Antrix damages case: We acted hastily, says ex-Isro chief

Unilateral termination on deal with Devas was uncalled and not needed, says Madhavan Nair; legal experts point to mix of unquestioning procedure and weak arguments

Former Indian Space Research Organisation chairman G Madhavan Nair says the space agency could have avoided the $672 million of damages it has been ordered to pay in the Antrix Corp case, if it had not cancelled the contract with Devas Multimedia unilaterally.

"There were several clauses in the contract for termination. Antrix should have provided a reasonable justification," said Nair."Reading the papers, I think, they have not provided it."

Nair and three other scientists — K R Sridhara Murthi, who headed Antrix Corp, A Bhaskara Narayana, in charge of international cooperation, and K N Shankara, who led the Isro satellite centre when the contract was signed in 2005 with Devas — were banned from government service after a probe blamed them for laxity in signing the deal. Later, Nair was absolved by the government.

"The argument Antrix used in the International Court of Arbitration was only to drag the case and they made a blunder. They also agreed that not filing terms of reference and not nominating  again was a bad decision," legal experts said. They also rapped the raising of the issue of a conflict of interest against Michael Pryles, one of the biggest names in the arbitration world and known for being a straightforward person. The legal experts did not want to be named.

Nair also called on the government to launch an inquiry on the motive behind cancellation of the lease agreement between Antrix and Devas Multimedia."Isro and Antrix have signed many agreements with foreign companies and countries. We have not had an issue except in the Devas case. All the agreements are transparent and the exit clauses are clearly mentioned," he said.

The tribunal said India's SATCOM policy  allowed private investment in space, while upholding the charges of Devas. It also noted that then Isro chairman K Radhakrishnan could have prevented the Cabinet Committee on Security (CCS) from calling off the deal. Isro chairman A S Kiran Kumar, Antrix Corp  chairman V S Hegde and Radhakrishnan did not answer calls for comment.

An Isro official said the decision to annul was taken after the CCS changed the usage of the satellite from commercial purposes to strategic use. "This argument will be used to fight in the courts, stressing national importance over private use of the assets," he said. In June 2011, when Devas commenced the arbitration process, seeking specific performance of the agreement or a claim for damages, Antrix  refused to participate. After the Supreme Court lifted an earlier injunction, Antrix was forced to participate but its argument was weak. Also, as mentioned, it had raised a charge of conflict of interest against Pryles, one of the biggest names in the arbitration world.

HOW THE EVENTS UNFOLDED

2005: Antrix and Devas sign deal for leasing S band transponders on GSAT satellite            
Feb-11: Antrix terminated deal with Devas, citing use of satellite for strategic purposes

• Inquiry against Nair and other scientists launched
• Devas objected to the termination;  returns cheque of Rs 58.37 crore it paid Antrix to the space agency

Jun-11: Devas goes to International court of Arbitration; Antrix gets injunction in local courts
Feb-12: Supreme court rejects Antrix claim; Antrix goes to ICA to object Devas
Dec-14: Hearing by ICA    
Sep-15: Verdict against Antrix; ICA tells Antrix to pay $672 million to Devas

In June 2013, Antrix claimed Devas' damages were limited by contract to the $15 million it had paid to the former, not $1.6 billion as claimed in the suit. The claim has been rejected.

"After the Supreme Court turned down their plea, Antrix should have doggedly defended the claim against them at the arbitration by engaging the best legal minds" said Ajay Thomas, registrar and director, London Court of International Arbitration (India).

Legal experts say on account of fear of scrutiny by the ''3Cs'' —  namely the Central Vigilance Commission, the Comptroller and Auditor General and the Central Bureau of Investigation — government organisations generally do not take legal initiatives or recourse to settlement proceedings. In case there is an adverse award, they wait for the outcome of appeals in courts. "In commercial disputes, arbitration is many times used as a negotiating tool to reach an out of court settlement. Government-owned organisation generally do not take that route," said a senior counsel, who has dealt with many cases where a government organisation is involved.