A Chief Justice of India (CJI) led bench of the Supreme Court has kept in abeyance a 2015 arbitral award by which Indian Space Research Organisation ISRO’s Antrix Corporation (commercial arm) was ordered to pay compensation of about US $1.2 billion to a Bengaluru-based startup, Devas Multimedia Private Limited (Devas Multimedia Pvt Ltd vs Antrix Corporation Ltd).
A Washington court had recently ordered the execution of the award dated September 14, 2015 in favour of Devas Multimedia and asked the Indian government entity to deposit the compensation with 18% annual interest that worked out to $1.2 billion to be paid by ISRO’s Antrix.
Case Background
The payment was ordered to be made in connection with a 2005 agreement entered into between Devas and Antrix for lease of two S-band Transponders on two ISRO satellites. Devas had planned to use the same to provide multimedia services. Devas was promoted by a few former employees of ISRO. The Central government, however, cancelled the controversial contract in February 2011, invoking sovereignty.
Devas filed a case against ISRO’s Antrix for damages it suffered owing to the cancellation of the agreement.
While ISRO’s Antrixpreferred an application under Section 9 of the Arbitration and Conciliation Act before the City Civil Court at Bengaluru, Devas filed a Section 9 application before the Delhi High Court for securing the award. ISRO’s Antrix also filed a petition under Section 34 of the Arbitration Act before the Bengaluru City Civil Court to restrain Devas from enforcing the arbitral award.
A Division Bench of the Delhi High Court rejected the plea by Devas giving green signal for the case to proceed before the Bengaluru court but this was stayed by the Supreme Court in 2018, which halted the Section 34 proceedings at Bengaluru.
Execution proceedings were also filed in various parts of the world including the United States. In a lawsuit filed in a US District Court, in September 2018, had said three separate international tribunals and nine different arbitrators had found the termination of the Devas-ISRO’s Antrix agreement to have been wrong. Devas had said that one of the tribunals in its findings had noted it to be a clear breach of simple good faith by India.
The US Court stayed the execution for a period of about one year to enable the parties including ISRO’s Antrix to settle the matter. This stay was, however, lifted on September 17, 2020 and the arbitral award of 2015 was confirmed in favour of Devas.
Court’s Observations
However, the bench of CJI SA Bobde and Justices L Nageswara Rao and Indu Malhotra stated that it was keeping the arbitral award in abeyance and also transferred the Section 34 proceedings from the Bengaluru court to the Delhi High Court.
The Supreme Court stated that the key issue before the court was whether the application under section 34 of the Act should be heard by the court at Delhi or the court at Bangalore.
However, the three-judge bench stated that they consider it “highly iniquitous to permit the party to execute an award without the objections under section 34 of the Act to the Award itself being heard.”
Attorney General KK Venugopal denied the possibility of mediation on the ground that the Union of India has discovered a serious fraud in the entire series of transactions leading up to the disputes including the arbitration agreement.
“Pending decision in the present special leave petition, it would be highly iniquitous to permit the petitioner – Devas Multimedia Private Limited to obtain the fruits of the Award by execution under any law or convention after obtaining a stay from this Court restraining the respondent – Antrix Corporation Limited from pursuing its objections under section 34 of the Act against the Award,”
The top court, therefore, kept the execution of the award in abeyance while ordering transfer of Section 34 proceedings from Bengaluru court to Delhi High Court. The apex court also said that the execution of award will remain in abeyance till the Delhi High Court decides the plea for stay which is part of the Section 34 proceedings.
Devas Multimedia will, however, be entitled to seek a deposit of the sum awarded or a part before the Delhi High Court, the court added.
