Lalit Shastri

The decision of the single judge bench of the Karnataka High Court on Friday 30 September to quash the case brought under the Prevention of Money Laundering Act, 2012, against K R Sridharamurthi, a former Executive Director of Antrix Corporation Limited, an arm of Indian Space Research Organisation (ISRO) is a fit case to be challenged and there is sufficient ground to go in appeal against it.

The Karnataka High Court has taken the decision to quash the case against the former ED of Antrix Corporation on the ground that “the lease of space segment to Devas Multimedia Private Limited (Devas) was on the instruction and directions of the board of directors of Antrix Corporation and special invitees”.

The big expose in 2012. Check the clipping below, especially the 3rd para marked in red. It shows that the Antrix Board meeting was a sham and smacked of conspiracy. This matter is already under the scanner of the CBI which is investigating the matter

The conspiracy angle vis-a-vis the Antrix Board meeting was highligthed shortly after the Antrix-Devas agreement had been annulled through an exclusive news story one did in February 2012 (see clipping above). Question arises how come this fact got swept under the carpet and the Karnataka High Court gave weightage to the directions of the board of directors of Antrix Corporation while quashing the case against the former ED of Antrix Corporation?

Sridharamurthi, along with 9 individuals and entities, is accused of money laundering in the Antrix-Devas deal of 2005. The Enforcement Directorate (ED) had filed a chargesheet in this matter in July 2018.

The Karnata High Court order comes after the Delhi High Court had already passed on order (on Monday 29 August 2022) to set aside a 2015 arbitral award by the International Chamber of Commerce (ICC) directing Antrix Corporation to pay USD 562.2 million as damages, along with interest thereon, to Devas for terminating their agreement in 2011, saying the award suffered from “patent illegalities and fraud”.

Earlier, the Supreme Court by its Judgment on 17 January 2022 had established that the Tribunal award contravened the fundamental policy of Indian law being in conflict with the most basic notions of justice and was also contrary to the national economic interest having also violated the “FIPB Policies‟ and the provisions of “FIMA‟ and “PMLA‟ and thus was “antithetical to the fundamental policy of Indian law”.

The Supreme Court also held that the very seeds of the commercial relationship between Antrix and Devas were a product of fraud perpetrated by Devas and thus every part of the plant that grew out of those seeds, such as the Agreement, the disputes, arbitral awards etc., are all infected with the poison of fraud.”

The Supreme Court held that a product of fraud is in conflict with the public policy of any country including India. The basic notions of morality and justice are always in conflict with fraud and that allowing Devas and its shareholders to reap the benefits of their fraudulent action, would send another wrong message namely that by adopting fraudulent means and by bringing into India an investment in a sum of INR 579 crores, the investors can hope to get tens of thousands of crores of rupees, even after siphoning off INR 488 crores.”

On 25 February 2011 Antrix had written to Devas informing it that the agreement [No. ANTX/203/DEVAS/2005 dated 28th January 2005] has been terminated with immediate effect.

The letter stated:
“The Central Government has communicated that it has taken a policy decision not to provide orbital slot in S-Band to our Company for commercial activities including those which are the subject matter of the existing agreements.”

The decision of the Space Commission to annul the deal was taken on 2 July, 2010. On 16 February 2011, then Prime Minister Manmohan Singh had told media-persons that this decision to annul the Antrix-Devas agreement was taken “after it was decided that the Government should take a sovereign policy decision regarding the utilization of Space Band capacity which uses S Band spectrum having regard to the country’s strategic requirements”.

The annulment of the agreement between Antrix and Devas came after Vijay Anand, the Joint Secretary of the Department of Space, who was also its Chief Vigilance Officer, in November 2009 learned of possible irregularities relating to the Contract and initiated a preliminary, internal review of certain of the allegations including that “the minutes of a 6 January 2009 meeting of a review committee of the Technical Advisory Committee (“TAG”) of the Indian Satellite Coordination Committee (“ICC”) relating to the experimental licence requested by Devas had been altered in a manner that eliminated certain comments that had been made at the meeting by the representatives of the Wireless Planning and Coordination Wing of the Department of Telecommunications (“WPC”), headed by the Wireless Advisor to the Government of India, from which Devas would have been required to seek its operating licence and frequency allocation.

The disclosure of potential irregularities and the information developed by the preliminary internal investigation led to the establishment by the Department of Space of a single man committee, Dr. B. N. Suresh, a former member of the Space Commission.

In his Report on GSAT-6, that was delivered to Dr. K Radhakrishnan, the Secretary of the Department of Space, on 7 July 2010, Dr. Suresh noted that only 10% of the capacity of the transponders to be leased to the Respondent under the Contract would be available for ISRO, which would bring in certain limitations on the availability of spectrum for any essential demands in the future.

Dr. Radhakrishnan directed that the Suresh Report be examined by the Satellite Communications & Navigation Program Office.

Following the receipt of the Suresh Report, the Department of Space consulted the Ministry of law and justice and the Department-of Telecommunications. on 18 June 2010, the Ministry of Law and Justice stated that Satellites, referred to in the agreement, are no doubt the property of the Central Government and Central Government under its sovereign functions is duty bound to take care of its strategic needs in respect of various forces like BSF, CISF, CRPF, RPF etc. any commercial activity cannot override to sovereign function. The Central Government/ISRO is not duty bound to provide orbit slot to Antrix for commercial activities, especially when there is strategic requirements. When the Central Government/ISRO denies the orbit slot to Antrix in exercise of its sovereign power and function, such event may fall under the category of Force Measure‟ as contemplated in Article 11 (of the agreement).

The Ministry of Law and Justice further opined that the Central Government (Department of Space), in exercise of its sovereign power and function, if so desire and feel appropriate, may take a policy decision to the effect that due to the needs of strategic requirements, the Central Govt/ISRO would not be able to provide orbit slot in S band for operating PS1 to the ANTRIX for commercial activities. In that event, ANTRIX in terms of Article 7 (c) read with Article 11, of the agreement may terminate the agreement and inform DEVAS accordingly. However on such termination ANTRIX shall be required to reimburse DEVAS all the Upfront Capacity Reservation Fees and corresponding service taxes received by ANTRIX till that date.”

The Minutes of 2 July 2010 of the Space Commission state:
“Focusing on the issue. Chairman stated that ISRO holds, in S band spectrum, 80 MHz in BSS and 70 MHz in MSS. The Antrix-Devas lease agreement on GSAT-6 and 6A would take away 70 MHz of the total S band spectrum available. Shivshankar Menon, NSA [National Security Advisor] stated that S band spectrum is crucial for several strategic and societal services. The Integrated Space Cell of IDS [Integrated Defence Staff], Ministry of Defence have projected a need for 17.5 MHz in S band for meeting the immediate requirements of Armed Forces, another 40 MHz during the 12th plan period and an additional 50 MHz during the 13th plan period. Armed Forces have also projected the need to build S band satellite capacity … for national security related mobile OMP (COMM) 11 of 2021 Page 41 of 87 communications. There are further demands for S band transponders from internal security agencies viz., BSF, CISF, CRPF, Coast Guard and Police for meeting their secured communication needs. Indian Railways have also projected S band requirements for train-tracking. Commission noted that, in view of these emerging requirements, there is an imminent need to preserve the S band spectrum for vital strategic and societal applications.

It was noted that Space spectrum is a vital national resource and it is of utmost importance to preserve it for emerging national applications for Strategic uses and societal applications. Given the limited availability of S band spectrum, meeting the strategic and societal needs is of higher priority than commercial/ entertainment sectors.

The Space Commission concluded that the Department of Space may take necessary actions and instruct Antrix to annul the Antrix Devas contract. Thereafter an opinion was taken from the Additional Solicitor General.

Consistent with the Additional Solicitor General‟s opinion, and in accordance with Rule 4 of the Transaction of Business Rules of the Government of India, a note was placed before the Cabinet Committee on Security for decision.

The Cabinet Committee on Security, comprised of the Prime Minister, the Minister of Defence, the Minister of Home Affairs, the Minister of External Affairs and the Minister of Finance and is the highest authority within India for matters relating to internal and external security and defence.

In February 2011, the Cabinet Committee on Security took the decision to deny orbital slot in S-band to Antrix for any commercial activities and to annul the Contract.

The report of the Cabinet Committee on Security‟s decision stated as under:

“Taking note of the fact that Government policies with regard to allocation of spectrum have undergone a change in the last few years and there has been an increased demand for allocation of spectrum for national needs, including for the needs of defence, para-military forces, railways and other public utility services as well as for societal needs, and having regard to the needs of the country‟s strategic requirements, the Government will not be able to provide orbit slot in S band to Antrix for commercial activities, including for those which are the subject matter of existing contractual obligations for S band.