A provisional liquidator, appointed to take control of all the assets of start-up Devas Multimedia Pvt Ltd, has called the firm a “sham” entity which “exists only on paper” in a preliminary report given to the National Company Law Tribunal (NCLT).
Devas was favoured by Antrix Corporation, the commercial arm of the state-run Indian Space Research Organisation (ISRO), in a 2005 satellite deal to provide access to the S-band spectrum to launch digital multimedia services.
Antrix Corporation and Devas Multimedia have been engaged in a long legal battle in India and the United States since the February 11, 2011 cancellation of the 2005 deal. Antrix Corporation approached the NCLT to liquidate Devas Multimedia last month in wake of a US federal court confirming an international arbitration award of $1.2 billion that was granted to Devas Multimedia as compensation over the cancellation of the 2005 deal.
The Bengaluru bench of the NCLT appointed the provisional liquidator on January 19, and the provisional liquidator’s preliminary report, dated February 3, was mentioned during the course of a Devas shareholder appeal against the liquidation at a Chennai National Company Law Tribunal (NCLAT) last week.
Devas Employees Mauritius Ltd approached the NCLAT opposing the liquidation process on the grounds that many issues in the dispute are pending in courts, including proceedings in cases of alleged corruption and money laundering being investigated by the CBI and ED against officials of Devas Multimedia and ISRO.
Devas Employees Mauritius in its appeal to the NCLAT argued that the firm was legitimate and had major investors like the German telecom major Deutsche Telekom among its shareholders.
Antrix Corporation however argued that Devas Multimedia has not been able to prove its claims of being involved in the “business of delivering broadband, wireless access and audiovisual services through an integrated hybrid satellite and terrestrial communication system” and that it had developed technology to provide services as mandated by the 2005 satellite deal.
The NCLAT noted in its February 11 order, “On behalf of the First Respondent/Petitioner, it is brought to the notice of this ‘Tribunal’, ‘Devas’ as a Company exists only on paper and it is a ‘sham’ entity engaged in acts of fraud which was mentioned in the first report filed by the ‘Provisional Liquidator” on February 3.”
The NCLAT said the Mauritius-based shareholder can approach the NCLT in Bengaluru and implead in the liquidation matter and seek redressal of its grievances against the process.
In recent days, the high-profile legal battle in the company law tribunals has seen top lawyers like Solicitor General Tushar Mehta appearing on behalf of Antrix Corporation.
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