Antrix-Devas scam: Karnataka High Court imposes ₹5 lakh costs on Devas shareholder for abuse of process of law, ‘proxy war’

The Karnataka High Court recently imposed costs of Rs. 5 lakh on Devas Employees’ Mauritius Private Limited (petitioner) for filing a petition on behalf of Devas Multimedia, which is facing money laundering and other charges for its allegedly fraudulent agreement on bandwidth facilities with Antrix Corporation..Justice PS Dinesh Kumar of the High Court, while imposing costs, observed that the present petition was filed a day prior to the date fixed for final hearing before the National Company Law Tribunal (NCLT) on a plea for liquidation of Devas. This conduct amounts to “abuse of process of law and a proxy war on behalf of Devas”, said the Court. ."NCLT's order dated March 2, 2021, shows that the learned Senior Advocate for the petitioner herein has agreed to file objection to the main Company Petition on or before March 12, 2021. Accordingly, the matter was adjourned to March 23, 2021 for final hearing. Thus, having elected the appropriate forum to oppose the Company petition, this writ has been filed a day prior to the date fixed for final hearing namely March 22, 2021. This amounts to abuse of process of law and a proxy war on behalf of Devas......Resultantly, this writ petition must fail and it is accordingly dismissed with cost of Rs.Five Lakhs payable in the name of the Registrar General of this Court within W.P No.6191/2021 four weeks from today and Registrar General shall report compliance.".The Court passed the said order while dismissing the petition questioning the legality of the sanction granted by the Central government on January 18, 2021 for Antrix Corporation to initiate winding up proceedings against Devas..The Central government on January 18, 2021 had authorised the Chairman & Managing Director of Antrix Corporation to present a petition to wind up Devas. Accordingly, Antrix Corporation has filed a company petition before NCLT, Bengaluru.By its order dated January 19, 2021, NCLT admitted the petition and granted time to the respondents to file replies. It also appointed the official liquidator attached to the High Court as a provisional liquidator..The petitioner then challenged NCLT’s order before the National Company Law Appellate Tribunal (NCLAT) Chennai. The said appeal was disposed of by an order dated February 11, 2021. By this order, the NCLAT had directed the petitioner to file a interlocutory application before NCLT seeking permission to implead itself and with liberty to raise all factual and legal pleas before the NCLT. The petitioner subsequently filed an application seeking impleadment in the proceedings before NCLT.The matter before the NCLT was adjourned to March 23. However, one day before the hearing, the petitioner filed a writ before the Karnataka High Court..The petitioner submitted that no opportunity was given to Devas prior to the accord of sanction by the Central government. It was further submitted that the order passed by the Centre authorizing the Chairman and Managing Director of Antrix Corporation to file a winding-up petition is a malafide exercise of power. It further challenged the constitutional validity of Section 272(1)(e) of the Companies Act, 2013, which allows a person authorised by the Central government to present a winding up petition to the NCLT..Additional Solicitors General MB Nargund and N Venkataraman, appearing for the Union of India and Antrix Corporation respectively, opposed the petition before the High Court..The Court, after looking into the rival arguments, observed:"In the case on hand, petitioner is a miniscule shareholder in Devas. It has already filed an application for impleadment before the appropriate forum namely the NCLT. Devas is not aggrieved by the sanction order. Petitioner has all opportunity to urge its contentions before NCLT. At this juncture, there is no order, which has any civil consequences.".Before dismissing the petition, the Court noted that the petitioner had failed to show how any of its fundamental rights were violated. It thus held that no the grounds for challenging the vires of Section 272(1)(e) were not valid."One of the most profound tenets of Constitutionalism is presumption of Constitutionality assigned to each legislation enacted. Indubitably, Parliament has competence. The sanction accorded by the Central Government does not meet petitioner with any Civil consequence. Devas has not challenged the sanction order. Petitioner has failed to demonstrate infringement of any rights enshrined in Part-III of Constitution of India.".[Read Order]