# DEVAS MULTIMEDIA PRIVATE LTD v. ANTRIX CORPORATION LTD. & ANR

- **Citation:** [2022] 11 S.C.R. 291
- **Court:** Supreme Court of India
- **Decided:** 2022-01-17
- **Case number:** Civil Appeal No.5766 of 2021
- **Bench:** Hemant Gupta, V. Ramasubramanian
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/devas-multimedia-private-ltd-v-antrix-corporation-ltd-anr-35659
- **Pages:** 78

## Headnote

Company Law - Winding up of a company - Fraud as a
ground for winding up - Distinguishing features between Companies
Act, 1956 and Companies Act, 2013, with regard to question of
availability of fraud as a ground for winding up of a company -
Discussed - Held: The main departure of the Companies Act, 2013
from the statutory regime of the Companies Act, 1956, is the specific
inclusion of fraud, directly as one of the circumstances in which a
company could be wound up - s.271 of the 2013 Act lists out the
circumstances in which a company may be wound up - Fraud has
now directly become (under the 2013 regime), one of the
circumstances in which a company could be wound up, though it
also continues to be a ground indirectly, u/s 224(2) r/w section 213
[as it was under Section 439(1) (f) r/w sections 243 and 237(b) of
the 1956 Act] - Companies Act, 2013 - s.271 - Companies Act,
1956.
Company Law - Winding up of a company - Fraud as a
ground for winding up - Petition u/s.271(c) of the Companies Act,
2013 - Advertisement of the company petition - Breach of - On
facts, petition for winding up was never advertised nor even ordered
to be advertised, either upon admission of the petition or anytime
thereafter - Contention of appellants that this vitiated the whole
proceedings - Held: Sub-sections (1) and (2) of s.468 of the 2013
Act empower the Central Government to make Rules providing for
all matters relating to winding up of companies - In exercise of the
powers so conferred, the Companies (Winding up) Rules, 2020 were
issued - Since requirement to advertise a petition for winding up is
stipulated in rr. 5 and 7 of the Companies (Winding up) Rules, 2020,
what is prescribed in r.35 of the NCLT Rules 2016 would cover
even petitions for winding up - Sub-rule (5) of r.35 makes it clear
that even in cases where direction of the Tribunal as regards
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advertisement has not been complied with, the Tribunal has an option
(i) either to dismiss the petition; or (ii) to give such further directions
as it may think fit - Sub-rule (6) of r.35 confers power upon the
Tribunal even to dispense with any advertisement - Thus, what was
not specifically available in black and white, under the 1956
statutory regime, namely the power to dispense with any
advertisement, is now made available specifically under the statutory
regime of 2013 - In the case at hand, the company in liquidation
did not have any creditors or customers who had dealings with the
company - There were no stakeholders prejudiced by failure of
NCLT to order publication of advertisement of the petition - This
was not a case where the company was sought to be wound up on
ground of inability to pay debts or on just and equitable ground -
This was a case of fraud and all stakeholders were fully aware of
the winding up proceedings - Therefore, failure of the Tribunal to
order publication of an advertisement did not render the entire
proceedings unlawful - Companies Act, 2013 - s.271(c) and 468 -
Companies Act, 1956 - Companies (Winding up) Rules, 2020 - rr.5
and 7 - National Company Law Tribunal Rules, 2016 - r.35.
Company Law - Winding up of a company - Petition u/
s.271(c) of the Companies Act, 2013 - Challenged, for being barred
by limitation - Held: Limitation is not always akin to a lighted
matchstick to a train of gun powder - The date of commencement
of the period need not necessarily be static - The date of
commencement may keep changing depending upon the acts of
omission and commission on the part of the party against whom the
action is initiated - If the conduct of the affairs of the company in
a fraudulent manner is a continuing process, the right to apply
becomes recurring - In the case at hand, fraud and corruption
were discovered only later and by the time the discovery was made,
the attempts to reap the fruits of fraud had reached the pinnacle -
These attempts continue even till date and this falls squarely within
s.271(c

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 [2022] 11 S.C.R. 291
DEVAS MULTIMEDIA PRIVATE LTD.
v.
ANTRIX CORPORATION LTD. & ANR.
(Civil Appeal No.5766 of 2021)
JANUARY 17, 2022
[HEMANT GUPTA AND V. RAMASUBRAMANIAN, JJ.]
Company Law - Winding up of a company - Fraud as a
ground for winding up - Distinguishing features between Companies
Act, 1956 and Companies Act, 2013, with regard to question of
availability of fraud as a ground for winding up of a company -
Discussed - Held: The main departure of the Companies Act, 2013
from the statutory regime of the Companies Act, 1956, is the specific
inclusion of fraud, directly as one of the circumstances in which a
company could be wound up - s.271 of the 2013 Act lists out the
circumstances in which a company may be wound up - Fraud has
now directly become (under the 2013 regime), one of the
circumstances in which a company could be wound up, though it
also continues to be a ground indirectly, u/s 224(2) r/w section 213
[as it was under Section 439(1) (f) r/w sections 243 and 237(b) of
the 1956 Act] - Companies Act, 2013 - s.271 - Companies Act,
1956.
Company Law - Winding up of a company - Fraud as a
ground for winding up - Petition u/s.271(c) of the Companies Act,
2013 - Advertisement of the company petition - Breach of - On
facts, petition for winding up was never advertised nor even ordered
to be advertised, either upon admission of the petition or anytime
thereafter - Contention of appellants that this vitiated the whole
proceedings - Held: Sub-sections (1) and (2) of s.468 of the 2013
Act empower the Central Government to make Rules providing for
all matters relating to winding up of companies - In exercise of the
powers so conferred, the Companies (Winding up) Rules, 2020 were
issued - Since requirement to advertise a petition for winding up is
stipulated in rr. 5 and 7 of the Companies (Winding up) Rules, 2020,
what is prescribed in r.35 of the NCLT Rules 2016 would cover
even petitions for winding up - Sub-rule (5) of r.35 makes it clear
that even in cases where direction of the Tribunal as regards
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advertisement has not been complied with, the Tribunal has an option
(i) either to dismiss the petition; or (ii) to give such further directions
as it may think fit - Sub-rule (6) of r.35 confers power upon the
Tribunal even to dispense with any advertisement - Thus, what was
not specifically available in black and white, under the 1956
statutory regime, namely the power to dispense with any
advertisement, is now made available specifically under the statutory
regime of 2013 - In the case at hand, the company in liquidation
did not have any creditors or customers who had dealings with the
company - There were no stakeholders prejudiced by failure of
NCLT to order publication of advertisement of the petition - This
was not a case where the company was sought to be wound up on
ground of inability to pay debts or on just and equitable ground -
This was a case of fraud and all stakeholders were fully aware of
the winding up proceedings - Therefore, failure of the Tribunal to
order publication of an advertisement did not render the entire
proceedings unlawful - Companies Act, 2013 - s.271(c) and 468 -
Companies Act, 1956 - Companies (Winding up) Rules, 2020 - rr.5
and 7 - National Company Law Tribunal Rules, 2016 - r.35.
Company Law - Winding up of a company - Petition u/
s.271(c) of the Companies Act, 2013 - Challenged, for being barred
by limitation - Held: Limitation is not always akin to a lighted
matchstick to a train of gun powder - The date of commencement
of the period need not necessarily be static - The date of
commencement may keep changing depending upon the acts of
omission and commission on the part of the party against whom the
action is initiated - If the conduct of the affairs of the company in
a fraudulent manner is a continuing process, the right to apply
becomes recurring - In the case at hand, fraud and corruption
were discovered only later and by the time the discovery was made,
the attempts to reap the fruits of fraud had reached the pinnacle -
These attempts continue even till date and this falls squarely within
s.271(c) - Therefore, the contention that the petition was barred by
limitation was rightly rejected by the Tribunal - Companies Act,
2013.
Company Law - Winding up of a company - Fraud as a
ground for winding up - Petition under s.271(c) of the Companies
Act, 2013 - Challenge to - On ground of estoppel from pleading
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fraud and seeking winding up - Held: In the case at hand, what
was alleged in the petition for winding up were, (i) formation of the
company for fraudulent or unlawful purpose; (ii) fraud in the
conduct of the affairs of the company; and (iii) fraud on the part of
the persons who were involved in the formation and/or in the
management of affairs of the company - The fraud relatable to the
agreement in question, was only one facet of the whole scheme of
things - What is covered by s.271(c) of the Companies Act, 2013 is
a fraud that goes beyond what lies in the realm of contract or in the
realm of the penal provisions of the Companies Act, 2013 - Hence
the contention of estoppel from pleading fraud, was rightly rejected
by the Tribunal - Companies Act, 2013 - s.271(c).
 Company Law - Winding up of a company - Fraud as a
ground for winding up - Petition under s.271(c) of the Companies
Act, 2013 - Order of winding up passed by Tribunal - Challenge to
- On ground of violation of the principles of natural justice due to
denial of permission for cross examination - Tribunal justified its
action of omission to permit cross-examination holding that the case
did not require any oral evidence - Held, on facts, the Tribunal was
right in rejecting the request for cross-examination - A party alleging
the non-existence of something, cannot be called upon to prove the
non-existence - It is the party who asserts the existence or who
challenges the assertion of non existence, who is liable to prove the
existence of the same - In the case on hand, Antrix asserted that
Devas offered services which were non-existent, through a device
which was not available and that even the so-called intellectual
property rights over the device were not available - Therefore, Antrix
cannot lead evidence to show the non-existence or non-availability
of those things, either by oral evidence or by subjecting their officials
to cross-examination by Devas - Devas never produced before the
Tribunals any device nor did they demonstrate the availability to
Devas services - All that Devas wanted was, the cross-examination
of the officials of Antrix - Any amount of cross-examination of the
officials of Antrix could not have established the existence of
something that was disputed by Antrix - Also, it is clear from the
time-line of events that the application for cross-examination was
moved by Devas after conclusion of the arguments on the side of
Antrix in the main petition itself, and that too after the unsuccessful
attempt made by one of its shareholders to assail the constitutional
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validity of the statutory provisions - Therefore, the Tribunal was
right in rejecting the request for cross-examination.
Company Law - Winding up of a company - Fraud as a
ground for winding up - Petition under s.271(c) of the Companies
Act, 2013 - Locus standi of the shareholders - Held: There is no
scope either in the Act or in the Rules for impleadment of any
shareholder as a respondent to the winding up petition - The
objecting shareholders had an effective hearing before NCLT -
Though their appeal was rejected by NCLAT on ground of
maintainability, their arguments for opposing the winding up, which
were just the same as that of the company, had been considered -
Therefore, the objection that opportunity was not given to the
shareholders, is just theoretical, when in fact they were heard -
Companies (Winding Up) Rules, 2020 - r.3(1) - Companies Act,
2013.
Company Law - Winding up of a company - Fraud as a
ground for winding up - Petition under s.271(c) of the Companies
Act, 2013 - Order of winding up passed by Tribunal - Challenge to
- On ground of erroneous and perverse findings and incorrect
standard of proof - Held: On facts, there is no perversity in the
findings recorded by both the Tribunals - These findings were
actually borne out by documents, none of which was challenged as
fabricated or inadmissible - Appellants cannot take advantage of
the use of an inappropriate expression by NCLAT - Detailed findings
recorded by Tribunal show that they were final and not prima facie
- Merely because NCLAT used an erroneous expression those
findings cannot become prima facie.
Company Law - Appeal against order of NCLT confirmed by
NCLAT before Supreme Court - Re-appreciation of evidence - If
permissible - Held: When two forums namely NCLT and NCLAT
have recorded concurrent findings on facts, it is not open to the
Supreme Court to re-appreciate evidence.
Company Law - Winding up of a company - Fraud as a
ground for winding up - Petition u/s.271(c) of the Companies Act,
2013 - Contention that the petition u/s.271(c) should have been
preceded, at least by a report from the Serious Fraud Investigation
Office, which has now gained statutory status u/s.211 of the
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Companies Act, 2013 - Held: The contention is un-acceptable, in
view of the fact that under the 2013 Act there are two different
routes for winding up of a company on allegations of fraud - One
is u/s.271(c) and the other is under the just and equitable clause in
s.271(e), read with s.224(2) and s.213(b) - It is only in the second
category of cases that the report of the investigation should precede
a petition for winding up - Companies Act, 2013 - Companies Act,
1956.
Company Law - Winding up of a company - Fraud as a
ground for winding up - Relevance of motive - Held: If as a matter
of fact, fraud as projected, stands established, the motive behind
the victim of fraud, coming up with a petition for winding up, is of
no relevance - A product of fraud is in conflict with the public
policy of any country including India - The basic notions of morality
and justice are always in conflict with fraud and hence motive behind
the action brought by the victim of fraud can never stand as an
impediment.
Dismissing the appeals, the Court
HELD: 1. The Companies Act, 1956 spoke about two
categories of winding up, namely, (i) winding up by the Tribunal;
and (ii) voluntary winding up. The circumstances in which a
company could be wound up by the Court, were enlisted in Section
433 of the 1956 Act. This Section contained a list of nine
circumstances in which a company may be wound up. Fraud (i)
either in the formation of the company or (ii) in the conduct of
affairs of the company or (iii) on the part of persons concerned in
the formation of or the management of its affairs, was not one of
the circum- stances stipulated in Section 433 of 1956 Act. Though
Section 433 of the 1956 Act did not include fraud as one of the
circumstances in which a company may be wound up, there was
still an indirect reference to fraud. Section 439(1) of the 1956 Act
provided a list of seven persons who were entitled to file an
application for the winding up of a company. Under clause (f) of
sub- section (1) of Section 439, an application for winding up shall
be presented by "any person authorized by the Central
Government in their behalf" in a case falling under Section 243.
[Para 6.1, 6.2][310-D-F]
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2. A combined reading of Sections 439(1)(f), 243 and 237(b)
of the 1956 Act shows that, (i) fraud in the formation of the
company; (ii) fraud in the conduct of affairs of the company; and
(iii) fraud on the part of the persons engaged in the formation or
conduct of the affairs of the company, though not listed as some
of the circumstances under Section 433 of the 1956 Act, were
still available for the winding up of the company, even under the
1956 Act. But there were 3 requirements to be satisfied. They
are: (i) the perpetration of one or the other types of fraud
mentioned above are reflected in a report of investigation; (ii)
the petition under these provisions is to be filed only by a person
authorised by the Central Government; and (iii) the petition
should be premised on the ground that it is just and equitable to
wind up the company. But the mandate of Section 243 (a) of the
Companies Act, 1956 to take recourse, in cases of fraud, to just
and equitable ground, was little incongruous. This is due to the
reason that under Section 443(2), the court may refuse to make
an order of winding up, on just and equitable ground, if some
other remedy was available to the persons seeking winding up.
Therefore, despite the fact that fraud was available, albeit
indirectly, as a circumstance for the winding up of a company,
even under the 1956 Act, its link to just and equitable clause was
little problematic because of section 443(2). [Para 6.5, 6.13][312F-G; 315-B]
3. Coming to the 2013 Act, provisions similar to sub-clauses
(i) and (ii) of clause (b) of section 237 of the 1956 Act, are to be
found in sub-clauses (i) and (ii) of clause (b) of section 213 of the
2013 Act. They employ the same language for the purpose of
ordering an investigation into the affairs of a company. But under
section 237 of the 1956 Act, the power to order investigation
was with the central Government, while it is with the Tribunal
under Section 213 of the 2013 Act. Section 224(2) of the 2013
Act is similar to Section 243 of the 1956 Act as it enables the
Central Government to authorize any person to file a petition for
winding up, on the basis of the report of any investigation. Here
again, the petition for winding up on the basis of the report of
such investigation, is to be on just and equitable ground by virtue
of clause (a) of sub-section (2) of Section 224, which is similar to
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clause (a) of Section 243. The main departure of the 2013 Act
from the statutory regime of the 1956 Act, is the specific inclusion
of fraud, directly as one of the circumstances in which a company
could be wound up. Section 271 of the 2013 Act lists out the
circumstances in which a company may be wound up. What were
clauses (a), (g), (h) and (i) of Section 433 of 1956 Act have now
become clauses (a), (b), (d) and (e) of Section 271 of the 2013
Act, though not in the same order. In addition, (i) conduct of the
affairs of the company in a fraudulent manner; (ii) formation of
the company for fraudulent or unlawful purpose; and (iii) persons
concerned in the formation or management of its affairs being
guilty of fraud, misfeasance or misconduct, have now been
included in clause (c) of Section 271, as some of the circumstances
in which a company could be wound up. In other words, fraud has
now directly become (under the 2013 regime), one of the
circumstances in which a company could be wound up, though it
also continues to be a ground indirectly, under section 224(2)
read with section 213 [as it was under Section 439(1) (f) read
with sections 243 and 237(b) of the 1956 Act].[Para 6.14,
6.15][315-E-H; 316-A-C]
4. Just as Section 439(1) of the 1956 Act provided a list of
persons by whom an application for winding up may be filed,
Section 272(1) of the 2013 Act also provides a list of persons by
whom a petition for winding up may be filed. What is common to
both Section 439(1) of the 1956 Act and Section 272(1) of the
2013 Act, is that a petition for winding up may be filed by: (i) the
company; (ii) any contributory; (iii) the Registrar; and (iv) any
person authorized by the Central Government in that behalf. Both
Section 439(1) of the 1956 Act and Section 272(1) of the 2013
Act use two important expressions, in relation to the persons
competent to file a petition for winding up and the procedure to
be followed. They are, (i) authorization; and (ii) sanction. The
circumstances in which an 'authorization' has to be granted and
the circumstances in which a sanction has to be granted, are
different. Similarly, the grant of sanction should be preceded by
an opportunity of hearing, but the issue of authorization does not
require any prior opportunity to the company to make a
representation. It is evident that the second proviso to sub-section
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(5) of section 439 of the 1956 Act became the first proviso to
sub-section (3) of Section 272 of the 2013 Act and sub-section
(6) of Section 439 became the second proviso to sub-section (3)
of Section 272. They respectively prescribe, (i) that for presenting
a petition for winding up, the Registrar requires previous sanction
of the Central Government; and (ii) that before granting sanction,
the Central Government should give a reasonable opportunity
to the company to make a representation. Thus, in effect, the
distinction between the procedure to be followed by the Registrar
and the procedure to be followed by "any other person authorised
by the Central Government", for presenting a petition for winding
up, is maintained as such. If the petition is to be filed by the
Registrar, it should be preceded by 2 things namely, (i) a sanction;
and (ii) an opportunity to the company to object. If the petition is
to be filed by "any other person", there is only one requirement
namely that of authorization by the Central Government by
notification. [Para 6.18, 6.19, 6.20, 6.21][317-E-H; 318-E-H; 319A]
5. Coming to the rules framed under the 2013 Act,
Sub-sections (1) and (2) of Section 468 of the 2013 Act empower
the Central Government to make Rules providing for all matters
relating to winding up of companies. In exercise of the powers so
conferred, the Central Government has issued a set of Rules
known as the Companies (Winding up) Rules, 2020. Rules 5 and
7 of these Rules speak about advertisement. The essence of Rule
5 is to provide an opportunity of being heard to the company
sought to be wound up, even before directions as to the
advertisement of the petition are given. The last limb of Rule 5
speaks about the discretion vested in the Tribunal to direct notice
to be given to the company and to give an opportunity of being
heard before giving any directions as to the advertisement of the
petition. This last limb of Rule 5 provides the clue about the
purpose of advertisement. [Para 7.7, 7.10][321-H; 322-A, 323D-E]
6. One way of looking at the requirement of an
advertisement is that it provides an opportunity to all the
stakeholders such as (i) creditors; (ii) workers; (iii) suppliers;
(iv) customers; and (v) the general public, either to support or
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oppose the proceedings for winding up. There is also another
way of looking at the object of issuing an advertisement of the
petition for winding up. The advertisement serves as a warning/
notice or red alert to all those dealing with the company so that
they know that there could be an element of risk in dealing with
the company. [Para 7.11][323-F]
7. After all, the winding up of a company is like the insolvency
of an individual. The advertisement of the petition for winding
up, not merely serves as an opportunity to support or oppose
winding up, but also harms the reputation of the company and
sends shock waves in the stock market, if it is a listed company
or among the stakeholders who have dealings with the company.
This is why an opportunity of being heard is contemplated in Rule
5 of the Companies (Winding up) Rules, 2020, before ordering
the advertisement of the petition. [Para 7.12][323-G-H]
8. The way in which the requirement of advertisement has
been viewed by Courts is that advertisement causes more harm
to the company than the benefit that it brings to the company.
Hence the argument of the appellant in this case that the failure
to advertise the petition was prejudicial to their interest, goes
contrary to one of the important purposes of the advertisement
and the chilling effect that it is supposed to have on the company.
[Para 7.14][324-E-F]
9. Even in a case where the Court took a view that
advertisement is mandatory, not only in view of the prescription
contained in the Rules, but also in view of the specific order
passed by the Company Court at the time of admission, directing
the publication of the advertisement in specified newspapers, this
Court did not see the failure to publish an advertisement as
something that would lead to the automatic dismissal of the
petition for winding up. This is for the reason that the
advertisement of a petition for winding up is perceived to be
something that worked at cross purposes, sometimes beneficial
to several stakeholders as it provides an opportunity of hearing
to them and sometimes as a measure of harassment of the
company. There are cases where the companies themselves have
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opposed the advertisement of the petition on the ground that the
same would harm their reputation and cripple their commercial
activities. There are also cases where the failure to advertise
has led to some of the creditors not having any notice of the
proceedings and thereby suffering prejudice. [Para 7.21][330-CF]
10. Rule 35 of the National Company Law Tribunal Rules,
2016 deals with advertisement of petitions. It may be seen from
Sub-rule (1) of Rule 35 that the procedure laid down in Rule 35 is
applicable to cases "where any application, petition or reference
is required to be advertised." The requirement to advertise a
petition for winding up does not flow out of the statute, but flows
out of the Rules. Since the requirement to advertise a petition
for winding up is stipulated in Rules 5 and 7 of the Companies
(Winding up) Rules, 2020, what is prescribed in Rule 35 would
cover even petitions for winding up. If so understood, Sub-rules
(5) and (6) of Rule 35 of the NCLT Rules 2016 would throw light
upon the controversy on hand. Sub-rule (5) makes it clear that
even in cases where the direction of the Tribunal as regards
advertisement has not been complied with, the Tribunal has an
option (i) either to dismiss the petition; or (ii) to give such further
directions as it may think fit. Sub-rule (6) confers power upon the
Tribunal even to dispense with any advertisement. In other words,
what was not specifically available in black and white, under the
1956 statutory regime, namely the power to dispense with any
advertisement, is now made available specifically under the
statutory regime of 2013. [Paras 7.25, 7.26, 7.27, 7.28 and
7.29][331-G; 333-B-E]
11. In the case at hand, the company in liquidation does not
have any creditors or customers who have dealings with the
company. In other words, there are no stakeholders who are
prejudiced by the failure of NCLT to order the publication of
advertisement of the petition. This is not a case where the
company is sought to be wound up on the ground of inability to
pay debts or on just and equitable ground. This is a case of fraud
and all stakeholders are fully aware of the proceedings and they
have even shown extreme urgency in enforcing an ICC Arbitration
award and 2 BIT awards, before the conclusion of the winding up
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proceedings. Therefore, one is unable to sustain the argument
that the failure of the Tribunal to order the publication of an
advertisement rendered the entire proceedings unlawful. [Para
7.30][334-B; C-D]
12. Limitation is not always akin to a lighted matchstick to
a train of gun powder. The date of commencement of the period
need not necessarily be static. The date of commencement may
keep changing depending upon the acts of omission and
commission on the part of the party against whom the action is
initiated. These acts of omission and commission constitute the
bundle of facts, which determine the question whether an action
is barred by limitation or not. [Para 8.21][344-A; 345-A-B]
13. The contours of fraud as delineated in Section 271(c) of
the Companies Act, 2013 cover three aspects namely, (i) the affairs
of the company being conducted in a fraudulent manner; (ii) the
company was formed for fraudulent and unlawful purpose; and
(iii) the persons concerned in the formation and management of
its affairs have been guilty of fraud, misfeasance or misconduct in
connection therewith. A singular act of omission or commission
may constitute fraud and even a series of acts may constitute
fraud. A fraudulent act may be different from the fraudulent manner
in which an act is performed. The words "the conduct of the affairs
of a company in a fraudulent manner" indicate that the process
was a continuing one. If the conduct of the affairs of the company
in a fraudulent manner is a continuing process, the right to apply
becomes recurring. [Para 8.22][345-B-E]
14. In the case at hand, fraud and corruption were
discovered only later and by the time the discovery was made,
the attempts to reap the fruits of fraud had reached the pinnacle.
These attempts continue even till date and this falls squarely
within Section 271(c). Therefore, the contention that the petition
was barred by limitation was rightly rejected by the Tribunal and
there is no reason to take a different view. [Para 8.23][345-F-G]
National Textile Workers' Union v. P.R. Ramakrishnan
& Ors. (1983) 1 SCC 228 : [1983] 1 SCR 922; Standard
Chartered Bank v. Andhra Bank Financial Services Ltd.
DEVAS MULTIMEDIA PRIVATE LTD. v. ANTRIX
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and Ors. (2006) 6 SCC 94 : [2006] 2 Suppl. SCR 1
and Jignesh Shah and Anr. v. Union of India and Anr.
(2019) 10 SCC 750 : [2019] 12 SCR 678 -
distinguished.
V. Ravi Kumar v. State, Rep. by Inspector of Police,
District Crime Branch, Salem & Ors. (2019) 14 SCC
568: [2018] 14 SCR 828 - held inapplicable.
IDBI Bank Ltd. v. the Official Liquidator (2020) 15 SCC
517 - relied on.
National Conduits (P) Ltd. v. S.S. Arora AIR 1968 SC
279; Cotton Corporation of India Limited v. United
Industrial Bank Ltd. & Ors. (1983) 4 SCC 625 : [1983]
3 SCR 962; Sesh Nath Singh v. Baidyabati Sheoraphuli
Co-operative Bank Ltd (2021) 7 SCC 313; Laxmi Pat
Surana v. Union Bank of India (2021) 8 SCC 481; Asset
Reconstruction company v. Bishal Jaiswal (2021) 6 SCC
366; and Svenska Handelsbanken v. Indian Charge
Chrome and Ors. (1994) 1 SCC 502 : [1993] 3 Suppl.
SCR 323 - referred to.
IDBI Bank Ltd. v. the Official Liquidator 2013 (6) CTC
40; Pradeep D. Kothari v. IDBI Bank Ltd. 2018 (1) CTC
136; T. Narayanan v. The Official Liquidator, 2012 (1)
MLJ 59 and Bengal Silk Mills Co. v. Ismail Golam
Hossain Ariff AIR 1962 Cal 115 - referred to.
Ebrahimi v. Westbourne Galleries Ltd. (1972) 2 WLR
1289 and Re Medical Battery Co. (1894) 1 Ch. 444
and Re Walter L. Jacob & Co. Ltd. 89 5 BCC 244 -
referred to.
Halsbury's Laws of England (4th Edition) paragraph
1463 Para 359, Vol. XVI, Fifth Edition (2017) of
Halsbury's Laws of England - referred to.
Case Law Reference
AIR 1968 SC 279
referred to
Para 7.12
[1983] 3 SCR 962
referred to
Para 7.13
(2020) 15 SCC 517
relied on
Para 7.20
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C
D
E
F
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303
[2019] 12 SCR 678
distinguished
Para 8.2
(2021) 7 SCC 313
referred to
Para 8.19
(2021) 8 SCC 481
referred to
Para 8.19
(2021) 6 SCC 366
referred to
Para 8.19
[2018] 14 SCR 828
held inapplicable
Para 10.2
[2006] 2 Suppl. SCR 1
distinguished
Para 10.2
[1993] 3 Suppl. SCR 323
referred to
Para 10.2
[1983] 1 SCR 922
distinguished
Para 11.2
CIVIL APPELLATE JURISDICTION : Civil Appeal No.5766
of 2021.
From the Judgment and Order dated 08.09.2021 of the National
Company Law Appellate Tribunal at Chennai in Company Appeal (AT)
(CH) No.17 of 2021.
With
Civil Appeal No.5906 of 2021.
Mukul Rohatgi, Arvind P. Datar, Sr. Advs., Ms. Anuradha Dutt,
Ms. B. Vijayalakshmi Menon, Pawan Sharma, Ms. Priyanka MP,
Chaitanya Kaushik, Ambar Bhushan, Haaris Fazili, Kunal Dutt, Advs.
for the Appellant.
N. Venkataraman, Balbir Singh, ASGs, Ankur Talwar, Rajat Nair,
P. V. Yogeswaran, Chinmayee Chandra, Arvind Kumar Sharma, Ajay
Bhargava, Ms. Vanita Bhargava, Ms. Maithili Moondra, Ms. Trishala
Trivedi, Arvind Ray, Ms. Vansha Sethi for M/s Khaitan & Co., Naman
Tandon, Ms. Surbhi Singh, Samarvir Singh, Sagarica Kaul, Ms. Monica
Benjamin, K. Gurumurthy, Prahlad Singh, Advs. for the Respondents.
The Judgment of the Court was delivered by
V. RAMASUBRAMANIAN, J.
1. Challenging an order of winding up passed by the National
Company Law Tribunal under Section 271(c) of the Companies Act,
2013 (for short the 2013 Act), which was confirmed by the National
Company Law Appellate Tribunal on appeals, the company in liquidation,
namely, Devas Multimedia Private Limited, through its ex-Director has
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come up with an appeal in Civil Appeal No.5766 of 2021 and one of the
shareholders of the company in liquidation, namely, Devas Employees
Mauritius Private Limited (hereinafter referred to as DEMPL) has come
up with another appeal in CA No.5906 of 2021.
2. We have heard Shri Mukul Rohtagi, learned senior counsel
appearing for the company in liquidation, Shri Arvind P. Datar, learned
senior counsel appearing for the shareholder-appellant, Shri N.
Venkataraman, learned Additional Solicitor General appearing for
Respondent No. 1 herein, which is the company which moved the Tribunal
for winding up the company in liquidation and Shri Balbir Singh, learned
Additional Solicitor General appearing for the Union of India.
3. Brief Background
3.1 The first respondent in these appeals, namely, Antrix Corporation
Limited (hereinafter referred to as Antrix), incorporated on 28.09.1992
under the Companies Act, 1956, is the commercial arm of the Indian
Space Research Organisation (ISRO for short) which is wholly owned
by the Government of India and coming under the administrative control
of the Department of Space.
3.2 On 28.07.2003, Antrix entered into a Memorandum of
Understanding with Forge Advisors, LLC, a Virginia Corporation. The
intent, as spelt out in the MOU, was to make both parties become "strong
and vital partners in evaluating and implementing major new satellite
applications across diverse sectors including agriculture, education,
media and telecommunications". Apart from other things, the MOU
contemplated Forge Advisors to provide a broad array of advisory
services that included near-term tactical projects in the areas of sales,
marketing, business development, strategic partnership negotiations and
other related business areas and long term projects in the areas of
corporate strategy, market opportunity assessment, business case
development for new services, launch of new application services etc.
3.3 On 22.03.2004, Forge Advisors made a presentation proposing
an Indian joint venture, to launch what came to be known as "DEVAS"
(Digitally Enhanced Video and Audio Services). It was projected in the
said proposal that DEVAS platform will be capable of delivering multimedia
and information services via satellite to mobile devices tailored to the
needs of various market segments such as (i) consumer segment,
comprising of entertainment and information services to digital multimedia
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consoles in cars and vehicles; (ii) commercial segment, comprising of
high value information services to Commercial Information Devices in
commercial transport vehicles; and (iii) social segment, comprising of
Developmental Information Services to Rural Information kiosks in
underserved areas.
3.4 The presentation dated 22.03.2004 was followed by a proposal
dated 15.04.2004. The proposal was to form "a strategic partnership
to launch DEVAS, a new service that delivers video, multimedia
and information services via satellite to mobile receivers in vehicles
and mobile phones across India". The proposal dated 15.04.2004
indicated that DEVAS was conceived as a new National Service,
expected to be launched by the end of 2006, that would deliver video,
multimedia and information services via satellite to mobile receivers in
vehicles and mobile phones across India1. The proposal contemplated
the formation of a joint venture and an obligation on the part of ISRO
and Antrix to invest in one operational S-Band satellite with a ground
space segment to be leased to the joint venture. In return, ISRO and
Antrix were to receive lease payments of USD 11 million annually for a
period of 15 years.
3.5 The concept of DEVAS, as indicated in the penultimate
paragraph of the Executive Summary of the proposal dated 15.04.2004,
was based upon the evolution and performance of similar services in
other markets such as XM Radio and Sirius Radio in the United States
and Mobile Broadcasting Corporation's multimedia services via satellite
in Korea and Japan.
3.6 It appears that pursuant to the aforesaid proposal, several
meetings were held between the representatives of Forge and ISRO/
Antrix and a Committee headed by one Dr. K.N. Shankara, Director of
SAC (Space Application Centre) was constituted to examine the proposal.
3.7 On 17.12.2004 Devas Multimedia Private Limited, (hereinafter
referred to as 'Devas' or the 'company in liquidation') was incorporated
as a private company under the Companies Act, 1956. Immediately
thereafter, Antrix entered into an Agreement with the said company on
28.01.2005. The Agreement was titled as "Agreement for the lease of
space segment capacity on ISRO/Antrix S-Band spacecraft by
DEVAS". The preamble of the Agreement stated that Devas was
1 Paragraph 1 of the Executive Summary of the Proposal dated 15.04.2004
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developing a platform capable of delivering multimedia and information
services via satellite and terrestrial system to mobile receivers, tailored
to the needs of various market segments and that Devas had, therefore,
requested Antrix, space segment capacity for the purpose of offering SDMB service, a new digital multimedia and information service, including
but not limited to audio and video content and information interactive
services, across India that will be delivered via satellite and terrestrial
system via fixed, portable mobile receivers including mobile phones, mobile
video/audio receivers for vehicles etc.. What was to be leased out by
Antrix to Devas was 5 numbers of C X S transponders each of 8.1 MHz
capacity and 5 numbers of S X C transponders each of 2.7 MHz capacity
on the Primary Satellite 1 (PS1). The leased capacity was agreed to be
delivered by Antrix to Devas from a fully operational and ready PS-1
within 30 months of the agreement, with a further grace period of six
months.
3.8 Article 7 of the Agreement contained provisions for the
termination of the Agreement by either of the parties, with certain
consequences to one or the other, depending upon the circumstances
under which termination was made.
3.9 It appears that Devas obtained approvals from Foreign
Investment Promotion Board (FIPB) during the period May 2006 to
September 2009. Pursuant to those approvals, Devas actually brought
into India, an investment of about INR 579 crores.
3.10 Devas also obtained an Internet Service Provider (ISP)
License from the Department of Telecommunications on 02.05.2008.
Devas then obtained permission from the Department of
Telecommunications on 31.03.2009 for providing Internet Protocol
Television (IPTV) Services within the scope of the terms and conditions
of ISP license. Devas claims to have conducted experiments on the
emerging technologies for satellite and terrestrial system in September
2009.
3.11 However the Agreement dated 28.01.2005 was terminated
by Antrix by a Communication dated 25.02.2011, in accordance with
Article 7(c) of the Agreement, which provides for termination on the
ground of force majeure. It was stated in the said letter that the
Government of India had taken a policy decision not to provide orbital
slots in S-Band for commercial activities.
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3.12 This termination led to Devas initiating a commercial
arbitration in India before the ICC Arbitral Tribunal. Independently, the
Mauritius investors initiated a BIT arbitration under the India-Mauritius
Bilateral Investment Treaty and the German Company by name Deutsche
Telecom, initiated a BIT arbitration under the India-Germany BIT. ICC
Arbitral Tribunal passed an Award on 14.09.2015 directing Antrix to pay
Devas, a sum of USD 562.5 million with simple interest @ 18% p.a.
The Government of India suffered similar awards in the other 2 BIT
Arbitral proceedings also.
3.13 In the meantime, the Central Bureau of Investigation (CBI)
filed a First Information Report on 16.03.2015, against the company in
liquidation namely Devas, as well as the officers of Devas and Antrix,
for offences under Section 420 read with Section 120B of IPC and
Section 13(1)(d) read with Section 13(2) of the Prevention of Corruption
Act, 1988. It was followed by a charge-sheet filed on 11.08.2016 and a
supplementary charge-sheet on 08.01.2019. Similarly the Enforcement
Directorate filed a report in ECIR No.12/BGZO/2015.
3.14 Therefore, Antrix made a request to the Ministry of Corporate
Affairs, Government of India, on 14.01.2021 seeking authorization to
initiate proceedings under Section 271(c) of the 2013 Act for winding up
Devas. Authorisation was given on 18.01.2021, on the basis of which
Antrix filed a petition before the National Company Law Tribunal,
Bengaluru Bench on 18.01.2021 for the winding up of Devas.
3.15 On 19.01.2021, NCLT passed a reasoned order, after hearing
the counsel for Devas, admitting the company petition and appointing
the Official Liquidator attached to the High Court of Karnataka at
Bangalore, as the provisional liquidator.
3.16 Against the said order of NCLT admitting the company
petition, DEMPL filed an appeal, but the same was disposed of by the
NCLAT with a direction to DEMPL to seek impleadment before NCLT
and raise all objections.
3.17 DEMPL simultaneously filed a writ petition in W.P. No. 6191
of 2021 before the Karnataka High Court challenging the constitutional
validity of Section 272(1)(e) of the Companies Act, 2013 and praying for
quashing the authorization dated 18.01.2021 granted by the Ministry of
Corporate Affairs to Antrix to initiate proceedings for winding up Devas.
The High Court dismissed the Writ Petition on 28.04.2021 and also imposed
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costs of Rs.5,00,000/-on DEMPL on the ground that they were guilty of
abuse of process of law.
3.18 By a final order dated 25.05.2021, NCLT directed the winding
up of Devas. Aggrieved by the order of winding up, Devas filed one
appeal and the shareholder-DEMPL filed another appeal before NCLAT.
These appeals having been dismissed by NCLAT by an Order dated
08.09.2021, the ex-Director of the company as well as the shareholder
are on appeal before us.
4.