AUSE TITLE:
Devas Employees Mauritius Pvt. Ltd v. Antrix Corporation Limited & Ors
DATE OF ORDER:
17 March 2023
JUDGE(S):
Hon’ble Justice Satish Chandra Sharma and Justice Subramonium Prasad
PARTIES:
Appellant: Devas Employees Mauritius Pvt. Ltd
Respondent: Antrix Corporation Limited & Ors
SUBJECT:
The Hon’ble Supreme Court (hereinafter referred to as ‘the Court’), upheld the single-judge Bench decision of the trial court; wherein the arbitral award of 2015 passed by the International Commercial Court (ICC) was aside on grounds of fraud in the Antrix-Devas Deal.
Accordingly, the appeal was dismissed.
IMPORTANT PROVISIONS
Arbitration and Conciliation Act, 1996
- Section 37 - Appealable orders -
- An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:—
- granting or refusing to grant any measure under section 9;
- setting aside or refusing to set aside an arbitral award under section 34.
- An appeal shall also lie to a Court from an order granting the arbitral tribunal.—
- accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or
- granting or refusing to grant an interim measure under section 17.
- No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.
- Section 34 - Application for setting aside arbitral award -
- Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).
- An arbitral award may be set aside by the Court only if—
- the party making the application furnishes proof that—
- a party was under some incapacity, or
- the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
- the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
- the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration.
Companies Act, 2013
- Section 271 - A company may, on a petition under section 272, be wound up by the Tribunal -
- if the company has, by special resolution, resolved that the company be wound up by the Tribunal;
- if the company has acted against the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality;
- if on an application made by the Registrar or any other person authorised by the Central Government by notification under this Act, the Tribunal is of the opinion that the affairs of the company have been conducted in a fraudulent manner or the company was formed for a fraudulent and unlawful purpose or the persons concerned in the formation or management of its affairs have been guilty of fraud, misfeasance or misconduct in connection therewith and that it is proper that the company be wound up;
- if the company has made a default in filing with the Registrar its financial statement or annual returns for immediately preceding five consecutive financial year; or
- if the Tribunal is of the opinion that it is just and equitable that the company should be wound up.
BRIEF FACTS:
- In 2005, the respondent corporation, wholly owned by the Indian government, signed a satellite contract with the appellant company which is registered under a foreign Act. According to this contract, the respondent company was to build and operate two satellites while the appellant company was to provide multimedia services in India by using those two satellites.
- In 2011, the Manmohan Singh led UPA government terminated this contract once allegations of a ‘quid pro quo’ deal between the two parties were raised.
- In 2015, the appellant company approached the International Chamber of Commerce (ICC); wherein it was found that the termination of the contract was arbitrary and wrong. Further, a fine of $562.2 million was imposed on the respondent organization along with interest by the Tribunal.
- The appellants also initiated claims under the “Bilateral Investment Treaties,” which also ruled in their favour and directed them to pay fines.
- In 2021, the respondent organization approached the National Company Law Tribunal (NCLT) seeking for winding up of the respondent company on grounds that it was set up with ‘fraudulent motives’. The NCLT ruled in favour of the respondent organization and directed the liquidation of the appellant company. The verdict was upheld by NCLAT as well as the Supreme Court.
- The respondent organization challenged the impugned order of the ICC in Delhi high court; wherein the said order was set-aside on the ground that the reasoning behind the order is self-contradictory.
- Accordingly, the present appeal was filed in the Supreme Court of India.
QUESTIONS RAISED:
- Whether the High Court erred in setting aside the award passed by the ICC in favour of the appellants?
ANALYSIS BY THE COURT:
- The Ld. Court observed that the 2005 deal entered between the two parties was a void contract under Indian Contract Law. That is why, the payments made by the respondent organization during 2005-2011 are, therefore, proceeds of crime not only under India's domestic anti-money laundering and anti-corruption laws but also under international regulations such as the UN Convention Against Corruption.
- The Court also observed that the municipal as well as the international laws enable the court with the power to seize and forfeiture assets owned by the petitioner through unjust enrichment during the 6-year period of the fraud deal.
- Therefore, in this scenario, the arbitral award passed by the ICC in favour of the appellants is wrong and has to be set-aside.
CONCLUSION
The Ld. Court upheld the single-judge Bench decision of the trial court; wherein the arbitral award of 2015 passed by the International Commercial Court (ICC) was aside on grounds of fraud in the Antrix-Devas Deal
