The S – Band Controversy

THE S – BAND CONTROVERSY 

Entering into the contract with Devas was in itself a hasty decision on the part of government and then on the other side the termination was also done in very little time span

Introduction:

The ongoing case of Antrix Corp. Ltd. vs. Devas Multimedia Pvt. Ltd. has attracted a lot of controversies with time. It is the contemplation of how the Indian system works. It is a reflection of Truth vs. Projections.

Overview of the Case:

Antrix Corporation Ltd. is a Government owned company which is controlled by the Department of Space and deals in providing commercial products and services to the Indian Space Research Organisation (ISRO). Devas Multimedia Pvt. Ltd. is a company which was incorporated to provide digital multimedia services.

Antrix and Devas entered into a written agreement in the year 2005, where Antrix agreed to build, launch and operate two satellites and lease their spectrum capacity to Devas to which, Devas promised to use those satellites and spectrum to provide multimedia broadband casting services in India. The issue came into the limelight when due to certain issues and revised Policy decisions by the Central Government, Antrix terminated the respective agreement with Devas in 2011.

Following this, Devas invoked the Arbitration clause of the agreement and took the matter to the International Chamber of Commerce (ICC) to seek the remedy out of the terminated contract. ICC on analysing the matter awarded Devas 1.5 billion for the damages caused by Antrix's termination of Agreement. Meanwhile, Antrix filed a petition before the Bangalore City Civil Court under Section 9 of the Arbitration and Conciliation Act, 1996 seeking the interim relief which was dismissed by the court declaring it to be non – maintainable.

Once the award was rendered by ICC Antrix, again filed the petition before the Bangalore City Civil Court under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the award granted against Antrix. On the other hand, within the similar time frame Devas filed the suit before the Delhi High Court challenging the Jurisdiction of Bangalore City Civil Court to entertain Antrix's application. The single Judge Bench (Delhi High Court) gave the decision in favour of Devas to seek interim measures securing the Arbitral Award by ICC.

After, the decision was given by the Single Judge Bench, Delhi High Court, Antrix filed an appeal before the Division Bench of the Delhi High Court, challenging the decision of the Single Judge Bench where, the court further set aside the order of the Single Judge Bench, High Court of Delhi.

Where there were multiple investigations going on by the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) against Devas, the company was suspected to have been in various fraudulent and illegal activities. While the investigation was still going on, in furtherance of the same Antrix prayed for the winding – up of Devas Multimedia Pvt. Ltd. on the account of committing fraudulent activities within the meaning of section 271(e) of Companies Act, 2013 before National Company Law Tribunal (NCLT). The tribunal investigated the matter and concluded that Devas has been functioning fraudulently since the time of its incorporation and hence, passed the order of winding – up of Devas.

Devas Multimedia approached the Supreme Court of India seeking interim orders to restrain the liquidator to take any measures following the decision of NCLT. The Apex Court refused to entertain the matter and directed Devas to approach NCLAT for the same.

Devas Mauritius Employees Pvt. Ltd. (DEMPL) which is a shareholder of Devas Multimedia Pvt. Ltd. took the matter to the National Company Law Appellate Tribunal (NCLAT) challenging the judgement passed by NCLT where, it refused to entertain the matter. Simultaneously, DEMPL filed the case before the U.S Court seeking the order to restrain Devas from taking any action with respect to the Arbitral Award or, restricting Devas from initiating any litigation with respect to the Award. The U.S Court decided upon the case passing on the temporary order restraining Devas from entering into any agreement with Antrix regarding the settlement of the Arbitral Award and also asked Antrix to pay compensation of $1.2 billion to Devas for cancelling the deal in 2005. Antrix filed an appeal against the order by the U.S Court in the U.S Court of Appeals for the Ninth Circuit where the decision still stands pending.

The Supreme Court of India has put up a stay order on the decision passed by the U.S Court and also questioned its jurisdiction to decide upon this case.

Analysis and the Conclusion:

As on records, the controversy of the case came into light with the termination of the written agreement between Devas and Antrix in 2011. This contract was all about the usage of Space band spectrums (S – Band) and providing multimedia services across India using the same.

As per my Analysis cancelling the contract could have been the last option left with the government of India. Entering into the contract with Devas was in itself a hasty decision on the part of government and then on the other side the termination was also done in a very less time span. This step caused major harm to the reputation of the Indian government not only Nationally but Internationally as well. Every decision has its own consequences and whereby, if we talk about this instance, it also had major repercussions. Where, the Honble' Prime Minister of India 'Mr. Narendra Modi' talks about the foreign investments on contrary to this, such hasty decisions on the part of the Government will discourage the same.

While cancelling the contract, there seems to be no evaluation of the loss the Indian Government was expected to incur wholly and the loss to be suffered individually to Devas out of the termination of this contract. While entering into contract with Devas, ISRO and Antrix did not seriously evaluate the cost to be incurred by the government or, Devas individually. The Spectrum which was the basis of the formation of the contract does not belong to ISRO but also rightfully belongs to the people as well. Having said the government not only needs to think upon the contract between Antrix and Devas but also, needs to think upon the Bilateral treaties India has with other countries.

Before the termination of the contract in my opinion it was important to be analysed that how this entire agreement was separately struck between Antrix and Devas involving ISRO and its associated outcomes. The way systems responded and the involvement of the entire governance sparked the whole controversy outlining the issue. In India when the government seeks to take any step ahead or a decision, it is never to be done without expert legal opinions in order to negate all the possible outcomes.

This contract between Antrix and Devas was not just between two entities but it involved major technicalities, legalities, International Relations, Investor Sentiments and much more. It even included various procedural lacks and it became complicated due to the dearth of a holistic view. There was no analysis part done before and after Antrix got into a contract with Devas. That is what projects the state of affairs, the level of communication and interpretation from higher to lower level on the part of decision makers.

Thus, it needs to be understood that analysis of the whole situation cannot be merely based upon the 2005 contract, because it involves various other aspects as well to reach to a sane conclusion. This whole matter not only reflects the ongoing dispute moreover, it is a mirror showing up the reality.