SC dismisses plea of Devas Multimedia against NCLAT winding up order
Jan 17, 2022
New Delhi [India], January 17 : The Supreme Court on Monday dismissed an appeal filed by Devas Multimedia Private Limited challenging National Company Law Tribunal (NCLAT) order that allowed to wind up the company.
A Bench of Justices Hemant Gupta and Justice V Ramasubramanian dismissed the plea of Devas Multimedia and upheld the order of NCLAT.
"We do not know if the action of Antrix in seeking the winding up of Devas may send a wrong message, to the community of investors. But allowing Devas and its shareholders to reap the benefits of their fraudulent action, may nevertheless send another wrong message namely that by adopting fraudulent means and by bringing into India investment in a sum of Rs 579 crores, the investors can hope to get tens of thousands of crores of rupees, even after siphoning off INR 488 crores," the Bench stated in its 134 pages of judgement.
While dismissing the plea of Devas, the top court in its order said, "Therefore, in fine, we find all the grounds of attack to the concurrent orders of the NCLT and NCLAT to be unsustainable. Therefore, the appeals are dismissed. However, without any order as to costs."
"If as a matter of fact, fraud as projected by Antrix, stands established, the
motive behind the victim of fraud, coming up with a petition for winding up, is of no relevance. If the seeds of the commercial relationship between Antrix and Devas were a product of fraud perpetrated by Devas, 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. 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 hence the motive behind the action brought by the victim of fraud can never stand as an impediment," the judgement further stated.
Earlier, the NCLAT had upheld the order of the Bengaluru bench of the National Company Law Tribunal (NCLT), which had on May 25, 2021 directed winding up of Devas Multimedia and appointed a provisional liquidator for the purpose.
The directions of the NCLT had come on a petition filed by Antrix Corporation, the commercial arm of the Indian Space Research Organisation (ISRO).
The NCLT Bengaluru bench ordered the winding up of Devas observing that it was incorporated in a "fraudulent manner to carry out unlawful purposes" and its management resorted to "fraudulent activities" in relation to the commercial contract with Antrix.
The NCLT had said that Devas Multimedia was incorporated with a fraudulent motive to collude and connive with the then officials of Antrix Corporation to get bandwidth from it by entering into an agreement in 2005, which was subsequently cancelled by the government.
The CBI had filed a charge sheet and ED had initiated PMLA proceedings into the Antrix-Devas deal and the Ministry of Corporate Affairs had also initiated an investigation into the affairs of Devas Multimedia.
