Mauritius Pvt Ltd (DEMPL) is a company incorporated under the laws of Mauritius and is a shareholder, owning 3.48% of the issued and paid-up equity share capital of Devas Multimedia Private Limited which is a company incorporated under the Companies Act, 1956 which has since been wound up under the provisions of the Companies Act, 2013 and is represented in the present proceedings through its Official Liquidator, noted the court.
Earlier in its Judgement, the single bench held that the Impugned award dated September 14 2015 suffers from patent illegalities and fraud and is in conflict with the Public Policy of India.
The court while passing the judgement noticed that the Arbitral Tribunal had incorrectly excluded the evidence pertaining to the pre-contractual negotiations which it could not have and had thus committed a patent illegality in the award
Delhi HC also had said that the Supreme Court by its judgment dated January 17, 2022, has 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.
Antrix Corporation Limited is an Indian government-owned company under the administrative control of the Department of Space.
Antrix entered into a Memorandum of Understanding (MOU) with Forge Advisors, LLC, a Virginia Corporation, USA. Forge Advisors made a presentation to Antrix Corporation Limited proposing an Indian Joint Venture which has now come to be known as "DEVAS" (Digitally Enhanced Video and Audio Services). It was projected in the said proposal that the DEVAS platform will be capable of delivering multimedia and information services via satellite to mobile devices tailored to the needs of various market segments. This presentation was followed by a proposal to form a strategic partnership to launch DEVAS which delivers video, multimedia and information services via satellite to mobile receivers in vehicles and mobile phones across India.
Under the said proposal, it was contemplated to form a joint venture which would cast an obligation on the part of ISRO and Antrix, to invest in one operational S-Band satellite with a ground space segment to be leased to the joint venture. In return, ISRO and Antrix were to receive lease payments of USD 11 million annually for a period of 15 years.
In pursuance of the said proposal, on December 17, 2004, Devas Multimedia Private Limited was incorporated as a private company under the Companies Act, 1956 Antrix entered into an Agreement with Devas Multimedia Private Limited on January 28, 2005.
The Agreement dated January 28, 2005, was terminated by Antrix by a Communication dated February 25, 2011, which stated that the Government of India had taken a policy decision not to provide orbital slots in S-Band for commercial activities.
Eventually, on July 1, 2011, Devas initiated arbitration proceedings against Antrix under the rules of the International Chambers of Commerce (ICC), seeking damages for a repudiatory breach of the Devas Agreement by Antrix.
During the pendency of proceedings before the ICC Arbitral Tribunal, the Central Bureau of Investigation (CBI) registered an FIR on 16.03.2015 alleging criminal conspiracy, criminal misconduct, cheating and other corrupt practices on the part of Devas and its officers. A charge sheet in respect of the FIR was filed against Devas, its officers and certain other
individuals by the CBI on August 11, 2016.