Supreme Court landmark judgment to impact arbitration |
The Supreme Court has dismissed an appeal filed by Devas Multimedia against the decision of the National Company Law Appellate Tribunal (NCLAT). The NCLAT had upheld the National Company Law Tribunal`s decision to wind up the company. This decision is bound to have significant political and economic ramifications as it is likely India will use this judgement while fighting against an international arbitration award won by Devas, whose enforcement the company has been pushing for in some geographies. Recently, a Canadian court ordered the attachments of assets owned in that country by Air India as part of this. The judgment, delivered by a bench comprising justices Hemant Gupta and V Ramasubramanian dismissed Devas` and its minority shareholder Devas Employees Mauritius Private Ltd`s appeal. The Bench upheld the order passed by NCLAT that stated that Devas was incorporated with a fraudulent motive to collude and connive with some officials of Antrix Corporation, the commercial arm of the Indian Space Research Organisation (ISRO). The judgement is the latest chapter in a controversial deal during the previous UPA regime, when, in 2005, Devas entered into an agreement with Antrix, the private sector arm of ISRO to provide high-speed data services using S-band satellite spectrum from Antrix. The deal was terminated amid allegations of corruption by Manmohan Singh`s UPA government in 2011. This resulted in commercial arbitration before an ICC Tribunal in the Netherlands and investment arbitration under the India-Mauritius and India-Germany bilateral investment treaty. Each of these proceedings has led to adverse awards against the Union of India. The latest Supreme Court judgment in favour of the Union of India bolsters its case against Devas internationally, especially against the arbitration award for Devas that is under consideration with the judiciary of the Netherlands. This may also help the Modi government in limiting the enforcement proceedings globally on grounds of fraud. The apex court`s order also embarrasses the previous Congress regime ahead of state elections in Uttar Pradesh, Uttarakhand, Goa, Manipur, and Punjab.
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