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TMI Blog2022 (9) TMI 1298X X X X Extracts X X X X X X X X Extracts X X X X ..... imited (hereinafter referred to as 'Antrix') by this petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) seeks setting aside of the Arbitral award dated 14.09.2015 passed by the Arbitral Tribunal constituted by the International Chamber of Commerce allowing the claim of the Respondent - Devas Multimedia Private Limited (hereinafter referred to as 'Devas'). 2. Antrix sought winding up of Devas under Section 271(c) read with Section 272(1)(e) of the Companies Act, 2013 before the National Company Law Tribunal (hereinafter referred to as 'NCLT') alleging that Devas was formed for a fraudulent and unlawful purpose and its affairs had been conducted in a fraudulent manner. On 19.01.2021, a Provisional Liquidator was appointed by the NCLT and by final order dated 25.05.2021 NCLT allowed winding up of Devas. 3. The order of winding up was challenged by Devas and Devas Employees Mauritius Private Limited (hereinafter referred to as 'DEMPL') before the National Company Law Appellate Tribunal (hereinafter referred to as 'NCLAT'). NCLAT by its order dated 08.09.2021 dismissed both the appeals. Thereafter the orders were assailed befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of products and services of Indian Space Research Organisation ('ISRO') to national and international customers. 11. Devas is a limited liability company incorporated on 17.12.2004 under the Companies Act 1956. The initial subscribers to the Memorandum of Association of the Respondent were Mr. D. Venugopal holding 9000 shares and Mr. M. Umesh holding 1000 shares and its authorized share capital at the time of its incorporation was Rs. 11,50,000/-. 12. Subject contract leading to these proceedings was entered into between Antrix and Devas on 28.01.2005 (hereinafter referred to as the 'Contract') for the Lease of Space Segment Capacity on ISRO/Antrix S-band Spacecraft. It provided for the lease to Devas of transponders on satellite GSAT-6, referred to in the Contract as Primary Satellite 1 or PS1. It also contained an option for Devas to lease transponders on a second satellite, GSAT-6A, referred to in the Contract as Primary Satellite 2 or PS2. 13. The Contract was executed between Antrix and Devas only and neither the Department of Space- nor ISRO nor any other governmental agency was a party to the Contract. 14. The Contract refers to and defines 'Governmental or Regulatory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther period of 12 years. 17. Article 3 of the Contract pertaining to Period of Lease and Terms & Conditions inter alia stipulated as under: 'a. ........ c. ANTRIX shall be responsible for obtaining all necessary Governmental and Regulatory Approvals relating to orbital slot and frequency clearances, and funding for the satellite to facilitate DEVAS services. Further, ANTRIX shall provide appropriate technical assistance to DEVAS on a best effort basis for obtaining required operating licenses and Regulatory Approvals from various ministries so as to deliver DEVAS services via satellite and terrestrial networks. However the cost of obtaining such approvals shall be borne by DEVAS. ....... e. The Parties agree and confirm that a part of PS1, as mutually agreed in writing, such agreement by DEVAS not to be unreasonably withheld, shall be used by ISRO for its own purposes, provided such usage does not interfere or compete in any way with the DEVAS Services. ....... j. ANTRIX agrees; that to the best possible extent, it will lease to DEVAS Additional Satellite Capacity above and beyond PS2, and spares and frequencies associated to the Additional Satellite Capacity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by ANTRIX ANTRIX may terminate this Agreement in the event ANTRIX is unable to obtain the necessary frequency and orbital slot coordination required for operating PS1 on or before the completion of the Pre Shipment Review of the PS1. In the event of such termination, ANTRIX shall immediately reimburse DEVAS all the Upfront Capacity Reservation Fees and corresponding service taxes received by ANTRIX till that date. Upon such termination, neither Party shall have any further obligation to the other Party under this Agreement nor be liable to pay any sum as compensation or damages (by whatever name called). d. Termination by ANTRIX for fault of DEVAS ANTRIX may terminate this Agreement at any time if: i DEVAS is in material breach of any provisions of this Agreement and DEVAS has failed to cure the breach within three months after receiving notice from ANTRIX regarding such breach or, ii Non payment of (a) the Lease Fees and other charges (such as spectrum monitoring charges) by DEVAS for a continued period of twelve (12) months, or if such accumulated delays from recurrent non payments exceed 60 (sixty) months, whichever occurs earlier or, (b) Upfront Capacity Reservat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e termination, and they shall survive termination and or expiry of this Agreement for a further period of 5 (five) years or fulfillment of these terms whichever is later.' 19. Article 11 of the Contract relates to Force Majeure conditions and reads as under: 'Article 11. Force Majeure a. Neither of the Parties hereto shall be liable for any failure or delay in performance of its obligations hereunder if such failure or delay is due to Force Majeure as defined in this Article, provided that notice thereof is given to the other Party within seven (7) calendar days after such event has occurred. b. For the purposes of this Agreement, 'Force Majeure Event'' shall include any event, condition or circumstance that is beyond the reasonable control of the party affected (the 'Affected Party') and that, despite ail efforts of the Affected Party to prevent it or mitigate its effects (including the implementation of a business continuation plan), such event, condition or circumstance prevents the performance by such Affected Party of its obligations hereunder. The following events may be considered Force Majeure Events under the Agreement: (i) explosion and fire; (ii) flood, ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no financial or other liability shall arise on termination under this clause as far as the affected party is concerned.' 20. Another clause relied upon by the Arbitral Tribunal in the impugned award is Article 13 dealing with Indemnities, which reads as under: 'Article 13. Indemnities a. Either of the Parties (ANTRIX or DEVAS) shall indemnify, defend and hold harmless the other Party, its officers, directors, employees, agents, consultants from and against any loss. damages, liabilities, expenses, claims, actions, charges, costs, interests, and penalties suffered by the indemnified Party together with the attorney's fees, arising from the fault of the indemnifying Party b. it is further agreed that DEVAS shall indemnify ANTRIX for the following i Libel, slander, invasion of privacy, or infringement of copyright or cyber law arising from the use of the leased capacity; ii. infringements of third-party patents or intellectual Property rights arising from a) combining with, or used in connection with the Leased Capacity, apparatus, satellite, systems of the DEVAS, its users, customers, contractors, lessees, agents or assignees where ANTRIX exercises no control; b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sents or otherwise in any way relating to this Agreement such dispute or difference shall be referred to the senior management of both Parties to resolve within three (3) weeks falling which It will be referred to an Arbital Tribunal comprising of three arbitrators, one to be appointed by each party (i.e. DEVAS and ANTRIX) and the arbitrators so appointed will appoint the third arbitrator. b. The seat of Arbitration shall be at NEW DELHI in India. c. The Arbitration proceedings shall be held in accordance with the rules and procedures of the ICC (International Chamber of Commerce) or UNCITRAL. d. The Arbitration Tribunal shall reach and render a decision or award in writing (concurred in by a majority of the members of the Arbital Tribunal with respect to the appropriate award to be rendered or remedy to be granted pursuant to the dispute, (including the amount that any indemnifying Party is required to pay to the indemnified Party in respect of a claim filed by the indemnified Party). e. To the extent practicable all decisions of the board of Arbitration shall be rendered no more than 30 (thirty) days following commencement of proceedings with respect thereto. The Arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bruary 2011, the Cabinet Committee on Security took the decision to deny orbital slot in S-band to Antrix for any commercial activities and to annul the Contract. Pursuant, to the decision of the Cabinet Committee on Security, on 23.02.2011, the Department Of Space directed the Petitioner to notify the Respondent of the decision of the Government of India regarding the termination of the Contract. 27. Antrix notified Devas on 25.02.2011 that the Contract was terminated inter alia citing Article 11 and Article 7(c) of the Contract. Post the termination by letter dated 25.02.2011, Antrix by its letter dated 15.04.2011 tendered the UCRF that had been received from Devas. Devas refused to accept the termination and instead claimed specific performance of the contract and in the alternative claimed damages to the tune of US$ 1.6 billion. 28. Antrix proposed a meeting of the senior management in terms of Article 20(a) of the Contract. However Devas instead of agreeing to the same filed a request for Arbitration dated 29.06.2011 with the International Court of Arbitration of the International Chamber of Commerce (ICC Court) relying upon the ICC rules. Devas also nominated Mr. V.V. Veeda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S to annul the agreement was not an 'act of or failure to act by any governmental authority acting in its sovereign capacity' within the meaning of Article 11(b). It was contended that the CCS decision was brought about by, and is otherwise attributable to Antrix's Own or its parent's actions. 36. It further submitted that Antrix instigated the alleged Force Majeure Event, and thus it was not beyond the reasonable control of Antrix within the meaning of Article 11(b). It also contended that Antrix did not make all efforts to prevent it or mitigate its effects as required by Article 11(b). It lastly contended that Article 11 permitted, the Unaffected Party (Devas) to terminate the agreement in light of Force Majeure Events, not the Affected Party (Antrix). 37. Antrix on the other hand contended that even if it was not entitled to terminate the agreement pursuant to Articles 7(c) or 11 of the contract, the decision of the CCS rendered the agreement impossible to perform and therefore void under section 56 of the Indian Contracts Act. 38. The tribunal held that Antrix was not entitled to terminate the Contract under Article 11 of the Contract and also that Section 56 of the Contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of either performing the agreement or terminating it. 43. The finding returned is a complete perversity, the Tribunal has committed a patent illegality in not appreciating that the IBA Rules on Taking of Evidence are applicable only in case of International Arbitration and that also with the consent of parties. Subject arbitration proceedings are domestic arbitration between two Indian parties and not International Arbitration proceedings and as such said rules are not applicable and the evidence could not have been excluded. 44. Even otherwise, the Tribunal has not appreciated the true import of Article 9 of IBA Rules which reads as under: 'Article 9 Admissibility and Assessment of Evidence 1. The Arbitral Tribunal shall determine the admissibility, relevance, materiality and weight of evidence. 2. The Arbitral Tribunal shall, at the request of a Party or on its own motion, exclude from evidence or production any Document, statement, oral testimony or inspection, in whole or in part, for any of the following reasons: (a) lack of sufficient relevance to the case or materiality to its outcome; (b) legal impediment or privilege under the legal or ethical rules determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Definitive Agreements and after Devas has raised its first Institutional round of funding, ISRO shall refund to Devas all the amounts paid by Devas to ISRO for any reason whatsoever, plus, liquidated damages of INR 6.9 billion for investment in the business and related losses including but not limited to, investments, capital raising costs, lost business opportunities, reputation loss, penalties, development costs, mobile receiver and terrestrial repeater development, infrastructure costs, severances, and vendor and dealer negotiation costs.' 49. The Initial Term sheet was not agreed upon and thereafter on 20.09.2004, Devas delivered a second draft 'Binding Term Sheet'. At this juncture Devas was informed that Antrix would be the contracting party and not ISRO. Devas continued to propose the high liquidated damages. 50. From the Term Sheets proposed it was evident that it was within the knowledge and contemplation of Devas that it had to obtain relevant licenses and approvals (including telecom approvals), without which it could not carry out its proposed multimedia business via satellite or terrestrially in India. 51. The Terms sheets proposing high liquidated damages were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eased to Devas and the rationale behind the CCS decision to annul the contract. 59. As noticed in the impugned Award, there are a limited number of available radio frequencies in the world, which are known by names such as C, extended C band, Ku. and S-band. As radio frequencies do not stop at national boundaries, governments have sought to regulate their allocation through the International Telecommunications Union (ITU), an agency of the United Nations. 60. The ITU is responsible for allocating available spectrum amongst its member States. Once it has allocated spectrum to a State, that State is then free to distribute the spectrum in accordance with its national laws. 61. By the early 1970s, ITU had allocated the use of part of the Sband radio frequency in India to the Government of India and Government of India allocated the right to use S-band in India to the Department of Space. 62. India had been allocated a total of 190 MHz of capacity by ITU in the portion of the S-band encompassing frequencies between 2500 MHz and 2690 MHz. 63. Pursuant to its national planning and to satisfy its national requirements, India, internally, allocated the 190 MHz that had been identified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, was looking for higher performance and capacity and demanded from ISRO a communication system/with greater capacity (including increased data rates and the ability to service a larger number of terminals). 69. This was followed by a demand in April 2004, by the military for a dedicated satellite for Naval use and the Naval Communications were most intricately complex, because of four distinct participants viz. ships, submarines, aircraft and shore authorities, all of which needed to communicate with each other in real time. This requested satellite, using 8 MHz of S-band capacity, was launched in August 2013. 70. In October 2005, a Note by a senior military officer outlined the importance of relying on space technology for defence, particularly starting in 2008 when a new plan would enter in place. This Note projected the bandwidth requirements of the Army, Navy and Air Force through 2010, 2015 and 2020. With respect to the S-band, the projected needs were for 86 MHz by 2010,151 MHz by 2015 and 208 MHz by 2020. 71. In February 2006, military leaders met with the Department of Space to address the projected S-band capacity required for the Defence Space Vision through 2020. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial Security Force, the Central Reserve Police Force, the Coast Guard and the Police for meeting their secured communications needs and the capacity for the traintracking requirements of the Indian Railways. 77. As per Antrix, in November 2009, Mr. A. Vijay Anand, the Joint Secretary of the Department of Space, who was also its Chief Vigilance Officer, learned of possible irregularities relating to the Contract and initiated a preliminary, internal review of certain of the allegations inter alia that 'the minutes of a 6 January 2009 meeting of a review committee of the Technical Advisory Committee ('TAG') of the Indian Satellite Coordination Committee ('ICC') relating to the experimental licence requested by Devas had been altered in a manner that inter alia eliminated certain comments that had been made at the meeting by the representatives of the Wireless Planning and Coordination Wing of the Department of Telecommunications ('WPC'), headed by the Wireless Advisor to the Government of India, from which Devas would have been required to seek its operating licence and frequency allocation.' 78. It is contended that Providers of terrestrial telecommunications services had been de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of strategic requirements, the Central Govt/ISRO would not be able to provide orbit slot in S band for operating PS1 to the ANTRIX for commercial activities. In that event, ANTRIX in terms of Article 7 (c) read with Article 11, of the agreement may terminate the agreement and inform M/s DEVAS accordingly. However on such termination ANTRIX shall be required to reimburse DEVAS all the Upfront Capacity Reservation Fees and corresponding service taxes received by ANTRIX till that date.' 85. The Department of Telecommunications in its memorandum dated 06.07.2010 stated that 'The agreement between DOS and ANTRIX indicates that M/s Devas is allowed to use part of frequency bands 2555- 2635 MHz and 2500-2535 & 2655-2690 MHz whereas DOS sought the ITU coordination for MSS to be used for strategic operations. The spectrum planned by DOS for strategic use is not to be shared with commercial applications as in the case of M/s Devas Multimedia.' 86. The Department of Space presented the matter to the Space Commission for its consideration. The Space Commission, which formulates the policies and oversees the implementation of the Indian space programme to promote the development and applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an opinion was taken from the Additional Solicitor General. 89. Consistent with the Additional Solicitor General's opinion, and in accordance with Rule 4 of the Transaction of Business Rules of the Government of India, a note was placed before the Cabinet Committee on Security to for decision. 90. The Cabinet Committee on Security, comprised of the Prime Minister, the Minister of Defence, the Minister of Home Affairs, the Minister of External Affairs and the Minister of Finance and is the highest authority within India for matters relating to internal and external security and defence. As per Antrix it is the appropriate governmental body to take a policy decision regarding use of S-band for strategic needs. 91. In February 2011, the Cabinet Committee on Security took the decision to deny orbital slot in S-band to Antrix for any commercial activities and to annul the Contract. The report of the Cabinet Committee on Security's decision stated as under; 'Taking note of the fact that Government policies with regard to allocation of spectrum have undergone a change in the last few years and there has been an increased demand for allocation of spectrum for national needs, inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 98. he Tribunal further held that even if the CCS' decision had the effect of annulling any necessary clearance or approval that Antrix had obtained, that would not be sufficient to enliven Article 7(c) as what was required was 'inability to obtain' a relevant clearance and not 'inability to retain' a clearance. 99. Once again a patent illegality has been committed by the Tribunal as this finding is complete contrary to the other finding returned by the Tribunal and as such cannot be accepted. There is no dispute to the material placed by Antrix with regard to the decision of the Department of Space as well as the Cabinet Committee on Security. 100. The Tribunal has also noted that the Cabinet Committee on Security in its decision taken in February 2011 decided that 'the Government will not be able to provide orbit slot in S band to Antrix for commercial activities'. 101. This direction of the Cabinet Committee on Security clearly shows that Antrix did not have the orbital slot coordination. There is no counter by Devas to the decision of the Cabinet Committee on Security. This clearly contradicts the reasoning of the Tribunal when it holds that Antrix could not resort t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annul the agreement, Antrix could have effectively prevented the CCS from making that decision, which means that the CCS' decision was not beyond Antrix's reasonable control.' 110. On the one hand the Tribunal holds that Dr. Radhakrishnan was not acting in his capacity as Chairman of Antrix and was acting in his capacity as Secretary of the Department of Space and/or Chairman of ISRO or the Space Commission on the other holds that he could have prevented CCS from taking the decision to annul the contract if he had acted in his capacity as Chairman of Antrix. 111. What the Tribunal is holding is that Dr. Radhakrishanan should have held back sensitive material pertaining to the security of the state from the CCS. As noticed hereinabove the Cabinet Committee on Security, comprised of the Prime Minister, the Minister of Defence, the Minister of Home Affairs, the Minister of External Affairs and the Minister of Finance and is the highest authority within India for matters relating to internal and external security and defence. 112. The decision of the CCS is premised on the fact that there has been an increased demand for allocation of spectrum for national needs, including for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e alleged breach on the part of Antrix was deliberate. 117. Further, the award suffers from patent illegality as the Tribunal had overlooked the provisions of Article 25 of the Contract that stipulates that the Agreement shall not be binding on DEVAS or ANTRIX until and unless ANTRIX receives all the requisite governmental and other regulatory approvals. Including those referred to in this Agreement. Admittedly. Antrix did not receive the orbital slot in S-band, which was a prerequisite for the provision of the Devas services. 118. During the pendency of these proceedings Antrix moved an application seeking to amend the petition and to incorporate certain subsequent events and to take additional grounds. Said application was opposed by DEMPL on the ground that said application was filed after the expiry of the statutory period for filing objections under section 34 of the Act. 119. Mr. N. Venkataraman, Learned Additional Solicitor General appearing for Antrix restricted his submissions and placed reliance upon the Judgments passed by the National Company Law Tribunal dated 25.05.2021, National Company Law Appellate Tribunal dated 08.09.2021 and the Supreme Court of India dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst Devas, its officials, and the then officials of Antrix. 128. NCLT held that there is a long history of fraud and fraudulent activities committed by Devas and its Management before and after its incorporation. It held that Devas brought Rs. 589 crores into India, without doing any worthwhile service/business in India and has siphoned off/diverted that money out of the Country except less than Rs. 100 Cr. under various heads in India. 129. It also noticed that World Space India Private Ltd, which was alleged to be subsidiary of Devas, as some of its Directors were working in that Company to render required technical service to Devas, was incorporated on 05.06.1998. However, its name was struck off from Registrar of Companies as it had failed to file the balance sheet and Annual returns for the year 2007 - 08. 130. NCLT further held that even the idea to incorporate Devas was with fraudulent intentions coupled with malafide objects to enter into Agreement with Antrix with no responsibility at all. It held that such a prestigious agreement with Government Owned Company was got signed by a clerk, paying remuneration for the same. It held that the Agreement itself would become vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness support services. 138. In between 2006 - October 2010, Devas, in the absence of Agreement had paid nearly Rs.40 Crores when the Agreement with the US Subsidiary was entered into only in October 2010. A sum of Rs.256,96,63,544/- was sent out of India into the United States of America amounting to an extent of Rs.230,11,14,734/- (Towards legal fees to American Firms) a total of Rs.487,07,78,278/- was migrated into the US Entities thereby taking the same out of India, etc. 139. It is held that the money trail had violated 'FIPB Policies', 'FIMA' and 'PMLA'. In short, the investments of Rs.579/- Crores were collected by Devas mentioning the Devas Agreement dated 28.01.2005 and not for 'Internet Services'. Apart from that, Devas was not competent to render 'Hybrid Services' such as 'Devas Services'. Moreover, no technology whatsoever was developed/made/owned/leased by the 'Appellant' and this claim was untrue. 140. An independent but concurrent opinion was authored by the other member of the NCLAT, Mr. V.P. Singh, Member (T). Mr. V.P. Singh in his judgment inter alia held Devas could not have delivered Devas Services in India due to the lack of policy framework and licensing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .01.2022 dismissed both the appeals. 149. Supreme Court rejected the contention of Devas that Antrix was estopped from raising the plea of fraud as it has not terminated the agreement on the ground of fraud and had also not set up fraud as a defence before the Arbitral Tribunal. 150. The Supreme Court on the plea of estoppels held as under: '9.8 But the question is as to whether all the above would lead to an inference of estoppel against Antrix. The fact that the Agreement dated 28.01.2005 was not terminated on the ground of fraud, through the letter dated 25.02.2011, cannot take the appellants anywhere. The earliest First Information Report for the offences under Section 420 read with Section 120B of the IPC was filed by the CBI only on 16.03.2015. The officers of Antrix as well as officials of the Government were also implicated in the FIR for offences under the Prevention of Corruption act, 1988. Therefore, the appellants cannot set up a plea of estoppel on the ground that the termination of the Agreement in the year 2011 was not on the ground of fraud, when the discovery of fraud itself was many years later. 9.9 For the very same reason, the failure of Antrix to plead f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent to an agreement is caused by coercion, fraud.....'. Frauds other than those used to induce the consent of a party to an agreement, are not covered by Section 19. In fact, the definition of fraud under Section 17 is also confined only to certain acts committed by a party to a contract. There are cases where a party may perpetrate a fraud either upon non-contracting parties or upon the Government or even upon the courts. The principle that fraud vitiates all solemn acts, will itself be rendered nugatory, if the understanding of fraud is confined only to the realm of contract. 9.14 In the case on hand, the fraud alleged by Antrix is not solely on the ground that their consent to the Agreement dated 28.01.2005 was vitiated by fraud. What is alleged in the petition for winding up are, (i) formation of the company for fraudulent or unlawful purpose; (ii) fraud in the conduct of the affairs of the company; and (iii) fraud on the part of the persons who were involved in the formation and/or in the management of affairs of the company. The fraud relatable to the agreement, is only one facet of the whole scheme of things. Therefore, we have to go beyond section 19 of the Cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial) noted, (i) that the company in liquidation failed to establish either the existence of technology or the ownership of intellectual property rights over the stated technology; (ii) that even according to the affidavit of Shri M. G. Chandrashekar, Devas had ample time to develop Devas Technology, meaning thereby that its nonexistence at that time was admitted; (iii) that the company did not have a single approval, permission or licence to render Devas services utilising Devas technology; (iv) that the approval of the Space Commission for building a satellite for Devas, was secured only after finalisation of commercial terms but without apprising the Space Commission of the same; (v) that even in the cabinet note, prepared by the Department of Space on 17.11.2005 a full picture was not recorded; (vi) that there was a contravention of the SATCOM Policy; (vii) that though the original minutes of the meeting required Devas to secure a spectrum licence from Wireless Planning Committee (WPC), after appearing before the apex committee with requisite technical details, the minutes of the meetings were manipulated later as though the company was exempted from the requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the misrepresentation in the Agreement. The third category of fraud concerned the violation of SATCOM Policy. The fourth category was actually an extension of the third category which related to SATCOM Policy. The fifth category was about suppression and misrepresentation in obtaining the approval of the cabinet. The sixth category of fraud revolved around the ISP licence dated 02.05.2008, of which IPTV licence was a part, but which had nothing to do with Devas Services. The seventh category related to the fraudulent manner in which experimental licence was obtained and the eighth category related to FIPB approvals and money trail. The Member (Technical) found the formation of company, the conduct of the affairs of the company and those persons concerned in the formation and conduct of management of its affairs to be guilty of fraud.' 153. The Supreme Court thereafter held that though the appeal was an appeal under section 423 of the Companies Act, 2013 and was only on a question of law and two forums namely NCLT and NCLAT had recorded concurrent findings on facts, it was not open to the court to re-appreciate the evidence but as the senior counsel for Devas had sought to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrix/ ISRO. The MoU was signed thereafter; (iii) But the documents filed by the appellants themselves show that a power point presentation was made by Forge LLC on 22.03.2004, proposing an Indian joint venture to launch what came to be known as DEVAS (which perhaps ultimately turned out to be ASURAS). It was claimed in the said proposal that DEVAS platform will be capable of delivering multimedia and information services via satellite to mobile devices tailored to the needs of various market segments such as consumer segment, commercial segment and social segment. This presentation dated 22.03.2004 was followed by a proposal dated 15.04.2004, about which we have made a brief mention in paragraph 3.4 above. This proposal obliged ISRO/Antrix to invest in one operational S-band Satellite with a ground space segment to be leased to a joint venture between Forge and Antrix. What was to be reserved for the joint venture was 97% of the space. The consideration receivable by ISRO/ Antrix upon such a lease, was to be US $ 11 million annually for a period of 15 years. At least at this stage the proposal to invest in an operational S-band satellite and the lease of nearly the entire space ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that time and which did not come into existence even later; (c) that the licenses and approvals were for completely different services; and (d) that the services offered were not within the scope of SATCOM Policy etc. are actually borne out by records; (vii) There is no denial of the fact that Devas offered a bouquet of services known as (a) Devas Services through a device called (b) Devas device in a hybrid mode of transmission, which is a combination of satellite and terrestrial transmissions, and which is called (c) Devas Technology but none of which existed at the relevant point of time or even thereafter; (viii) Devas did not even hold necessary intellectual property rights in this regard though they claimed to have applied; (ix) That the formation of the company, namely, Devas Multimedia Private Limited was for a fraudulent and unlawful purpose is borne out by the fact that the company was incorporated in December-2004, as a result of preliminary meetings held at Bangalore in March-2003 and in USA in May 2003, followed by the signing of the MoU on 28.07.2003, the presentation made on 22.03.2004 and the discussions held thereafter. The ground work was clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , did not make a mention about Devas or the Agreement, but proceeded on the basis as though ISRO received several Expressions of Interest. These materials show the complicity of the officials to allow Devas to have unjust enrichment; (xiii) It is on record that the minutes of the meeting of the Sub Committee dated 06.01.2009 were manipulated and the experimental licence was granted on 07.05.2009. Only thereafter, the original minutes were restored on 20.11.2009 and that too after protest. (xiv) Admittedly, every one of the investors procured shares of the company in liquidation and each shareholder had a representative in the board of directors. Since the board controlled the company, the directors were guilty of the conduct of the affairs of the company in a fraudulent manner. Since each shareholder had a representative in the board, the shareholders had to take the blame for the misdeeds of the directors; (xv) Additionally, the shareholders were fully aware of the fact that the application for approval dated 02.02.2006 to the FIPB was for ISP services. But they entered into a Share Subscription Agreement on 06.03.2006 for Devas services. The Share Subscription Agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 13.6 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 an investment in a sum of INR 579 crores, the investors can hope to get tens of thousands of crores of rupees, even after siphoning off INR 488 crores.' (underlining supplied) 159. After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and held as under: '27. For a better understanding of the role ascribed to Courts in reviewing arbitral awards while considering applications filed under Section 34 of the 1996 Act, it would be relevant to refer to a judgment of this Court in Ssangyong Engg. & Construction Co. Ltd. v. NHAI [Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 : (2020) 2 SCC (Civ) 213] wherein R.F. Nariman, J. has in clear terms delineated the limited area for judicial interference, taking into account the amendments brought about by the 2015 Amendment Act. The relevant passages of the judgment in Ssangyong [Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 : (2020) 2 SCC (Civ) 213] are noted as under : (SCC pp. 169-71, paras 34-41) '34. What is clear, therefore, is that the expression 'public policy of India', whether contained in Section 34 or in Section 48, would now mean the 'fundamental policy of Indian law' as explained in paras 18 and 27 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] i.e. the fundamental policy of Indian law would be relegated to 'Renusagar' understanding of this expression. This would necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticular, is now done away with. 37. Insofar as domestic awards made in India are concerned, an additional ground is now available under sub-section (2-A), added by the Amendment Act, 2015, to Section 34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within 'the fundamental policy of Indian law', namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality. 38. Secondly, it is also made clear that reappreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award. 39. To elucidate, para 42.1 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the object of the 1996 Act and the endeavours made to preserve this object, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this Court would become a dead letter if arbitral awards are set aside by categorising them as perverse or patently illegal without appreciating the contours of the said expressions. 29. Patent illegality should be illegality which goes to the root of the matter. In other words, every error of law committed by the Arbitral Tribunal would not fall within the expression 'patent illegality'. Likewise, erroneous application of law cannot be categorised as patent illegality. In addition, contravention of law not linked to public policy or public interest is beyond the scope of the expression 'patent illegality'. What is prohibited is for Courts to reappreciate evidence to conclude that the award suffers from patent illegality appearing on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disregarding the superior Courts in India would be antithetical to the fundamental policy of Indian law. Contravention of a statute not linked to public policy or public interest cannot be a ground to set at naught an arbitral award as being discordant with the fundamental policy of Indian law and neither can it be brought within the confines of 'patent illegality' as discussed above. In other words, contravention of a statute only if it is linked to public policy or public interest is cause for setting aside the award as being at odds with the fundamental policy of Indian law. If an arbitral award shocks the conscience of the court, it can be set aside as being in conflict with the most basic notions of justice. The ground of morality in this context has been interpreted by this Court to encompass awards involving elements of sexual morality, such as prostitution, or awards seeking to validate agreements which are not illegal but would not be enforced given the prevailing mores of the day. [Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 : (2020) 2 SCC (Civ) 213]' 165. Supreme Court in Delhi Airport Metro Express (P) Ltd.(supra) has held that the grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also violated the 'FIPB Policies' and the provisions of 'FIMA' and 'PMLA' and thus antithetical to the fundamental policy of Indian law. 171. The Supreme Court by its judgment dated 17.01.2022 has held that the very seeds of the commercial relationship between Antrix and Devas were a product of fraud perpetrated by Devas and thus 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. 172. It has held that 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 that allowing Devas and its shareholders to reap the benefits of their fraudulent action, would send another wrong message namely that by adopting fraudulent means and by bringing into India an investment in a sum of INR 579 crores, the investors can hope to get tens of thousands of crores of rupees, even after siphoning off INR 488 crores. 173. In view of the above, the objections filed by the Petitioner under Section 34 of the Act are allowed and it is held that the Impugned award dated 14.09.2015 suffers from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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