⚖ Devas v/s India: The Decade Long Battle
Devas Multimedia has been making the news for its legal battle with the Indian government. Here's what the whole affair is about.
Fraud deals, furious legal battles, massive compensations and a last-minute decision that changes everything...
Sounds like the making of a political thriller film, no?
Well well, these are just the elements of the decade-long battle between the Indian government and Devas Multimedia.
The battle began in the aftermath of India's 2G scam with a simple termination of the agreement. But the stakes just kept rising and rising to the extent that India now has to pay Devas $1.5 billion and the future of Air India is at stake too.
But what exactly sparked this battle?
The Story So Far
The tale begins in 2003.
In a move to rapidly increase the penetration of mobile services in India, ISRO began talks with US-based Forge Advisors. Forge claimed they had multiple patents that could help with this. But if they wanted to strike a deal with Antrix, which is the commercial arm of ISRO, they had to form an Indian company. And so, Devas Multimedia was born.
Under the terms of the deal, Antrix would build and launch two satellites and 90% of their capacity would be leased out to Devas. Plus, Devas would also get S-band spectrum (which is usually only reserved for government entities) all for just Rs. 1,000 crores. This deal, which would be valid for 12 years, would allow Devas to provide multimedia services to mobile users.
Sounds simple enough, right?
But the government terminated the deal in 2011 itself. It claimed that the S-band spectrum was worth over Rs. 2 lakh crores!
So, why did Devas get such a discount? Well, according to the government some Antrix officials had cut a favourable deal with Devas for their own personal gain.
Now, the matter could have ended here.
But thanks to the Antrix deal Devas had found multiple foreign investors including Deutsche Telkom (Germany), Columbia Capital and Telecom Ventures (Mauritius). These foreign investors were unhappy with the abrupt termination of the deal.
So, they dragged the Indian government to international courts.
What's Happening Now?
Multiple international courts including the International Chamber of Commerce have ruled in favour of Devas. They have asked the Indian government to pay them a total of $1.5 billion.
To make up for at least part of this claim, Devas will get 50% of Air India's assets held by the International Air Transport Association, a Canadian court has ruled.
Wondering why all the courts are siding with Devas? Because there is a slight chance that the government may have misjudged the Devas agreement. You see, the 2G scam which broke out in the late 2010s spooked the government. The scam unearthed the fact that several politicians had been giving away spectrum licences for cheap for their personal benefits.
This had already cost the government a lot and so it decided to terminate the Devas agreement as well to prevent further losses.
So, the question of whether the Devas agreement was actually a scam or not is still up in the air. While international courts have ruled in favour of Devas, our Supreme Court has declared the agreement a fraud and called for the dissolution of Devas.
This is incredibly good news for the government. Because now it can use this ruling to challenge the decisions of all the international courts and try to get away without paying Devas.
Plus, this will also help it conduct the sale of Air India to Tata Sons, which has currently been jeopardised by the decision of the Canadian court.
But if we look at the larger picture, this could represent a massive loss for the whole country. If India gets out of paying foreign investors their dues, it will shake their confidence. This could directly impact our dream of becoming a $5 trillion economy.
Who do you think will win the final battle?
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