NCLT rules in favor of Antrix, orders winding up of Devas Multimedia The National Company Law Tribunal (NCLT), Bengaluru bench ordered the winding up of Devas Multimedia under Section 271 and 272 of the Companies Act, 2013. The NCLT bench comprising of Rajeswara Rao Vittanala (Member, Judicial) and Ashutosh Chandra (Member, Technical) admitted the plea of the petitioner -...
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NCLT rules in favor of Antrix, orders winding up of Devas Multimedia
The National Company Law Tribunal (NCLT), Bengaluru bench ordered the winding up of Devas Multimedia under Section 271 and 272 of the Companies Act, 2013.
The NCLT bench comprising of Rajeswara Rao Vittanala (Member, Judicial) and Ashutosh Chandra (Member, Technical) admitted the plea of the petitioner - Antrix Corporation Ltd commercial arm of Indian Space Research Organization's (ISRO's) to wind up Devas Multimedia (Respondent).
Both the Companies - Antrix and Devas have been involved in multiple legal proceedings since 2005 when Antrix terminated its contract with Devas in 2011. In November 2020, Supreme Court had stayed the execution of a US award which asked Antrix to pay $1.2 billion compensation to Devas.
In 2011, the Devas-Antrix agreement of 2005 was cancelled by the Centre in the backdrop of the 2G scam and allegation. On 27 October 2020, a US Federal Court had confirmed a $1.2 billion compensation granted to Devas by an Arbitration Tribunal of the International Chamber of Commerce over the cancellation of the 2005 agreement between Antrix and Devas to build and launch two satellites to provide multimedia services.
The Supreme Court of India in November 2020, until further orders, had put a hold on the implementation of the US Federal Court order.
Antrix Corporation before the NCLT sought for the winding up of Devas Multimedia alleging that the company's affairs were conducted in a fraudulent manner; that the company was formed for a fraudulent and unlawful purpose and that the persons concerned in the formation or management of its affairs have been guilty of fraud, misfeasance or misconduct.
On 18 January 2021, the Central Government had authorized Rakesh Shashibhushan (Chairman and Managing Director of Antrix) to present the petition to wind up Devas multimedia on the grounds specified under Section 271(1)(c) of the Companies Act.
Tushar Mehta (Solicitor General) and N. Venkataraman (Additional Solicitor General) presented their arguments on behalf of Antrix and were successfully able to convince the Tribunal that Devas had resorted to various frauds, misfeasance, and connivance with officials in obtaining contract dated 28 January 2005 from Antrix.
The Tribunal found, "By perusal of investigation reports by CBI and the actions taken by other statutory Authorities, we are of prima facie opinion that the incorporation of Devas Multimedia Company and obtaining a contract in a fraudulent manner that too within a short time, without having requisite experience, would not justify its continuance on the rolls of Registrar of Companies, Bangalore".
The NCLT remarked that even though various proceedings are pending against the US Award passed in the Antrix-Devas dispute, there is as such no bar to initiate the present proceedings.
Further, the Tribunal in its judgment, dated 19 January 2021, stated, "It is unheard that a Company incorporated hardly one and half months earlier, can able to get a Contract from the Government of India, that too without having any technical experience in the relevant field. Therefore, without prejudice to the rights of Parties in the litigation pending before the Hon'ble High Court of Delhi and the Hon'ble Supreme Court, the Tribunal can exercise powers conferred on this Tribunal, under Chapter XX Part 1 of the Companies Act, 2013, to appoint provisional liquidator before passing final winding up order, which would be decided after hearing the parties".
The bench acknowledged that Devas had suffered various adverse findings with cogent evidence at the hands of various Statutory Authorities, it would not be proper to permit Devas to continue its name on the rolls of Registrar of Companies, Bengaluru.
The NCLT favored the petitioner to have made out a prima facie case. The Tribunal admitted the winding-up petition and appointed a Provisional Liquidator for Devas. Further, the management of Devas was ordered to extend full cooperation with the Provisional Liquidator.
The Provisional Liquidator was permitted to initiate appropriate action in accordance with extant provisions of Companies Act, to take control of Management of Devas and to take custody or control all the property, effects and actionable claims to which the Devas Company is or appears to be entitled to and take such steps and measures, as may be necessary, to protect and preserve the properties of the Devas Company and to avoid misuse of its property.
The NCLT listed the matter to be considered next on 8 February 2021.