Full Judgment Text
W.P No.6191/2021
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 28 DAY OF APRIL, 2021
R
BEFORE
THE HON’BLE MR. JUSTICE P.S. DINESH KUMAR
WRIT PETITION No.6191 OF 2021 (GM-RES)
BETWEEN :
DEVAS EMPLOYEES MAURITIUS
PRIVATE LIMITED, (IN ITS
CAPACITY AS A SHAREHOLDER OF
DEVAS MULTIMEDIA PRIVATE LIMITED)
A COMPANY INCORPORATED
UNDER THE LAWS OF THE
REPUBLIC OF MAURITIUS, BEARING
COMPANY NO.C087664
HAVING ITS REGISTERED OFFICE AT
C/O INTERNATIONAL PROXIMITY
TH
5 FLOOR, EBENE ESPLANADE
24 CYBERCITY
EBENE-72201
REPUBLIC OF MAURITIUS
RERPESENTED BY ITS DIRECTOR
MR. RAMACHANDRAN VISWANATHAN
AGED ABOUT 53 YEARS ... PETITIONER
(BY SHRI. RAJIV NAYAR, SENIOR ADVOCATE FOR
SHRI. C.K. NANDA KUMAR, ADVOCATE)
[THROUGH VIDEO CONFERENCE]
AND :
1. UNION OF INDIA
THROUGH MINISTRY OF
CORPRATE AFFAIRS
TH
5 FLOOR, 'A' WING
W.P No.6191/2021
2
SHASTRI BHAWAN
NEW DELHI-110 001
REPRESENTED BY ITS
SECRETARY
2. ANTRIX CORPORATION LTD
REGISTERED OFFICE AT
ANTARIKSH BHAVAN
CAMPUS, NEAR NEW BEL ROD
BANGALORE
KARNATAKA-560 094
REPRESENTED BY ITS
AUTHORISED SIGNATORY
CHAIRMAN AND MANAGING DIRECTOR
CIN:U85110KA1992GOI013570
EMAIL ID:cmd.ofnce@.antrix.co.in
CONTACT NUMBER: +91 80 2217 8311
3. DEVAS MULTIMEDIA PVT LTD
(IN PROVISIONAL LIQUIDATION)
FIRST FLOOR, 29/1
KAVERIAPPA LAYOUT
MILLERS TANK
BUND ROAD
BANGALORE-560 052
REPREENTED BY ITS
DIRECTOR ... RESPONDENTS
(BY SHRI. N. VENKATARAMAN, ASG/SENIOR ADVOCATE FOR
SHRI. SAJI P. JOHN, ADVOCATE FOR R2 - THROUGH VIDEO
CONFERENCE;
SHRI. M.B. NARAGUND, ASG A/W
SHRI. M.N. KUMAR, CGC FOR R1- THROUGH VIDEO
CONFERENCE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227
OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT THAT SECTION
272(1)(e) OF THE COMPANIES ACT 2013 IS ULTRA VIRES THE
CONSTITUTION OF INDIA 1950 ANNEXURE-B AND DECLARE THAT THE
SECOND PROVISO TO SC.272(3) OF THE COMPANIES ACT 2013 MUST
BE READ TO BE APPLICABLE TO PETITION PRESENTED BY PERSONS
FAILING UNDER S.272(1)(e) OF THE COMPANIES ACT 2013 I.E ANY
PERSON AUTHORIZED BY THE CENTRAL GOVERNMENT IN THAT
BEHALF ANNEXURE-B AND ETC.
W.P No.6191/2021
3
THIS WRIT PETITION, HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 19.04.2021, COMING ON FOR PRONOUNCEMENT OF
ORDERS THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:-
ORDER
Devas Employees' Mauritius Pvt. Ltd., a Company
incorporated under the laws of Republic of Mauritius has
presented this writ petition with prayers to (i) declare
Section 272(1)(e) of Companies Act, 2013 ('the Act' for
short) as ultra vires Constitution of India; (ii) to declare
that the second proviso to Section 272(3) of the Act, must
be read to be applicable to the petitions presented by
persons falling under Section 272(1)(e) of the Act; and to
issue a writ of certiorari quashing sanction order dated
January 18, 2021 and consequently to quash all
1
proceedings in C.P. No. 06/BB/2021 before NCLT .
2. Brief facts of the case are, petitioner holds
3.48% shares in Devas Multimedia Pvt. Ltd., (respondent
No.3 herein), (hereinafter referred to as 'Devas'). On
January 28, 2005, Antrix Corporation Ltd., (respondent No.
1
National Company Law Tribunal
W.P No.6191/2021
4
2 herein) and Devas entered into an agreement for lease of
space segment capacity on ISRO/Antrix S-Band Space
Craft. According to the petitioner, investments were
brought into Devas from different shareholders including
State owned Deutshe Telekom, an enterprise of the German
Government.
3. On February 25, 2011, Antrix Corporation
terminated the agreement. Devas initiated arbitration
2
proceedings in ICC . On September 14, 2015, ICC Arbitral
Tribunal passed an Award for USD 562.5 Million with
interest thereon, which according to the petitioner works
out to about Rs.10,000 Crores and same is being enforced
in several jurisdictions. The Central Government vide
notification dated January 18, 2021 has authorised the
Chairman & Managing Director of Antrix Corporation to
present a petition to wind up Devas. Accordingly, Antrix
Corporation has filed a Company Petition before NCLT,
Bengaluru. By it's order dated January 19, 2021, NCLT has
2
International Chamber of Commerce
W.P No.6191/2021
5
admitted the petition and granted time to the respondents
therein to file replies; and appointed the official liquidator
attached to this Court as provisional liquidator.
4. Petitioner has challenged NCLT’s order before
3
NCLAT Chennai in Company Appeal (AT)(CH)No.02/2021.
The said appeal has been disposed of vide order dated
February 11, 2021, by directing the petitioner to file
necessary interlocutory application before NCLT seeking
permission to implead itself and with liberty to raise all
factual and legal pleas before the NCLT. Petitioner has filed
an application seeking impleadment in the proceedings
before NCLT.
5. Shri. Rajiv Nayar, for petitioner mainly urged
following contentions:
•
a winding up petition can be presented by persons
specified in Section 272(1) of the Act, which includes
both Registrar and 'any person authorized by the
Central Government'. Section 272(3) provides that
Registrar shall obtain previous sanction from the
3
National Company Law Appellate Tribunal
W.P No.6191/2021
6
Central Government to present a winding up petition.
The second proviso to Section 272(3) mandates that
Central Government shall not accord sanction unless
Company has been given an opportunity of making
representation;
•
in this case, no opportunity was given to Devas prior
to the accord of sanction by the Central Government;
•
the order passed by the Central Government
authorizing the Chairman and Managing Director of
Antrix Corporation to file winding up petition is
malafide exercise of power;
•
the agreement between Antrix and Devas has been
terminated on the ground of force majeure after
taking opinion from the learned Additional Solicitor
General and not on the ground of fraud;
•
the arbitral award passed by ICC is unanimous;
6. Shri. Nargund and Shri. Venkataraman, learned
Additional Solicitors General for the Union of India and
Antrix Corporation argued opposing the petition.
7. I have carefully considered rival contentions and
perused the records. In the conspectus of facts of this
case, following points arise for consideration:-
W.P No.6191/2021
7
(1) Whether Section 272 (1)(e) is ultra vires
Constitution of India? and
(2) Whether order dated 18.01.2021 needs any
interference?
Re. Point No.1
8. Shri. Nayar has argued that both Registrar of
Companies and a 'person authorized by the Central
Government' stand on the same footing. In the case of
Registrar, before according sanction, Central Government is
required to give an opportunity to the Company and the
same is missing in the case of a 'person authorized by
Central Government'. Placing reliance on paragraph No.10
4
in Ram Dial and others Vs. The State of Punjab , he argued
that where one of the provisions provides for notice and
hearing, and the other does not, it is drastic and arbitrary
and on this ground, the Apex Court has declared Section
14(e) of the Punjab Municipalities Act, as unconstitutional.
9 . Shri. N.Venkataraman, learned ASG, has
submitted that there is a classic distinction between the
4
AIR 1965 SC 1518
W.P No.6191/2021
8
Registrar of Companies and a person authorized by the
Central Government because Registrar is a regulator and
stands on a different footing.
10. In Ram Dial , the Apex Court was considering
Section 14(e) and Section 16 of the Punjab Municipalities
Act. Under Section 14(e) of the said Act, the State
Government, in public interest, could direct that a seat of a
specified member whether elected or appointed, shall be
vacated on a given date. Section 16 of the said Act gave
power to the State Government to remove any member of
the Municipal Committee. Proviso to Section 16(1) of the
said Act required the State Government to communicate the
reasons for removal and provide an opportunity to the
noticee to explain his stand. Thus, the Punjab Municipality
Act had two distinct provisions, of which, one provided for
notice and the other did not. Both provisions dealt with
removal of a member. In contradistinction, in this case,
Section 272 of the Companies Act permits different
category of persons to present a petition for winding up.
W.P No.6191/2021
9
The Registrar of Companies is privy to all information of the
Company and when he proposes to move a petition for
winding up under Section 271(c) of the Companies Act, it
shall be based on his opinion and satisfaction that the
affairs of that Company were conducted in a fraudulent
manner which is not the case of a person authorised by the
Central Government.
11. Shri. Rajiv Nayar, placed reliance on another
authority, Subramanian Swamy Vs. Director, Central Bureau
5
of Investigation and another (paragraphs No.57, 58, 59
and 68) and contended that discrimination cannot be
justified on the ground that there is reasonable
classification. In the said authority, the issue was whether
classification be made creating a class of Government
officers at the level of Joint Secretary and above on one
hand and certain officials in Public Sector Undertakings on
the other, for the purpose of enquiry/ investigation into
offences alleged to have been committed under the
5
(2014)8 SCC 682
W.P No.6191/2021
10
Prevention of Corruption Act, whereas, in the case on hand,
the distinction is with regard to sanction to be accorded by
the Central Government to the Registrar of Companies on
one hand and 'any authorized person' on the other.
12. Therefore, both authorities are not applicable to
the facts of this case and do not lend any support to the
petitioner’s case.
13. On the other hand, Shri. Venkataram, learned
ASG is right in his submission that 'Registrar' falls in a
category as a 'Regulator'. This can also be gathered from
the powers and duties of the Registrar of Companies
enumerated in Sections 77, 77(2), 78, 81, 83, 93, 137,
157, 206, 208, 209 and 248 of the Companies Act.
Therefore, I am persuaded to accept the submission of
learned ASG that Registrar falls in a different category.
14. Shri. Nayar next relied upon paragraph No.255
in Delhi Transport Corporation Vs. D.T.C. Mazdoor Congress
W.P No.6191/2021
11
6
and others and paragraph No. 11 in Sultana Begum Vs.
7
Prem Chand Jain , and urged that proviso to Sec. 272(3)
may be read to be applicable to petitions presented by 'any
person authorised by the Central Government'. In Delhi
Transport Corporation case, the issue is with regard to
applicability of certain rules in case of retrenchment on
account of reduction in establishment and other
circumstances such as probationary period. In Sultana
Begum it is held that statute has to be read as a whole. As
recorded hereinabove, the Registrar being the Regulator,
falls in a distinct category and these authorities do not lead
petitioner’s case any further.
15. Shri. Venkataraman, learned Addl. SG has placed
reliance on the following authorities and contended that
sanction is an administrative act and therefore affording any
opportunity of hearing is not contemplated at that stage:
6
1991 Supp (1) SCC 600
7
(1997)1 SCC 373
W.P No.6191/2021
12
•
Superintendent of Police (C.B.I.) Vs. Deepak
8
Chowdhary and others (paragraph No.5);
9
•
Sultan Singh vs. State of Haryana and another
(paragraph No.4);
•
Designated Authority (Anti-Dumping Directorate),
10
Ministry of Commerce Vs. Haldor Topsoe A/S
( paragraphs No.24 & 25);
•
State of Maharashtra Vs. Ishwar Piraji Kalpatri and
11
others (paragraphs No.16 & 17); and
•
Asst. Commissioner, Assessment-II, Bangalore and
12
others Vs. Velliappa Textiles Ltd., and another
(paragraphs No.7 & 8).
16. In Velliappa Textiles , the Apex Court has quoted
13
Lord Reid’s statement in Wiseman Vs. Borneman that
'every public officer who has to decide whether to prosecute
or raise proceedings, ought, first to decide whether there is
prima facie case, but no one supposes that justice requires
that he should first seek the comments of the accused or
8
(1995)6 SCC 225
9
(1996)2 SCC 66
10
(2000)6 SCC 626
11
(1996)1 SCC 542
12
(2003)11 SCC 405
13
(1969)3 All ER 275
W.P No.6191/2021
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the defendant on the material before him. So, there is
nothing inherently unjust in reaching such a decision in the
absence of other party '.
17. To buttress his argument that two distinct
procedures can be prescribed in a statute, Shri.
Venkataraman relied upon paragraphs No. 14, 17 & 30 in
Manganlal Chhanganlal (P) Ltd. Vs. Municipal Corporation of
14
Greater Bombay and others . In this authority, the
Constitution Bench of Supreme Court of India has held as
follows:
"14. To summarise: Where a statute providing for a
more drastic procedure different from the ordinary
procedure ......... The fact that in such cases the executive
will choose which cases are to be tried under the special
procedure will not affect the validity of the statute.
Therefore, the contention that the mere availability of two
procedures will vitiate one of them, that is the special
procedure, is not supported by reason or authority."
(Emphasis Supplied)
18. Shri. Venkataraman also urged that the State
enjoys a special status. In support of this contention, he
14
(1974)2 SCC 402
W.P No.6191/2021
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has relied upon paragraph No.14 in M. Jhangir Bhatusha
15
and others Vs. Union of India and others . In this case,
the Constitution Bench of the Supreme Court of India was
considering the exemption granted to STC, but denied to
private importers. It is held that the State can ordinarily
claim no flavoured treatment but there may be clear and
good reason for making a departure.
19. In the next authority, P.M.Ashwathanarayana
16
Setty and others Vs. State of Karnataka and others , the
Apex Court has held that State enjoys widest latitude where
measures of economic regulation are concerned. In State
17
of Gujarat Vs. Ambica Mills Ltd. , referred in this authority,
it is held that more complicated Society becomes, the
greater the diversity of its problems and the more does
Legislation direct itself to the diversities. In the utilities, tax
and economic regulation cases, there are good reasons of
judicial self restraint if not, official deference to Legislative
15
1989 Supp (2) SCC 201
16
1989 Supp (1) SCC 696
17
(1974) 4 SCC 656
W.P No.6191/2021
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judgment. The Courts have only the power to destroy, but
not to reconstruct. When these are added to the complexity
of economic regulation, the uncertainty, the liability to
error, the bewildering conflict of the experts, and the
number of times the Judges have been overruled by events,
self limitation can be seen to be the path to judicial wisdom
and institutional prestige and stability.
20. Shri. Venkataram also relied upon paragraph
18
No.17, in K.B. Nagur Vs. UOI and contended that
presumption of constitutionality is always in favour of
legislation, unless, the contrary is shown. In this authority
is also held as follows:
"20. It is also a settled and deeply-rooted canon of
constitutional jurisprudence, that in the process of
constitutional adjudication, the courts ought not to pass
decisions on questions of constitutionality unless such
adjudication is unavoidable. In this sense, the courts have
followed a policy of strict necessity in disposing of a
constitutional issue. In dealing with the issues of
constitutionality, the courts are slow to embark upon an
unnecessary, wide or general enquiry and should confine
18
(2012)4 SCC 483
W.P No.6191/2021
16
their decision as far as may be reasonably practicable,
within the narrow limits required on the facts of a case."
(Emphasis supplied)
21. It is settled that when a provision of law is
challenged, Courts are required to exercise restraint and be
cautious in striking down a provision. It may be profitable to
note the decision of the Apex Court in Government of
19
Andhra Pradesh and others Vs. P. Laxmi Devi (Smt) ,
wherein it is held as follows:
46. ………….. But before declaring the statute to be
unconstitutional, the court must be absolutely sure that
there can be no manner of doubt that it violates a provision
of the Constitution. If two views are possible, one making the
statute constitutional and the other making it
unconstitutional, the former view must always be preferred.
Also, the court must make every effort to uphold the
constitutional validity of a statute, even if that requires
giving a strained construction or narrowing down its scope
vide Rt. Rev. Msgr. Mark Netto v. State of Kerala [(1979) 1
SCC 23 : AIR 1979 SC 83] SCC para 6 : AIR para 6. Also, it
is none of the concern of the court whether the legislation in
its opinion is wise or unwise.
(Emphasis Supplied)
19
(2008)4 SCC 720
W.P No.6191/2021
17
Re. Point No.2
22. It is urged on behalf of the petitioner that
Central Government's decision to accord sanction is
malafide.
23. Shri. Venkataraman has argued that Devas was
incorporated on December 17, 2004. On January 28, 2005,
Antrix Corporation has entered into the agreement wherein
Devas has made following representations:
"b. DEVAS hereby represents and warrants ANTRIX as
under:
i) DEVAS has the capacity and power to enter into and
perform this Agreement in terms thereof;
ii) DEVAS has the ability to design Digital Multimedia
Receivers ("DMR");
iii) DEVAS has the ability to design Commercial
Information Devices ("CID");
iv) DEVAS has the ownership and right to use the
Intellectual Property used in the design of DMR and
CID;
v) The fulfillment of DEVAS' obligations under this
Agreement by DEVAS will not violate any Laws;
vi) DEVAS shall assign, transfer and/or sub-let its rights
and obligations hereunder in accordance with law.
W.P No.6191/2021
18
vii) DEVAS shall be solely responsible for securing and
obtaining all licenses and approval (Statutory or
otherwise) for the delivery of Devas Services via
satellite and terrestrial network."
24. He has submitted that Devas did not have the
ownership of any intellectual property as the technical
know-how mentioned in the agreement was unknown in the
world at that point of time. Thus, all that Devas has done
is bringing money into India under different channels, and
siphoning off a major portion of it.
25. Shri. Venkataraman has further submitted that
20
CBI has investigated and filed charge sheet in 2016. The
21 22
ED and Authorities under PMLA have also investigated
into the matter. Letters of Rogatory have been issued to
France, USA and Singapore. The Director of petitioner's
Company, Shri. Ramachandran Vishwanath, who is the
deponent verifying the Affidavit annexed to the writ
petition, is an accused in Criminal Proceedings and he is
20
Central Bureau of Investigation
21
Enforcement Directorate
22
Prevention of Money Laundering Act, 2002
W.P No.6191/2021
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avoiding service of summons sent to the very address
mentioned in the Affidavit. Therefore, petitioner has not
come to this Court with clean hands. He submitted that
Officers of ISRO, the Chairman and Executive Director of
Antrix Corporation and other Officers are also accused in
the Criminal cases.
26. The Secretary of Department of Space will also
be ex-officio Chairman of ISRO and Antrix Corporation. The
material on record (Annexure-G) discloses that on January
14, 2021, the Chairman-cum-Managing Director of Antrix
Corporation has written a detailed letter to the Secretary,
Ministry of Corporate Affairs giving chronological events and
sought sanction to file winding-up proceeding against
Devas. It is stated in the letter that Devas had committed
fraud in collusion with earlier Officers of Antrix Corporation,
Department of Space and ISRO and it has resulted in huge
financial loss to the Government of India.
W.P No.6191/2021
20
27. It is further stated in the letter that in the year
2011, Newspapers reported a mega scam and fraud in the
Department of Space and views of various Ministries were
sought. They had replied that the Contract and subsequent
transactions had involved serious contraventions and
breach of laws and it was completely overlooked and a
misrepresented Cabinet note was prepared seeking
termination of agreement dated 28.01.2005.
23
28. While filing application before the FIPB, Devas
had projected investments only as Internet Service Provider
(ISP), and the Department of Telecom had issued a license
to Devas for ISP services only. The application filed before
FIPB does not refer to multimedia services to be employed
in the use of S-Band transponder facility for which Antrix
Corporation and Devas had entered into the agreement. It
is further stated that Devas was incorporated with a Share
capital of Rs.1,00,000/- about one month prior to the
23
Foreign Investment Promotion Board
W.P No.6191/2021
21
agreement with Antrix Corporation and Devas itself had
valued the Company at Rs.579 Crores.
29. It was argued by Shri. Nayar that Antrix
Corporation is the judgment debtor. Therefore, in order to
avoid payment under the Arbitration Award, the Antrix
Corporation has chosen to seek liquidation of Devas and the
request made by Antrix has been acceded in great hurry by
according sanction. He contended that the aspect of fraud
has been designed to deprive Devas of its legitimate dues.
30. Admittedly, Antrix Corporation is fully owned by
the Government of India and the Secretary of the
Department of Space is the Ex-officio Chairman of Antrix
Corporation. It is no doubt true that agreement has been
cancelled on the ground of force majeure and Devas has
obtained an Arbitral Award. But, at the same time, the
contents of the letter dated January 14, 2021 written by the
Antrix Corporation cannot be brushed aside. The Managing
Director of Antrix Corporation has stated that with an
W.P No.6191/2021
22
Investment of Rs. 579 Crores, Devas have provided ISP
services for about 25 people and earned a revenue of
Rs.80,000/-. It is also stated that out of Rs.579 Crores,
Rs.233 Crores have been moved out towards litigation
services and large sum of money has been transferred to
the wholly owned subsidiary of Devas in USA.
31. Petitioner has annexed a copy of the Company
petition filed by Antrix Corporation before NCLT as
Annexure-H to the writ petition. Averment with regard to
siphoning of money reads thus:
" 13(dd). Monies to the tune of Rs.579 Crores were brought
in, and when the same were not being used for the
stipulated ends, the investment would be rendered illegal
and loses the eligibility as a protected investment.
13(ee). The investment of Rs.579 Crores instead of being
used to render internet services, was used in the following
manner that resulted in a case of Money Laundering:
i) Around of Rs.75 Crores were sent out of India by
creating a wholly owned subsidiary in the USA, with
the directors of Devas controlling the subsidiary.
ii) Over Rs.180 Crores were sent out as payment towards
business support services, without receiving either
W.P No.6191/2021
23
assets or services and writing them off as losses in the
books.
iii) Over Rs.233 Crores moved out of India in the guise of
litigation services. When the earlier payments were
made as business support, it resulted in service tax
exposure on reverse charge basis. To avoid payment
of such taxes, the monies were laundered in the guise
of litigation support services.
iv) Rs.92 Crores remained in India out of which a sum of
Rs.21 Crores was lying in fixed deposits which have
been seized by the PMLA authorities and Rs.59 Crores
was paid as upfront capacity fee to Antrix. The
balance monies were paid out as salaries to the
Directors of Devas."
32. It is the specific case of Antrix Corporation that
there was collusion of its officials and it is narrated as
follows:
"46. Because the officials of Antrix in collusion with the
Respondents No.1 Company, illegally and arbitrarily arrived
at a separate pricing of spectrums including the lease
charges to be paid by the Respondent No.1 company, even
when "Devas Services" which involved both Mobile Satellite
Services and Broadcasting Satellite Services, was absent
from the price stipulation available at that time."
th
"55. Because it is revealed that in 58 Meeting of the
Board of Directors, held on 17/03/2005 at Bangalore,
Mr.G.Madhavan Nair, the then Chairman, while welcoming
W.P No.6191/2021
24
the Directors, informed the Board that Antrix had signed a
contract worth US$ 144 Million with the Respondent for
leasing of S-Band Transponders over a period of 12 years.
Ms. Veena S Rao, the then Additional Secretary (AS),
Department of Space, being one of the Directors on the
Board of Antrix was also present in the said meeting and as
such she was aware of the agreement between Antrix and
the Respondent No.1 Company for leasing of S-Band
Transponders, an agreement which is illegal and
unenforceable. However, the same was concealed before
th
the 104 Space Commissioner meeting which was attended
th
by the aforementioned persons forming part of the 58
Board Meeting of Antrix."
33. With regard to the valuation of the Company, it
is stated thus in the Company petition:
"74. Because for a company with no commercial
antecedent and hardly in vogue for more than six months,
the shares of the Respondent No.1 Company were sold at
exorbitant rates as high as Rs.1.26 Lakhs per equity share.
The officials of the Respondent No.1 Company were not able
to give any valid justification to the investigating agencies for
pricing the shares at such high premiums, thus leading to the
conclusion that the foreign investments were brought into
India only for fraudulent activities including money
laundering. This is evident from the subsequent actions of
the Respondent No.1 Company, whereby Rs.487 Crores out
of Rs.579 Crores investment, were laundered out of Indian
W.P No.6191/2021
25
through the US subsidiary of the Respondent No.1
Company."
34. The averment with regard to financial
transactions reads as follows:
"79. Because of the Rs.579 Crores of foreign investment
amounts of Rs.76,19,04,563/- as share
subscription/investment in Devas America Inc (a wholly
owned subsidiary of the Respondent No.1 Company) and
Rs.180,77,58,989/- (Rupees One Hundred and Eighty Crores
Seventy-Seven Lakhs Fiffty-Eight Thousand Nine Hundred
and Eighty-Nine) in the guise of service fee towards business
support services, were laundered out of India. Out of the
Rs.180 Crores, the Respondent No.1 Company paid around
40 crores for the period 2006 October 2010 for which there
was no agreement at all. The agreement was entered into
only in October 2010 with the US subsidiary. If one adds the
share subscription of Rs.76,19,04,563 (Rupees Seventy Six
Crores Nineteen Lakhs Four Thousand Five Hundred and
Sixty Three), it would total upto Rs.256,96,63,544 (Rupees
Two Hundred and Fifty Six Crores Ninety-Six Lakhs Sixty-
Three Thousand Five Hundred and Forty Four). Over and
above this between 2011 and 2014, Devas India had sent
monies out of India into US to the extent of
Rs.230,11,14,734 (Rupees towards legal fees to USA firms.
Thus, a total of around Rs.487,07,78,278, (Rupees Crores
had been taken out of the Indian entity and migrated into US
entities. Devas had a balance of 21,38,66,041 (Rupees of
which 3 Crores was in the form of Inter Corporate loan
W.P No.6191/2021
26
deposits to DCP Networks Pvt Ltd., Bangalore. The balance
of Rs.18,38,66,041 (Rupees in the from of mutual
funds/bank deposits. Devas had totally spent
Rs.12,23,64,178 (Rupees towards expenses between 2005
and 2016 of which Rs.6 Crores and Rs.4 Crores respectively
(totalling 10 Crores) had been paid to 2 of its/directors.
Other than 12 Crore spend over 11 years, out of the 579
Crores, the balance 568 Crores way lying as liquidity of
which around Rs.487,07,78,278 (Rupees Crores have been
taken out of India into the US subsidiaries and other US
firms. When the PMLA authorities confronted these details
with the Directors/employees of Devas Multimedia India, a
confessional statement was made that the whole operations
were driven from USA and through the US subsidiary entity
and the Indian holding company had not bid role to play.
The entire payment of Rs.487,07,78,278, (Rupees
comprising of share subsription money, service fee towards
business support and legal fees cannot be supported with
any evidence and nothing in fact was furnished by Devas
India to the PMLA authorities."
35. It is averred in the Company petition [paragraph
No.11(f)] that the existence of Contract dated 28.01.2005
was suppressed by the 'then officials' from various
Government Authorities while seeking approval for the
project. It is also averred that a Cabinet note dated
17.11.2005 put up for the consideration of Union Cabinet
W.P No.6191/2021
27
suppressed the existence of Contract which had already
been executed on 28.01.2005, and stated, instead, that
ISRO was in receipt of "several firm expressions of interest"
by different service providers for utilization of Satellite
capacity.
36. It is further averred in the Company Petition that
Devas, a Company incorporated without any commercial
antecedents and hardly in existence for six months had sold
its shares at exhorbitant rates, as high as Rs.1.26 Lakhs per
share, to foreign investors. [paragraph 13(v)].
37. It is further averred in paragraph No.42 that the
agreement between Devas and Antrix was signed by one
Shri. S.R. Gururaj, who was an Article Clerk of Shri. M.
Umesh, a Chartered Accountant, who was one of the
Directors of Devas. It is also averred that Shri. Gururaj has
gone on record vide his statement dated 15.01.2016 before
the CBI.
W.P No.6191/2021
28
38. Petitioner has produced a copy of the agreement
between Antrix Corporation and Devas dated 28.01.2005,
as Annexure-C and it shows that on behalf of Antrix
Corporation, the agreement is signed by its Executive
Director, Shri. K.R. Sridhara Murthi and on behalf of Devas,
the agreement is signed by Shri. S.R. Gururaj.
39. It is further alleged in paragraph No.55 of the
th
Company petition that in the 58 meeting of the Board of
Directors of Antrix Corporation, Shri. Madhavan Nair, the
then Chairman had informed the Board that Antrix
Corporation had signed a Contract with Devas. Ms. Veena S.
Rao, the then Additional Secretary, Department of Space
being one of the Directors on the Board of Antrix
Corporation was also present in the said meeting and she
was aware of the said agreement. However, the same was
th
concealed before the 104 Space Commission Meeting
which was attended by the aforementioned persons forming
th
part of 58 Board Meeting of Antrix Corporation.
W.P No.6191/2021
29
40. Shri. Venkataraman, placing reliance on the
24
words of Lord Herschell in Derry Vs. Peek referred in
paragraph No.78 of Venture Gobal Engineering LLC Vs. Tech
25
Mahindra Ltd., and another , submitted that fraud is
proved when it is shown that a false representation has
been made knowingly, or without belief in its truth or
recklessly. He argued that facts of this case clearly show
that false representations have been made both by Devas
and the officers of Antrix Corporation. He submitted that
fraud unravels everything and therefore, Antrix Corporation
has taken appropriate steps to file the petition seeking
liquidation of Devas.
41. It is further averred in the complaint at
paragraph No.80 that neither Devas nor the Overseas
investors had ever sought for an approval from FIPB for
investing funds other than for ISP Services.
24
1889(LR) 14 AC 337 (HL)
25
(2018)1 SCC 656
W.P No.6191/2021
30
42. Admittedly, petitioner has challenged the order
passed by NCLT before NCLAT. Pursuant to the order
passed by NCLAT, petitioner has filed an impleading
application in the Company winding up Petition pending
before NCLT. Thus, petitioner is privy to all averments
contained in the Company Petition. It has approached this
Court under Article 226 of the Constitution of India as one
of the shareholders of Devas. However, petitioner has not
whispered anything about the serious allegations of
siphoning of the money, levelled against Devas and other
illegalities alleged in the Company Petition.
43. Antrix Corporation is fully owned by the
Government of India. It’s specific case is, its officers are
involved in the fraud. Law enforcing agencies such as CBI,
ED, Authorities under PMLA have conducted investigation.
As recorded hereinabove, Secretary, Department of Space
is ex-officio Chairman of Antrix Corporation and he has
sought for sanction to liquidate Devas. It is settled that
Courts must presume that all actions of the executive shall
W.P No.6191/2021
31
be in consonance with the Rules of business of the
Government. In order to substantiate the malafides on the
part of the Central Government, one of the arguments
advanced by Shri. Nayar is that the sanction has been
accorded in a hurried manner.
44. Shri. M.B. Naragund, learned ASG has made
available the original file containing the requisition and the
sanction. I have carefully perused it. It is has been dealt
with by concerned personnel in the Ministry and their file
notings are on record.
45. Shri. Rajiv Nayar contended that the sanction
order has been gazetted on January 18, 2021 and petition
has also been filed on the same day. The original file
discloses communications by email and proposal for
e-publication of the Notification in the Official Gazette. We
are in the electronic era of instant communication and
therefore no exception can be taken if a department
functions with speed/efficiency.
W.P No.6191/2021
32
46. Placing reliance on paragraph No.7 in S.L.Kapoor
26
Vs. Jagmohan and others. Shri. Nayar, contended that an
administrative order which involves civil consequences must
be made consistently with the Principles of Natural justice.
The comprehensive connotation of 'civil consequences' as
held in Mohinder Singh Gill Vs. Chief Election Commissioner,
27
New Delhi extracted therein, is, everything that affects a
citizen in his civil life.
47. In the case on hand, petitioner is a miniscule
shareholder in Devas. It has already filed an application for
impleadment before the appropriate forum namely the
NCLT. Devas is not aggrieved by the sanction order.
Petitioner has all opportunity to urge its contentions before
NCLT. At this juncture, there is no order, which has any
civil consequences.
48. Shri. Nayar also urged that where malafides are
alleged, it is necessary for the person against whom such
26
(1980)4 SCC 379
27
(1978)1 SCC 405
W.P No.6191/2021
33
allegations are made should come forward with an answer
refuting or denying the allegations. To buttress this
argument, he relied upon paragraphs No. 115 and 116 in
Express Newspapers Pvt. Ltd., and others Vs. Union of India
28
and others . He argued that respondents have not refuted
the allegations of malafides urged in paragraphs No.5 and
44 of the writ petition and they read as follows:
"5. In any event the exercise of power by Respondent
No.1 in the present case is malafide exercise of power and
the sanction dated 18.01.2021 ought to be struck down."
"44……This action of the debtor i.e., Antrix, to prevent the
creditor, i.e., Devas, to pursue its remedies in law are
untenable and wholly malafide, including the grant of
sanction by Respondent No.1 to Antrix, and the initiation of
winding up proceedings against Devas."
49. Above pleadings are vague. In any event,
petitioner has challenged the order dated January 19, 2021
passed by the NCLT before the NCLAT and the NCLAT has
disposed of the said appeal by its order dated February 11,
2021 by directing petitioner to file necessary interlocutory
application before the NCLT seeking permission to implead
28
(1986)1 SCC 133
W.P No.6191/2021
34
itself in the main pending Company Petition. NCLAT has also
granted liberty to raise all factual and legal pleas before the
NCLT. Petitioner has accepted the said order and proceeded
further and filed an application under Rules 11 and 34 of
the NCLT Rules, 2016 for impleadment in the main petition.
50. Shri. Venkataram has submitted that pleadings
are complete before the NCLT and the company petition
was listed for final hearing. NCLT's order dated March 2,
2021, shows that the learned Senior Advocate for the
petitioner herein has agreed to file objection to the main
Company Petition on or before March 12, 2021. Accordingly,
the matter was adjourned to March 23, 2021 for final
hearing. Thus, having elected the appropriate forum to
oppose the Company petition, this writ has been filed a day
prior to the date fixed for final hearing namely March 22,
2021. This amounts to abuse of process of law and a proxy
war on behalf of Devas.
W.P No.6191/2021
35
51. One of the most profound tenets of
Constitutionalism is presumption of Constitutionality
assigned to each legislation enacted. Indubitably,
Parliament has competence. The sanction accorded by the
Central Government does not meet petitioner with any Civil
consequence. Devas has not challenged the sanction order.
Petitioner has failed to demonstrate infringement of any
rights enshrined in Part-III of Constitution of India.
52. Having held that Registrar and 'a person
authorized by the Central Government' fall into different
categories, it does not warrant reading down Section 272(3)
of the Companies Act.
53. Accordingly, both points for consideration are
held in the negative.
54. Resultantly, this writ petition must fail and it is
accordingly dismissed with cost of Rs.Five Lakhs payable
in the name of the Registrar General of this Court within
W.P No.6191/2021
36
four weeks from today and Registrar General shall report
compliance.
55. In view of the dismissal of this petition, pending
interlocutory applications, if any, do not survive for
consideration and they stand disposed of.
Sd/-
JUDGE
SPS