Space war between India, Devas Multimedia takes another turn

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Five years on, a raging battle between the Government of India, the privately-owned Devas Multimedia, and former senior officials of the Department of Space (DOS), the Indian Space Research Organisation (ISRO) and Antrix Corp refuses to die down.

While Devas seems have won cases filed overseas against the Indian government for cancelling its transponder leasing contract, the latter is also adopting legal recourse in India against the alleged corruption in the deal.

The latest development is a chargesheet filed by the Central Bureau of Investigation (CBI) a few days ago, placing the loss to the exchequer on account of the deal at Rs 578 crore. Those named are former ISRO Chairman and DOS Secretary G. Madhavan Nair, then Executive Director of Antrix K.R. Sridhara Murthi, and others.

Antrix, the commercial arm of ISRO, had entered into an agreement with Devas in 2005 for the long-term lease of two ISRO satellites operating in the S-band. With the leased transponders, Devas planned to offer digital multimedia services using the S-band wavelength (spectrum), reserved for strategic purpose.

The deal was cancelled in 2011 following the Comptroller and Auditor General’s (CAG) estimate of Rs 2 trillion crore loss to the government and the subsequent uproar.

The then United Progressive Alliance (UPA) government invoked sovereignty for cancelling the deal and decided to use the advanced satellite for the country’s strategic use.

However the CAG’s loss estimates were contested by a two-member high powered review committee which also ruled out cheap selling of spectrum to Devas. The panel comprised former Cabinet Secretary B.K. Chaturvedi and noted aerospace scientist Roddam Narasimha.

But a five-member team, chaired by former Central Vigilance Commissioner (CVC) Pratyush Sinha, concluded that there have been serious lapses of judgment on part of various officials, and in some cases the actions verged on the point of breach of public trust in the deal.

Reacting to the chargesheet, Nair said that there was nothing wrong in the deal. The CBI action comes after India lost an arbitration case in an international tribunal against Devas for cancelling the contract.

Last month, Devas said: “A Permanent Court of Arbitration tribunal has found that the government of India’s actions in annulling a contract between Devas and Antrix Corporation Ltd. and denying Devas commercial use of S-band spectrum constituted an expropriation.”

Devas said the unanimous decision included the arbitrator appointed by India.

However, the Department of Space said that in the award — issued on “jurisdiction and merits on July 25, 2016” — the tribunal has said the Indian government’s essential security interest provisions “do apply in this case to an extent” and the “limited liability of compensation shall be limited to 40 per cent of the value of the investment”, but the precise quantum has not been determined as yet.

In an earlier decision, an International Chamber of Commerce (ICC) tribunal in 2015 found unanimously that Antrix’s repudiation of the contract was unlawful, and awarded Devas damages and pre-award interest of approximately $672 million, plus post-award annual interest accruing at 18 per cent until the award is paid in full.

According to Devas, a mutually agreeable resolution of this matter is preferred and until that occurs, the company and its investors will continue to press their claims before international tribunals and in courts around the world.

In June this year, the Enforcement Directorate (ED) had issued a notice to Devas for alleged violation of foreign exchange laws.

According to a government statement, Devas is suspected to have received FDI of Rs 578.54 crore between May 2006 and June 2010 from various overseas investors, but the share subscription agreements it entered with them contained clauses contrary to the conditions specified in the approvals granted by Foreign Investment Promotion Board.

Devas was also charged with contravening the FDI regulations under FEMA for assuring foreign investors an annual eight per cent priority dividend in addition to other dividends on cumulative basis, and for one tranche of receipt of funds, issuing a security akin to an External Commercial Borrowing (ECB) promising higher returns than the ceiling fixed by the Reserve Bank of India.

The Antrix-Devas deal is the second major controversy in which senior ISRO officials were figuring.

The first one was popularly known as the ISRO Spy Scandal in which S. Nambi Narayanan, a senior space scientist was wrongly implicated and arrested on espionage charges along with another top official, two Maldivian women and a businessman.

In 1996, a year later after the case surfaced, things changed drastically with the CBI and the apex court clearing Narayanan and gave him a clean chit. He got back his job.

Narayanan has approached the Supreme Court seeking criminal and disciplinary action against the senior police officers for implicating him in the espionage case in which he was discharged.

Venkatachari Jagannathan and Sanu George / IANS