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International Tribunal rules against India in Devas-Antrix deal

India Blooms News Service | | 26 Jul 2016, 08:12 pm

#The Hague, # Devas-Antrix deal, # Arbitration case, # ISRO, # India loses case, #Heavy damages, #Investment contrstraints

The Hague, July 26 (IBNS): In a major blow to its image as an investment destination, India lost a big arbitration case in the International Tribunal in The Hague for cancelling a satellites and spectrum deal with Bangalore-based Devas Multimedia and could end up paying damages worth a billion dollars.

While the Indian government said it is examining the award handed over by the Tribunal and legal recourse, as deemed fit, will be taken, the ruling came as a big blow to the country both financially and in terms of its image for foreign investment.

The contract was cancelled in 2011 by Antrix Corporation Limited which is the commercial wing of Indian Space Research Organization (ISRO).

Antrix had in 2005 signed the deal with Devas Multimedia, an Indian company headquartered in Bangalore and founded by a team of satellite entrepreneurs and executives, to build two satellites on which Devas would lease transponders in India. Bundled into the deal was 70 MHz of S-Band spectrum which was allegedly "grossly underpriced" at Rs 1000 crore.

The ruling at The Hague, was the second by an international tribunal arising out of the cancellation of the Devas-Antrix contract.

India reacted to the verdict with its Department of Space saying that "the Government of India reiterates that it had invoked the essential security interests through a well reasoned, valid and proper CCS decision."

"The award of the Tribunal is being examined and legal recourse, as deemed fit, will be taken. We also remain committed to pursue our larger national interests including sovereign strategic security interests in this matter," read a government statement.

"Meanwhile, the Enforcement Directorate, has issued a show cause notice to Devas for violation of FEMA, 1999 and are further investigating the case under Prevention of Money Laundering Act, 2002. Enforcement Directorate have issued show cause notice to Devas for contravention to the provisions of FEMA, 1999," it said.

"The CBI have filed an FIR against, inter-alia, M/s Devas Multimedia Pvt. Ltd, Bangalore; and other unknown public servants of M/s Antrix/ISRO/DOS. This case is presently under investigation," it said.

Devas too issued a statement.

“Devas committed to partner with Antrix on a hybrid satellite-terrestrial infrastructure project to bring nationwide satellite/terrestrial broadband wireless access and audio visual services to India. With today’s PCA award, two international tribunals have now unanimously agreed that financial compensation should be paid after the annulment of Devas's rights,” said Devas Chairman Lawrence Babbio, former Vice Chairman of Verizon, the largest telecommunications company in the United States.

“Other courts in France and the United Kingdom have agreed that the award against Antrix ought to be enforced. We prefer a mutually agreeable resolution of this matter. But until that occurs, Devas and its investors will continue to press their claims before international tribunals and in courts around the world,” he said.

The verdict of the tribunal is likely to slap on India damages of a billion dollars.

The verdict could also mark India as unworthy of foreign investment because of abrupt policy changes.

Former ISRO chairman G Madhavan Nair, among others, were blamed for their roles in the deal, triggering a row as Nair cried foul and said it was a conspiracy.

The bungling in the deal had caused early exit of Nair as Chairman of ISRO.

CBI, which had registered a case last year, carried out searches at the premises of Devas Limited as well as the then Executive Director of Antrix K R Sridhara Murthi in Bengaluru.

An FIR was lodged against Murthi, M G Chandrasekhar and R Vishwanathan of Forge Advisors, Devas Multi-media Private Limited and unnamed officials of Antrix, ISRO and Department of Space in a designated court in Bangalore.

The agency has slapped 120-B (criminal conspiracy), 420 (cheating) of Indian Penal Code and relevant sections of Prevention of Corruption Act against them.

It is alleged that the accused people had entered into a criminal conspiracy and the government officials abused their position by favouring Devas by giving them rights for delivery of videos, multimedia and information services to mobile phones using S-Band through GSAT-6 and GSAT-6A satellites and terrestrial systems in India.

CBI said that a deal between Antrix and Devas was fixed in principle in January 2005 for lease of S-Band transponders. However, the then Executive Director of Antrix signed it on behalf of Antrix six months later only after ensuring that Chandrashekhar and Vishwanathan were majority stakeholders in Devas multi-media. They continued in this position till 2008-09.

CBI has alleged that when a proposal seeking budgetary support of Rs 269 crore for approving design, manufacture and launch of GSAT-6/INSAT-4E (PS1) was placed in the 104th meeting of the Space Commission on May 26, 2005, it was not informed that the agreement had already taken place with Devas Multimedia for leasing out the S-Band.

The CBI had alleged in its FIR that the approval of Space Commission was obtained by keeping it in dark.

It was alleged that Devas with the intent to siphon off the amount from its bank accounts in India got a subsidiary named Devas USA incorporated in USA and a substantial part of the “wrongful” gain was remitted to Devas USA on the pretext of services, salaries etc.

(Writing and reporting by Sujoy Dhar and Supriyo Hazra)

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