Setting aside a September 2015 award asking government-owned Antrix Corporation Limited to pay more than $ 562.5 million to the Devas Multimedia Private Limited, the Delhi High Court Monday said the award suffers from patent illegalities and fraud. The award is in conflict with the public policy of India, said the court.
Antrix, which is engaged in the marketing and sale of products and services of Indian Space Research Organisation (ISRO), in 2005 had entered into a contract for the lease of a part space segment capacity on a communication satellite and an option to gain additional capacity on another satellite to Devas for 12 years. Devas planned to use the same to provide digital multimedia broadcasting services across India.
In February 2011, the Cabinet Committee on Security decided to annul the contract. The matter then went to arbitration before the International Court of Arbitration of the International Chamber of Commerce (ICC Court). The tribunal in 2015 ruled in favour of Devas — the decision was challenged by Antrix before the High Court here.
Observing that the reasoning of the tribunal is self contradictory and the award suffers from patent illegality on the face of it, Justice Sanjeev Sachdeva in the ruling pronounced on Monday said the Arbitral Tribunal has incorrectly excluded the evidence pertaining to the pre-contractual negotiations. The pre-contractual negotiations pertained to termination of contract.
“Additionally, findings on fraud returned by the Supreme Court by its judgment dated January 17, 2022, clearly establish that award contravenes the fundamental policy of Indian law being in conflict with the most basic notions of justice and is also contrary to the national economic interest having also violated the “FIPB Policies” and the provisions of “FIMA” and “PMLA” and thus antithetical to the fundamental policy of Indian law,” said the court.
The court also said that the Tribunal has committed patent illegality in not appreciating that the ‘IBA Rules on Taking of Evidence’ are applicable only in case of international arbitration and that also with the consent of parties. “Subject arbitration proceedings are domestic arbitration between two Indian parties and not International Arbitration proceedings and as such said rules are not applicable and the evidence could not have been excluded,” said Justice Sachdeva.
On January 17, the Supreme Court upheld a May 25, 2021, order of the National Company Law Tribunal (NCLT) to liquidate Devas on the ground that the firm was created under fraudulent circumstances. In September 2015, the tribunal had passed the award in favour of Devas in the sum of $562.5 million “with simple interest at 18% from the date of award to the date of payment”.
Devas before the tribunal had argued that Antrix was not entitled to terminating the agreement and cannot rely on Force Majeure clause in the contract as the CCS decision “was brought about by, and is otherwise attributable to Antrix’s own or its parent’s actions”. Antrix argued that the decision of CCS rendered the agreement impossible to perform. However, the tribunal ruled that Antrix was not entitled to terminating the contract.