First case of winding up a comapany on the grounds of fraud. This case is a 11 year long legal battle between Devas multimedia and Antrix .

1. DEVAS EMPLOYEES MAURITIUS (P.) Ltd. V. UNION OF INDIA
Kavya H.S
BBA LL.B

2. INTODUCTION
 Popularly known as DEVAS- ANTRIX Case.
 This is a 11 year long legal battle between two parties ( devas and antrix)
 Devas multimedia is the first case of winding up a company due to fraud
 deals with winding up proceedings when a company is parallel involved in
arbitral and criminal proceedings
 The final decision by supreme court(in 2022) comes at a time when the
foreign investors of Devas have successfully attached Indian assets in
multiple foreign jurisdictions such as Canada and France, to recover the
money that India has not paid to these investors under two bilateral
investment treaty (BIT) awards.

3. PARTIES INVOLVED
1. DEVAS MULTIMEDIA :-
 It is a private company incorporated under Companies Act,1956 , On 17
December 2004
 CEO – Ramachandran Vishwanath
 Co- founder- Dr. M.G. Chandrashekhar (former scientific secretary at ISRO)
2. DEVAS EMPLOYEES MAURITIUS (P) Ltd. :-
 Incorporated in Mauritius
 Held 3.48% shares in Devas Multimedia Pvt. Ltd.
3.ANTRIX CORPORATIN Ltd. :-
 Incorporated on 28 September 1992 under Companies Act 1956
 Commercial wing of ISRO, which provides a host of product and services
 Wholly owned company of the Government of India

4. FACTS
 On 28 January 2005 Antrix and Devas entered into an agreement
 wherein the Devas would provide multimedia services using the S-band spectrum transponders on
two ISRO satellites built at a cost of Rs.766 crore.
 Multiple foreign investors had backed the project, including three Mauritian investors and
Germany’s Deutsche Telekom (DT), one of the world’s leading telecommunication companies.
 soon after the deal was signed, the controversy raised against Devas-Antrix agreement, with
allegations of corruption and irregularities being levelled against the deal of the S-band spectrum
being offered at throwaway prices; Devas ,a company set up by former ISRO officials in 2004,
just one year before the contract was signed, having secret knowledge about the
commercialization of the S-band spectrum; and ISRO’s serving officials colluding with Devas to
facilitate a wrongful gain to the latter.
 The Agreement was terminated in accordance with the force majeure clause (SECURITY
REASONS) on 25 February 2011 by Antrix due to certain disputes and revised policy decisions of
the Central Government
 Aggrieved by the termination, Devas invoked the arbitration clause contained in the Agreement.
Ultimately, the International Chamber of Commerce (ICC) on 14 September 2015 awarded Devas
USD 562.5 million with interest for the damages caused by Antrix's wrongful repudiation of
the Agreement.

5. Contd…
 Apart from ICC, Devas also initiated claims against India under “Bilateral Investment
Treaties,” where both the DT Tribunal and India-Mauritius BIT tribunal ruled in the favour of
Devas investors and ordered antrix to pay fines.
 Devas was suspected of committing various fraudulent activities. Accordingly, the Central
Bureau of Investigation (CBI) and the Enforcement Directorate (ED) investigated the matter.
 CBI filed FIR on 16 March 2015 against Devas as well as its officers for offences:-
sec. 420 r/w sec.120B of IPC [cheating & punishment for conspiracy]
sec.13(1)(d) r/w Sec. 13(2) of the Prevention of Corruption Act, 1988. [abusing position as
public servant to obtain benefit & punishment for criminal misconduct]
 ED also filed report on illegal activities of Devas
 Antrix made a request to the Ministry of Corporate Affairs, Government of India seeking
authorization to initiate proceedings for winding up of Devas

6. FORUMS WHICH RULED AGIANST ANTRIX
 Devas and its investors moved against Antrix through different forums to claim
damages
 the government’s decision to rescind the contract prompted Devas’ foreign
investors to bring separate Bilateral Investment Treaty (BIT) claims against India
under the India-Mauritius BIT and India-Germany BIT, respectively.
 The disciplinary Tribunal and India – Mauritius BIT Tribunal ordered India to pay
162 million USD and 132 million USD
 BIT –Bilateral Investment Treaties are international agreements establishing
terms and conditions for private investments by nationals and companies of one
country to another country.
 The ICC tribunal also ruled that Antrix’s termination of the contract was illegal
and ordered Antrix to pay $562.5 million to Devas as damages.

7. LIQUIDATION BY NCLT
 In January 2021, Antrix approached the National Company Law Tribunal (NCLT), seeking
liquidation of Devas on the grounds that the company was incorporated with “fraudulent
motive”.
 NCLT POINTED OUT:-
 “The incorporation of Devas itself was with fraudulent motive and unlawful object to collude and
connive with the then officials of Antrix and to misuse/abuse process of law, to bring money to
India and divert it under dubious methods to foreign countries,”
 Devas is not carrying out any business operations after termination of contract with Antrix. Devas
hardly has any other business except to grab PS-1 and PS-2 [satellites] from Antrix in terms of
agreement and to carry out its illegal object to divert money.
 The only reason apparent on record, by perusal of various pleading raised ,is that it wants to
prosecute enforcement of award in question, in the name of the company in the courts of India
and abroad by abusing the process of law.”
 The financial position and balance sheet report shows;
revenue for the year 2011 to 2014 are mere 79,115, ₹58,429, ₹36,489 and ₹7,566 respectively, and
nil for the years 2015-19. its fixed assets are negligible, and it is totally nil for the years 2018-19.

8. Contd...
 one S.R. Gururaj, who was an Article Clerk in the office of Chartered Accountant M. Umesh
(a director of Devas) had signed on behalf of Devas though Mr. Gururaj was not associated
with Devas in any manner. Mr. Gururaj had given a statement to the investigating agencies
that he signed the agreement on the instruction of Mr. Umesh.
 The NCLT said that Devas, which signed agreement within 45 days of its incorporation, did
not possess minimum experience even to qualify to participate in such contract, much less to
obtain it.
 The National Company Law Tribunal (NCLT) has ordered liquidation of DEVAS while declaring
that the company was not only incorporated in a fraudulent manner to carry out unlawful
purposes and its management is continuing to resort to fraudulent activities in relation to its
agreement to get bandwidth from Antrix Corporation, ISRO’s commercial arm.
 Devas failed to show any reason why it should not be wound up on the ground of fraud under
sec 271(e) of Companies Act 2013.
 The NCLT has said that liquidation proceeding was independent one irrespective of the
criminal and the civil proceedings pending against Devas before other authorities and the
courts.
 Aggrieved by the order of winding up, Devas filed an appeal before the NCLAT. The
appeal before NCLAT was dismissed on 8 sep 2021.

9. Appeal to supreme court
 an ex-director of Devas along with a shareholder filed an appeal before the Hon'ble Supreme Court.
 Contentions of Devas;-
1.Breach of the mandatory requirement of advertisement before ordering winding up.
2.Winding up petition being barred by limitation.
3.Antrix being estopped from pleading fraud.
 Contentions of Antrix:-
1.Detailed findings recorded by the NCLT on 8 (eight) different types of fraud committed by Devas,
both in the formation of the company and in the manner in which the affairs of the company were
carrier out, which cannot be assailed in an appeal under Section 423 of the Companies Act.
2. The Agreement dated 28 January 2005 entered into between Antrix and Devas spoke about three
components, namely 'Devas Technology', 'Devas Services' and 'Devas Device' none of which existed
either on the date of formation of Devas, or on the date of execution of the Agreement, or on the date
of winding up the company.

10. OBSERVATIONS OF SUPREME COURT :-
 Sec. 433 OF 1956 act –indirect reference to fraud- on the ground that it is just and
equitable to wound up
 2013 Act- specific inclusion of FRAUD as a ground
 the Apex Court held that the NCLT Rules, 2016 (Rules) confers the powers upon the NCLT
to dispense with the requirement to put up an advertisement., there were no
stakeholders who were prejudiced by the failure of NCLT to order the publication of
advertisement of the petition.
 Also, this was not a case where the company is sought to be wound up on the ground of
inability to pay debts or on just and equitable ground. This was a case of fraud and all
stakeholders were fully aware of the proceedings and they had even shown extreme
urgency in enforcing an ICC Arbitration award and BIT awards, before the conclusion of the
winding up proceedings.
 the SC upheld the view of NCLAT;The NCLAT while dealing with the question of limitation
held that the fraud alleged by Antrix was not a singular act which was transaction-specific.
Further, the NCLAT had noted that the winding up was based on a series of acts of fraud. If
the conduct of the affairs of a company in a fraudulent manner is a continuing process, the
right to apply becomes recurring.

11. Contd…
 On the contention of devas that the auditors of antrix didn’t mentioned any fraud ;the SC
rejected it by saying that the auditors are not experts in criminal law or any technology
 Devas argued that Antrix is estopped from pleading fraud and seeking winding up of Devas.
On estoppel, Devas argued that the termination letter of the Agreement was not issued on
the ground of fraud but on ground of force majeure.
 The Apex Court noted that arbitration proceedings commenced in the year 2013 and the
award was passed in September 2015. Accordingly, the Hon'ble Supreme Court opined that
Antrix could not have been expected to plead fraud in the arbitration even before the
discovery of fraud.
 It was observed that if the seeds of a 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, and the arbitral awards are infect with the poison of
fraud. The Hon'ble Supreme Court stated that allowing Devas and its shareholders to reap
the benefits of their fraudulent action would send wrong message to the world at large.
 Based on these grounds the SC upheld the decision of NCLT and NCLAT.

12. THANK YOU