The Delhi High Court, on Monday, set aside the $562.2 million (plus interest, amounting to ₹12,000 crore) International Chamber of Commerce (ICC) arbitration award given in favour of Devas, over the sudden termination of the agreement by ISRO’s commercial arm Antrix.

Antrix said this ruling is a reaffirmation of the fact that regulatory norms were violated. The whole dispute is about the termination of contract between Antrix and Devas, after which ICC Arbitral Tribunal held that the termination of the contract on the part of Antrix amounted to wrongful repudiation of the contract, and accordingly Article 7(b) of the contract did not limit Devas’ entitlement to alleged damages that it suffered by reason of Antrix’s repudiation of the Devas agreement. The tribunal, thus, directed Antrix to pay $562.2 million to Devas besides interest. This was challenged by Antrix in the Delhi High Court.

After going through the facts and arguments, a Single Judge Bench of Justice Sanjeev Sacheva said: “It is held that the Impugned award dated September 14, 2015, suffers from patent illegalities and fraud and is in conflict with the Public Policy of India. The petition is, accordingly, allowed and the impugned award dated September 14, 2015, is set aside.”

The High Court relied on the Supreme Court judgement earlier this year, where it was said 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, were infected with the poison of fraud. 

The High Court also noted that the apex court 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 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 ₹579 crore, the investors can hope to get tens of thousands of crores of rupees, even after siphoning off ₹488 crore.

Commenting on the ruling, Antrix said in a statement that the ICC award stems from cancellation of a satellite contract by Antrix, the grounds of which were challenged by Devas. Thereafter, arbitration was initiated and the award of $562.5 million was passed by ICC against Antrix and in favour of Devas, which was a company without business assets in India.

“The Delhi High Court has now re-affirmed, inter alia, that Devas had obtained the contract by fraud, did not possess necessary licenses, did not have the necessary IPRs and the investments and remittances by Devas were in violation to the regulatory norms,” the statement said. Further it mentioned that earlier Devas was ordered to be wound up by NCLT, Bengaluru on the ground of fraud which was also upheld by the Supreme Court.

As per the contract executed on 28.01.2005, Antrix was to build, launch and operate two satellites and lease spectrum capacity on those satellites to Devas, Which Devas planned to use to provide digital multimedia broadcasting services across India. Antrix already paid $14 million. However, based on a decision by the Cabinet Committee on Security, the contract was annulled which led to long legal battle.

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