India loses arbitration case to Devas in The Hague, likely to pay one billion dollar damages and face investment contraints

The adverse 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.

The contract was cancelled in 2005 by Antrix Corporation Limited which is the commercial wing of Indian Space Research Organization (ISRO).

Antrix had signed a deal with Devas Multimedia in 2005 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.
 
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 and 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 Bengaluru.

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 leading 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.