TaxTMI 
TaxTMI 
2021 (5) TMI 51
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.... persons falling under Section 272(1)(e) of the Act; and to issue a writ of certiorari quashing sanction order dated January 18, 2021 and consequently to quash all proceedings in C.P. No. 06/BB/2021 before NCLT (National Company Law Tribunal). 2. Brief facts of the case are, petitioner holds 3.48% shares in Devas Multimedia Pvt. Ltd., (respondent No.3 herein), (hereinafter referred to as 'Devas'). On January 28, 2005, Antrix Corporation Ltd., (respondent No. 2 herein) and Devas entered into an agreement for lease of space segment capacity on ISRO/Antrix S-Band Space Craft. According to the petitioner, investments were brought into Devas from different shareholders including State owned Deutshe Telekom, an enterprise of the German Government. 3. On February 25, 2011, Antrix Corporation terminated the agreement. Devas initiated arbitration proceedings in ICC (International Chamber of Commerce). On September 14, 2015, ICC Arbitral Tribunal passed an Award for USD 562.5 Million with interest thereon, which according to the petitioner works out to about Rs. 10,000 Crores and same is being enforced in several jurisdictions. The Central Government vide notification dated Jan....
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.... (1) Whether Section 272 (1)(e) is ultra vires Constitution of India? and (2) Whether order dated 18.01.2021 needs any interference? Re. Point No.1 8. Shri. Nayar has argued that both Registrar of Companies and a 'person authorized by the Central Government' stand on the same footing. In the case of Registrar, before according sanction, Central Government is required to give an opportunity to the Company and the same is missing in the case of a 'person authorized by Central Government'. Placing reliance on paragraph No.10 in Ram Dial and others Vs. The State of Punjab AIR 1965 SC 1518, he argued that where one of the provisions provides for notice and hearing, and the other does not, it is drastic and arbitrary and on this ground, the Apex Court has declared Section 14(e) of the Punjab Municipalities Act, as unconstitutional. 9. Shri. N.Venkataraman, learned ASG, has submitted that there is a classic distinction between the Registrar of Companies and a person authorized by the Central Government because Registrar is a regulator and stands on a different footing. 10. In Ram Dial, the Apex Court was considering Section 14(e) and Section 16 of ....
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.... Companies enumerated in Sections 77, 77(2), 78, 81, 83, 93, 137, 157, 206, 208, 209 and 248 of the Companies Act. Therefore, I am persuaded to accept the submission of learned ASG that Registrar falls in a different category. 14. Shri. Nayar next relied upon paragraph No.255 in Delhi Transport Corporation Vs. D.T.C. Mazdoor Congress and others 1991 Supp (1) SCC 600 and paragraph No. 11 in Sultana Begum Vs. Prem Chand Jain (1997)1 SCC 373, and urged that proviso to Sec. 272(3) may be read to be applicable to petitions presented by 'any person authorised by the Central Government'. In Delhi Transport Corporation case, the issue is with regard to applicability of certain rules in case of retrenchment on account of reduction in establishment and other circumstances such as probationary period. In Sultana Begum it is held that statute has to be read as a whole. As recorded hereinabove, the Registrar being the Regulator, falls in a distinct category and these authorities do not lead petitioner's case any further. 15. Shri. Venkataraman, learned Addl. SG has placed reliance on the following authorities and contended that sanction is an administrative act and therefore affor....
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....importers. It is held that the State can ordinarily claim no flavoured treatment but there may be clear and good reason for making a departure. 19. In the next authority, P.M. Ashwathanarayana Setty and others Vs. State of Karnataka and others 1989 Supp (1) SCC 696, the Apex Court has held that State enjoys widest latitude where measures of economic regulation are concerned. In State of Gujarat Vs. Ambica Mills Ltd. (1974) 4 SCC 656, referred in this authority, it is held that more complicated Society becomes, the greater the diversity of its problems and the more does Legislation direct itself to the diversities. In the utilities, tax and economic regulation cases, there are good reasons of judicial self restraint if not, official deference to Legislative judgment. The Courts have only the power to destroy, but not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the Judges have been overruled by events, self limitation can be seen to be the path to judicial wisdom and institutional prestige and stability. 20. Shri. Venkataram also relied up....
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....city and power to enter into and perform this Agreement in terms thereof; ii) DEVAS has the ability to design Digital Multimedia Receivers ("DMR"); iii) DEVAS has the ability to design Commercial Information Devices ("CID"); iv) DEVAS has the ownership and right to use the Intellectual Property used in the design of DMR and CID; v) The fulfillment of DEVAS' obligations under this Agreement by DEVAS will not violate any Laws; vi) DEVAS shall assign, transfer and/or sub-let its rights and obligations hereunder in accordance with law. vii) DEVAS shall be solely responsible for securing and obtaining all licenses and approval (Statutory or otherwise) for the delivery of Devas Services via satellite and terrestrial network." 24. He has submitted that Devas did not have the ownership of any intellectual property as the technical know-how mentioned in the agreement was unknown in the world at that point of time. Thus, all that Devas has done is bringing money into India under different channels, and siphoning off a major portion of it. 25. Shri. Venkataraman has further submitted that CBI (Central Bureau of Investigation) has....
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....d Devas itself had valued the Company at Rs. 579 Crores. 29. It was argued by Shri. Nayar that Antrix Corporation is the judgment debtor. Therefore, in order to avoid payment under the Arbitration Award, the Antrix Corporation has chosen to seek liquidation of Devas and the request made by Antrix has been acceded in great hurry by according sanction. He contended that the aspect of fraud has been designed to deprive Devas of its legitimate dues. 30. Admittedly, Antrix Corporation is fully owned by the Government of India and the Secretary of the Department of Space is the Ex-officio Chairman of Antrix Corporation. It is no doubt true that agreement has been cancelled on the ground of force majeure and Devas has obtained an Arbitral Award. But, at the same time, the contents of the letter dated January 14, 2021 written by the Antrix Corporation cannot be brushed aside. The Managing Director of Antrix Corporation has stated that with an Investment of Rs. 579 Crores, Devas have provided ISP services for about 25 people and earned a revenue of Rs. 80,000/-. It is also stated that out of Rs. 579 Crores, Rs. 233 Crores have been moved out towards litigation services and large sum o....
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....worth US$ 144 Million with the Respondent for leasing of S-Band Transponders over a period of 12 years. Ms. Veena S Rao, the then Additional Secretary (AS), Department of Space, being one of the Directors on the Board of Antrix was also present in the said meeting and as such she was aware of the agreement between Antrix and the Respondent No.1 Company for leasing of S-Band Transponders, an agreement which is illegal and unenforceable. However, the same was concealed before the 104th Space Commissioner meeting which was attended by the aforementioned persons forming part of the 58^th Board Meeting of Antrix." 33. With regard to the valuation of the Company, it is stated thus in the Company petition: "74. Because for a company with no commercial antecedent and hardly in vogue for more than six months, the shares of the Respondent No.1 Company were sold at exorbitant rates as high as Rs. 1.26 Lakhs per equity share. The officials of the Respondent No.1 Company were not able to give any valid justification to the investigating agencies for pricing the shares at such high premiums, thus leading to the conclusion that the foreign investments were brought into India only for ....
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....at the whole operations were driven from USA and through the US subsidiary entity and the Indian holding company had not bid role to play. The entire payment of Rs. 487,07,78,278, (Rupees comprising of share subsription money, service fee towards business support and legal fees cannot be supported with any evidence and nothing in fact was furnished by Devas India to the PMLA authorities." 35. It is averred in the Company petition [paragraph No.11(f)] that the existence of Contract dated 28.01.2005 was suppressed by the 'then officials' from various Government Authorities while seeking approval for the project. It is also averred that a Cabinet note dated 17.11.2005 put up for the consideration of Union Cabinet suppressed the existence of Contract which had already been executed on 28.01.2005, and stated, instead, that ISRO was in receipt of "several firm expressions of interest" by different service providers for utilization of Satellite capacity. 36. It is further averred in the Company Petition that Devas, a Company incorporated without any commercial antecedents and hardly in existence for six months had sold its shares at exhorbitant rates, as high as Rs. 1.26 Lak....
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....iled an impleading application in the Company winding up Petition pending before NCLT. Thus, petitioner is privy to all averments contained in the Company Petition. It has approached this Court under Article 226 of the Constitution of India as one of the shareholders of Devas. However, petitioner has not whispered anything about the serious allegations of siphoning of the money, levelled against Devas and other illegalities alleged in the Company Petition. 43. Antrix Corporation is fully owned by the Government of India. It's specific case is, its officers are involved in the fraud. Law enforcing agencies such as CBI, ED, Authorities under PMLA have conducted investigation. As recorded hereinabove, Secretary, Department of Space is ex-officio Chairman of Antrix Corporation and he has sought for sanction to liquidate Devas. It is settled that Courts must presume that all actions of the executive shall be in consonance with the Rules of business of the Government. In order to substantiate the malafides on the part of the Central Government, one of the arguments advanced by Shri. Nayar is that the sanction has been accorded in a hurried manner. 44. Shri. M.B. Naragund, learned A....
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....itiation of winding up proceedings against Devas." 49. Above pleadings are vague. In any event, petitioner has challenged the order dated January 19, 2021 passed by the NCLT before the NCLAT and the NCLAT has disposed of the said appeal by its order dated February 11, 2021 by directing petitioner to file necessary interlocutory application before the NCLT seeking permission to implead itself in the main pending Company Petition. NCLAT has also granted liberty to raise all factual and legal pleas before the NCLT. Petitioner has accepted the said order and proceeded further and filed an application under Rules 11 and 34 of the NCLT Rules, 2016 for impleadment in the main petition. 50. Shri. Venkataram has submitted that pleadings are complete before the NCLT and the company petition was listed for final hearing. NCLT's order dated March 2, 2021, shows that the learned Senior Advocate for the petitioner herein has agreed to file objection to the main Company Petition on or before March 12, 2021. Accordingly, the matter was adjourned to March 23, 2021 for final hearing. Thus, having elected the appropriate forum to oppose the Company petition, this writ has been filed a day p....