U.S. Court Rejected Devas Multimedia’s Foreign Investors Plea to Allow Parent Firms to Intervene in Liquidation
The U.S. Court for the Western District of Washington, has rejected a motion filed by foreign investors in the Bengaluru
U.S. Court Rejected Devas Multimedia’s Foreign Investors Plea to Allow Parent Firms to Intervene in Liquidation
The U.S. Court for the Western District of Washington, has rejected a motion filed by foreign investors in the Bengaluru-based space start-up Devas Multimedia seeking an order to allow their US-based parent firms to intervene in efforts to liquidate their firms in Mauritius.
The judge held that, “the motion to intervene is stricken without prejudice to refile if appropriate following final resolution of the appeal in this matter.”
The U.S. Federal Court was approached by three Mauritius-based investors in Devas Multimedia – CC/Devas Mauritius Ltd., Telcom Devas Mauritius Ltd and Devas Employees Mauritius Pvt Ltd – along with Devas Multimedia America Inc, a U.S. arm of Devas, on 11 May, wherein they expressed their concerns about the actions taken by Mauritius officials to liquidate the firms at India’s instance.
It is worth noting that this development in the US Federal Court takes place as part of a longstanding legal battle between foreign investors in the Bengaluru space start-up over the acclamation of a satellite deal between the Indian Space Research Organisation (ISRO) and its commercial arm, Antrix Corp., in 2005.
As a result of this legal battle, Devas Multimedia was liquidated in India by the National Company Law Tribunal; Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) cases were filed against Devas, ISRO and Antrix officials; and foreign arbitration award of up to $1.3 billion in favor of Devas Multimedia and its investors was awarded.
The three Mauritius investors in Devas Multimedia approached the US Federal Court for recognition of CCDM Holdings, LLC, Telcom Devas, LLC, and Devas Employees Fund US, LLC, together as “the Delaware Parents” of the Mauritius firms to intervene in ongoing efforts by Mauritius authorities to liquidate the Mauritius arms of the investors.
The U.S. Court was informed that, “Four weeks ago, a Mauritian government agency notified the Mauritian shareholders that—based upon intelligence obtained from a foreign authority, later confirmed as India’s Department of Space—it intended to revoke their business licenses and seize control of the companies. The Mauritian shareholders obtained a temporary injunction from a Mauritian Court.”
The Devas investors have claimed that the Mauritian Financial Services Commission has moved to revoke the business licenses of the investors based on information provided by India’s Department of Space and informed that India had appeared in a 8 May hearing on the FSC’s request, urging the Court to maintain the administrator’s control of the Mauritian shareholders.
The U.S. Federal Court confirmed a 14 September, 2015, International Chamber of Commerce Tribunal award of over $ 1.3 billion against Antrix Corp on 27 October, 2020.
Thereafter, Antrix Corporation had filed an appeal against this order in the U.S. Court of Appeals for the Ninth Circuit.
According to the satellite lease agreement between ISRO and Devas Multimedia that was signed in 2005, ISRO was to lease two communication satellites to Devas Multimedia for a period of 12 years at a cost of Rs. 167 crores per satellite. The start-up was to provide video-audio services to mobile platforms in India using the space band or S-band spectrum transponders on Isro’s GSAT 6 and 6A satellites built at a cost of Rs 766 crore by the space agency.
The Devas Multimedia-Antrix Corp agreement was annulled by the UPA government in February 2011 following allegations of the contract being a “sweetheart deal” in the backdrop of the 2G scam.
Thereafter, in 2014, the CBI and ED began investigating the 2005 satellite deal. The ED and the CBI had filed chargesheets alleging corruption and money laundering in the matter.