The National Company Law Tribunal (NCLT) has directed to initiate the liquidation process of Devas Multimedia by allowing the petition filed by Antrix Corporation, a commercial arm of the Indian Space Research Organisation.
The Bengaluru bench of the NCLT has said Devas Multimedia was incorporated with a fraudulent motive to collude and connive with the then officials of Antrix Corporation to get bandwidth from it by entering into an agreement in 2005, which was subsequently cancelled by the government.
The tribunal also confirmed the appointment of the provisional liquidator by it earlier on January 19 and directed him to take "expeditious steps to liquidate" the company to prevent it from perpetuating its fraudulent activities and abusing the process of law.
"The incorporation of Devas itself was with fraudulent motive and unlawful object to collude and connive with then officials of Antrix and to misuse/abuse process of law, to bring money to India and divert it under dubious methods to foreign countries," the tribunal noted.
It further observed that the Government of India has "sovereign powers" to frame and change its policies, which includes the termination of the agreement in question.
"In the light of aforesaid facts and circumstances of the case, after duly considering the legal position on the issue and by exercising the power conferred on the tribunal. company petition is allowed by ordering to wind up Devas Multimedia Pvt Ltd," said a two-member NCLT bench, comprising members - R Rao Vittanala and Ashutosh Chandra - in its order passed on May 25.
The tribunal has directed the liquidator to submit a report by July 7.
"All persons associated with the affairs of Devas Multimedia, are hereby directed to extend full assistance and co-operation to the said Liquidator to discharge his statutory functions," the NCLT said while directing Antrix to advertise this winding-up order.
The NCLT said Devas Multimedia management is continuing to resort to fraudulent activities.
The tribunal also observed that Devas Multimedia has taken the arbitration out of the country contrary to the terms of the agreement. Moreover, while accepting the termination of the agreement in question before the ICC court, it changed its version and claimed huge damages.
"Even after the filing of the instant petition, instead of proving to the satisfaction of tribunal (NCLT) that it is not liable to be wound up, Devas has started a proxy war by approaching NCLAT and High Court of Karnataka, through Devas Employees Mauritius Pvt Ltd, by raising un-tenable ground one after the another," it said.
According to the NCLT, it was not in dispute that Devas is not carrying out any business operations, after the termination of the agreement in question.
"Devas has failed to show any cogent reasons as to why it should not be wound up and to keep its name on the ROC Karnataka," it added.
On January 19, it had admitted the petition filed by Antrix Corporation for winding up Devas Multimedia and has appointed a provisional liquidator for the company, directing to take control of its management, properties and actionable claims.
Now, after almost four months, it has allowed the petition of Antrix.
Devas Multimedia was incorporated on December 17, 2004.
According to the winding petition filed by the commercial arm of ISRO before the NCLT, the then officials of Antrix Corporation, including its chairman, had executed a contract dated January 28, 2005.
This was finally terminated on February 25, 2011, as it was obtained fraudulently in connivance of the then officials. The investigating agencies - CBI and Enforcement Directorate - have unearthed fraud in executing the agreement, Antrix had said.
CBI had later filed charge sheets and ED had initiated PMLA proceedings. The MCA had also initiated an investigation into the affairs of Devas Multimedia, but a stay was granted by the Delhi High Court.
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