Extension of IBC suspension comes with added risks
Extension of IBC suspension comes with added risks

The National Company Law Tribunal (NCLT) has admitted the petition filed by Antrix Corporation, the commercial arm of Indian Space Research Organisation, for winding up Devas Multimedia and has appointed a provisional liquidator for the company.

A two-member NCLT Bengaluru bench of the NCLT has directed the provisional liquidator to take control of the management, properties and actionable claims of Devas Multimedia.

The tribunal has also directed the existing management of Devas Multimedia to extend full cooperation to the provisional liquidator appointed by it.

"We admit the company petition and the respondents are granted time to file their replies," said an NCLT bench comprising Member Judicial Rajeswara Rao Vittanala and Member Technical Ashutosh Chandra, in its order passed on January 19.

The NCLT has posted the matter on February 8 for further hearing into the matter.

The government, through the Ministry of Corporate Affairs, also supported the Antrix Corporation plea before the NCLT and pointed out towards the various documents filed in the case for winding up of Devas Multimedia.

MCA officials submitted that continuance of Devas Multimedia's name on the rolls of Registrar of Companies (RoC) was not warranted and should be wound up.

The counsel representing Devas Multimedia has asked for some more time to file reply and said a reasonable opportunity should be provided to make its representation. They also submitted that the cause of action arose a long time back, there was no urgency in the present petition.

However, the NCLT after going through the submissions by Solicitor General Tushar Mehta and Additional Solicitor General N Venkatarama representing Antrix Corporation, said, in view of "circumstance of the case, and the law on the issue, we are of the considered opinion that prima facie case is made out by the Petitioner in favour of granting interim order as prayed for." "Since the R1 Company (Devas) has suffered various adverse findings with cogent evidence at the hands of various statutory authorities... it would not be proper to permit R1 Company to continue its name on the rolls of Registrar of Companies, Bengaluru," it said.

Devas Multimedia was incorporated on December 17, 2004.

According to the petition, the then officials of Antrix Corporation including its the then chairman had executed 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 of the agreement, Antrix said.

CBI had later filed charge sheets and ED had initiated PMLA proceedings. Even the MCA had also initiated an investigation into the affairs of Devas Multimedia but a stay was granted by the Delhi High Court.

In its petition, Antrix Corporation submitted that it itself was a "victim of the fraud and corruption" to which its then chairman and other officials were a party, and on account thereof has suffered an arbitral award on September 14, 2015 running into more than half a billion dollars, which with interest, comes to more than a billion dollars today.

It has preferred an appeal before the High Court of Delhi, against the arbitral award.

Devas had applied for FIPB approvals for the investment of Rs 579 crore and the investment has resulted for activities for money laundering.

While Tushar Mehta submitted that project involved the use of a combination of technologies as satellite and terrestrial systems for providing SDMB Service.

"It has now come on record that the technology necessary for providing these service was not even in existence at the time, the contract was awarded and was developed years later by the French scientists, who has patented it. Devas Multimedia did not even possess the necessary technology, when it as awarded contract on January 28, 2005," he submitted.

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