The Supreme Court in the case of Devas Multimedia Private Ltd. v/s Antrix Corporation Ltd. & Anr. junked an appeal filed by Devas Multimedia challenging an NCLAT order to wind up the company.
The respondent in these appeals, namely, Antrix Corporation Limited, incorporated under the Companies Act, 1956, is the commercial arm of the Indian Space Research Organisation (ISRO ) which is wholly owned by the Government of India and coming under the administrative control of the Department of Space. Antrix entered into a Memorandum of Understanding with Forge Advisors, LLC, a Virginia Corporation. The intent, as spelt out in the MOU, was to make both parties become “strong and vital partners in evaluating and implementing major new satellite applications across diverse sectors including agriculture, education, media and telecommunications”. Apart from other things, the MOU contemplated Forge Advisors to provide a broad array of advisory services that included nearterm tactical projects in the areas of sales, marketing, business development, strategic partnership negotiations and other related business areas and long term projects in the areas of corporate strategy, market opportunity assessment, business case development for new services, launch of new application services etc.
Mukul Rohtagi, senior counsel appearing for the company in liquidation, assailed the impugned orders of NCLT and NCLAT and contended that the winding up petition is barred by limitation; Antrix is estopped from pleading fraud and there is violation of the principles of natural justice due to the denial of permission for cross examination.
The appellant in the second appeal, DEMPL, and which holds 3.48% of the issued equity share capital of the Company in liquidation, assailed the impugned orders and contended that the question of locus of a small shareholder to oppose winding up has been decided by both Tribunals contrary to law.
The division bench of Justice Hemant Gupta and Justice V. Ramasubramanian said that if as a matter of fact, fraud as projected by Antrix, stands established, the motive behind the victim of fraud, coming up with a petition for winding up, is of no relevance. If the seeds of the commercial relationship between Antrix and Devas were a product of fraud perpetrated by Devas, 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 court while dismissing the appeal held all the grounds of attack to the concurrent orders of the NCLT and NCLAT to be unsustainable.