The Supreme Court on 04.11.2020 stayed the execution of an award passed by a US court asking Antrix Corporation, the commercial arm of ISRO, to pay compensation of USD 1.2 billion to Devas Multimedia, a Bengaluru-based startup, for cancelling a 2005 satellite deal.
A bench headed by Chief Justice S A Bobde and Justices L Nageswara Rao and Indu Malhotra stayed the execution of the international award, which was passed by the US court.
The US District Court, Western District of Washington, had ordered Antrix to compensate Devas to the extent of $562.5 million coupled with the interest — the total damages coming to about $1.2 billion.
The two companies had entered into an agreement in 2005to use two satellites (GSAT-6 and GSAT-6A) for high-speed beaming of video content on mobile devices on the S-band spectrum. Devas was promoted by a few former employees of ISRO. However, the then UPA government cancelled the controversial contract in February 2011, invoking sovereignty and decided to use the advanced satellites (GSAT-6 and GSAT-6A) for the country’s strategic use. Thereafter, Devas Multimedia filed a case against Antrix for damages it suffered owing to the cancellation of the agreement.
While Antrix preferred an application under Section 9 of the Arbitration and Conciliation Act 1996 before the City Civil Court at Bengaluru, Devas filed a Section 9 application before the Delhi High Court for securing the award. 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-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 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.
However, the bench headed by Chief Justice Bobdein the present case 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. It was 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.”
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.