The Supreme Court’s decision to uphold the winding down of Devas Multimedia means that the arbitration award cannot sustain anywhere in the world, according to Antrix legal counsel. 

On Monday, the apex court upheld the winding down decision of the National Company Law Tribunal and National Appellate Company Law Tribunal for Devas Multimedia. According to Antrix and certain legal experts, this could impair the international legal proceedings being conducted by Devas shareholders against Antrix and the Republic of India worldwide.

Chinmoy Roy, Jr Legal Officer, Antrix Corporation Limited ,told BusinessLine, “The findings of the Supreme Court are very explicit and clear. Based on observations of the court in Para 13.5 and 13.6 in the order, the Award cannot sustain in the eyes of law anywhere in the word.”

“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 Supreme Court said in its order.

“[A]llowing 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 an investment in a sum of ₹I 579 crore, the investors can hope to get tens of thousands of crores of rupees, even after siphoning off ₹488 crore,” the court said.

Jay Newman, a senior advisor to Devas shareholders, however, said the court’s decision is not a setback, nor is it a surprise. “It was scripted for months. The Modi government will now appeal to global courts waving the NCLT ruling as yet another bogus excuse to evade payment. Courts in the US, Netherlands, Canada and France, have seen through the previous sham proceedings and evasion tactics, and this ruling is no different. Devas shareholders will continue to identify and seize Indian state assets around the world until the debt has been paid,” Newman said.

The case

Devas, which had commenced arbitration against Antrix in July 2011, was issued an award by the International Chambers of Commerce of $562.5 million for damages against the cancellation of the 2005 contract given to it to build two satellites. As of now, shareholders are seeking payment of awards over $1.3 billion from India.

Devas shareholders have been seeking the registration as well as the enforcement of the award worldwide. With Indian assets as well as Indian public sector units caught up in arbitration in the US, Canada and France so far. Devas shareholders also achieved successful enforcement of parts of the award, most significant being the Canadian court granting $30-million Airport Authority of India assets to be seized, a district court in Seattle granted. 

Rahul Kamerkar, an advocate, added, “The SC’s decision will definitely have implications. Because how else will you execute the order if you are a non-existent entity. This will put an end to it actually because the foriegn courts will have to recognise the order of winding up of the Indian courts. The court appointed liquidator could take up the shareholders’ claims or give them up.”

Earlier in December, Antrix had told a court in the US that Devas shareholders have no locus standi to claim the $1.3-billion arbitration award, given that Devas Multimedia Private Ltd is now under the control of a liquidator appointed by the National Company Law Tribunal.