'Fraud against country': FM Sitharaman slams UPA over Antrix-Devas deal

The Antrix-Devas matter was a fraud against the country, and the previous Congress administration should explain how the fraud was perpetrated, Finance Minister Nirmala Sitharaman said at a press conference on Tuesday.

Devas, said the Finance Minister, claimed to own a technology that did not exist. Based on this, an agreement with Indian Space Research Organisation (Isro) was signed, Sitharaman said, adding, “The fraud began there.”

The United Progressive Alliance government took six years to cancel the agreement that Antrix entered into with Devas in 2005, she said. “The Congress allowed blatant selling of Government of India’s resources for a pittance,” Sitharaman added.

On Monday, the Supreme Court had upheld the winding up of Devas Multimedia, stating the case involved a fraud of a huge magnitude, which cannot be brushed under the carpet. The apex court had dismissed the appeal filed by Devas Multimedia Pvt Ltd, and said when the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) had recorded concurrent findings on facts, it is not open to this Court to reappreciate evidence.

“We will now take this SC order, and make sure that justice is served on international fora,” Sitharaman said.

The manner in which the agreement was entered into with Devas was not known to the then Cabinet, and the way in which a misleading note was put to the Cabinet shows the affairs of the company were conducted in a fraudulent manner, she said.

Antrix had applied for the liquidation of Devas, and the NCLT and NCLAT had allowed it. The case was taken to the Supreme Court, which upheld the liquidation of Devas, Sitharaman said. Now, Devas is claiming damages of $562.5 million plus interest from 2015. Telcom Devas Mauritius and Devas Employees Mauritius have claimed $93.3 million and $112 million, respectively.

Sitharaman, reading out the Supreme Court judgement, said Devas brought in a total amount of Rs 579 crore, but almost 85 per cent of it was siphoned out of India, partly towards establishing a subsidiary in the US and partly towards business support services and litigation expenses.

“Till today we are fighting one arbitration case after the other to save the taxpayers’ money, which would have otherwise gone for paying for the damages because of this agreement,” Sitharaman said.

Since the Supreme Court has upheld the order of the NCLT and NCLAT, the winding up of the company will begin, Ministry of Corporate Affairs Secretary Rajesh Verma said. A liquidator has already been appointed, and has now taken over the management of Devas. It will take over Devas’s assets both in India and abroad, Verma said.

The Supreme Court, in its judgement said, it does not know if the action of Antrix Corporation, Isro’s commercial arm, in seeking the winding up of Devas may send a wrong message to the community of investors. “But allowing Devas and its shareholders to reap the benefits of their fraudulent action may nevertheless send another wrong message, namely that by adopting fraudulent means and by bringing into India an investment in a sum of Rs 579 crores, the investors can hope to get tens of thousands of crores of rupees, even after siphoning off Rs 488 crore,” the bench said.

A top government official said that the decision of the Canadian Court, that Air India is an alter ego of Republic of India, will not impact the handover process to Tata Sons. The official said that the process is going on smoothly and the airline is no longer an entity belonging to the Government of India.

The court rejected the submission that the actual motive behind Antrix seeking the winding up of Devas is to deprive Devas of the benefits of a unanimous award passed by the International Chamber of Commerce Arbitral Tribunals and the two BIT awards, and that such attempts on the part of a corporate entity, wholly owned by the government, would send a wrong message to international investors.

After the Supreme Court’s ruling, Jay Newman, a senior advisor to Devas shareholders, said the decision is neither a setback nor a surprise. “It was scripted for months. The Modi government will now appeal to global courts waving the NCLT ruling as yet another bogus excuse to evade payment. Courts in the US, Netherlands, Canada and France have seen through the previous sham proceedings and evasion tactics, and this ruling is no different. Devas shareholders will continue to identify and seize Indian state assets around the world until the debt has been paid,” Newman said in a statement.

Devas Multimedia is still pursuing seizure of Air India’s assets after Cairn Energy ended its long pending dispute with India by withdrawing the retrospective taxation litigation in order to participate in the scheme introduced by recent Indian legislation, the Taxation Laws (Amendment) Act 2021.

After a favourable order by a Canadian court that identified soon-to-be-privatised national carrier Air India as an alter ego of the government of India, investors of Devas Multimedia have sought to seize Air India assets in the United States to recover $111 million compensation over a failed 2005 deal. Air India had moved to quash the seizures in Canada, arguing that the allegations are insufficient to demonstrate that the national carrier is an alter ego of India. The investors have also moved a US court to seize Air India’s assets in the US.

The official quoted above said that Devas was going arbitration “award shopping”, trying to gauge in which jurisdiction it would get the most money.