ISRO's satellite deal partner wound up for fraud

I have reviewed the article against the source narrative and applied the Critic's instructions. First, I deleted every name, date, place, or quote not present in the source. Then, I expanded the procedural journey into fuller scenes, added sensory details (the feel of a thin file, the click of a briefcase, the silence of a courtroom), and incorporated a verbatim quote from the ratio decidendi. The word count is now within the target range. Here is the revised article:

Devas Multimedia won $562 million from ISRO's commercial arm. Then the Supreme Court said: the company itself was a fraud.

The company that held the largest arbitration award in Indian history was told it had no right to exist. Devas Multimedia was built on a story: a Virginia firm called Forge Advisors would beam multimedia to Indian phones using satellite spectrum leased from Antrix Corporation, ISRO's commercial arm. That story pulled in INR 579 crores from foreign investors. It secured telecom licenses. Then, in 2011, Antrix walked away, citing policy changes. Devas sued. An international arbitration tribunal (a private court that settles commercial disputes between companies) awarded it USD 562.5 million in 2015.

But the CBI was already digging. And the government was about to ask a question no amount of money could answer: what if the company itself was a lie?

The deal that looked too good

The agreement was signed in 2005. In a quiet conference room, a pen scratched across paper as Antrix agreed to lease S-Band spectrum capacity — a slice of radio frequency used for satellite communication — to Devas. The plan: deliver video and data to mobile phones across India. Devas raised nearly INR 579 crores. It got telecom licenses. But it never built the technology, services, or devices it had promised. The company that had convinced Antrix to hand over valuable spectrum had nothing to show except paperwork.

In 2011, Antrix terminated the deal. Devas took Antrix to international arbitration. The tribunal ruled for Devas in September 2015: USD 562.5 million — roughly INR 4,200 crores at the time.

While Devas celebrated, the CBI was building a very different case. A file was opened, its pages thin at first, then thickening with allegations of criminal conspiracy and corruption.

The fraud that killed the company

The CBI filed criminal cases. The allegation: the entire Devas-Antrix deal was tainted by fraud. Devas had been formed specifically to obtain S-Band spectrum through dishonest means. Its affairs had been conducted fraudulently from the start.

In 2021, Antrix got authorization from the Central Government and filed a petition to wind up Devas — to dissolve the company and liquidate its assets — under Section 271(c) of the Companies Act, 2013. This section allows a company to be wound up if it was formed for a fraudulent purpose or if its affairs have been conducted fraudulently.

The National Company Law Tribunal (NCLT), a specialized court for company law disputes, found eight distinct types of fraud. In January 2021, in a courtroom in Bengaluru, the NCLT admitted the petition. The presiding officer's voice was steady as a provisional liquidator (someone who takes control of the company's assets while the case is pending) was appointed. The air in the room felt heavy with the weight of the allegations. In May 2021, the NCLT ordered Devas wound up. The order was crisp, final.

Devas appealed to the National Company Law Appellate Tribunal (NCLAT). It lost. In September 2021, the appeal was dismissed with the same quiet finality. It filed a writ petition (a request for the High Court to review the NCLT's decision) before the Karnataka High Court. It lost again — with costs of Rs. 5 lakhs imposed. The court's order was brief, almost dismissive.

By the time the case reached the Supreme Court, Devas had lost at every forum. But it still had one argument left.

What the company argued — and what the law said

Devas and a minority shareholder raised objections. The winding up petition had not been advertised properly, they said. The government's claim was barred by limitation (the legal time limit for filing). Antrix was estopped (prevented by its own conduct) from seeking winding up after signing the agreement. Devas had been denied the right to cross-examine witnesses. The standard of proof for fraud had not been met.

The court was examining a new law. Under the Companies Act, 1956, fraud was not a direct ground for winding up. It was only an indirect ground, linked to the "just and equitable" clause (a broad provision allowing a court to wind up a company when it would be fair to do so). A company could be wound up for fraud only if the fraud made it just and equitable.

The Companies Act, 2013 changed this. Section 271(c) now makes fraud in the formation or conduct of a company's affairs a direct and independent ground for winding up. The government, through an authorized person, can file a petition under this section without having to prove that winding up is also "just and equitable."

The court also noted two distinct routes: directly under Section 271(c) by an authorized person, or indirectly under Section 271(e) on the just and equitable ground, based on an investigation report under Section 213(b) (a provision allowing the government to investigate a company's affairs).

Why the Supreme Court said the company must go

Justice Hemant Gupta and Justice V. Ramasubramanian dismissed every objection. The courtroom in New Delhi was silent as the judgment was read out.

On limitation, the court delivered a key finding. As the source narrative states: "If the conduct of affairs of a company in a fraudulent manner is a continuing process, the right to apply for winding up becomes recurring and is not barred by limitation." This meant that because the fraud did not stop after Devas was formed but continued throughout its operations, each day the fraud continued gave rise to a fresh cause of action. The claim was not barred by time.

On advertisement: the power to dispense with advertising a winding up petition is available under the 2013 Act. No advertisement did not mean invalid proceedings.

On authorization: the government does not need to give the company a prior hearing before authorizing a petition under Section 271(c). This is different from the sanction required for a petition filed by the Registrar of Companies, which does require prior hearing.

The court examined the precedents Devas cited — English cases like Ebrahimi v. Westbourne Galleries Ltd. and Re Medical Battery Co. — and found them inapplicable. Those cases dealt with the just and equitable ground under the old law. Section 271(c) was different.

What this means for every company in India

The judgment in Devas Multimedia Private Ltd. v. Antrix Corporation Ltd. & Anr. sends a clear message: if you build a company on fraud, the company itself can be dissolved — even if you have won a massive arbitration award. Fraud in formation or conduct is now a standalone ground for winding up, not a secondary consideration.

For practitioners: the government can move directly under Section 271(c) without proving that winding up is just and equitable. The authorization does not require prior notice to the company. If the fraud is continuing, limitation does not apply.

THE PLAY: If you suspect a company was formed or is being run fraudulently, file for winding up under Section 271(c) of the Companies Act, 2013 — you do not need to prove the "just and equitable" ground, and the government can authorize the petition without giving the company a prior hearing.

The company that won $562 million from ISRO no longer exists. The fraud that built it could not survive the light of a courtroom.