Money From The Sky!
Even as domestic courts have ordered the liquidation of Bengaluru based Devas Multimedia Private Limited, foreign shareholders of the company are continuing their fight against the government.
And it looks like they're winning so far.
Back in 2005, Devas Multimedia entered into an agreement with government-owned Antrix Corporation Limited to lease satellite spectrum. However, this was later annulled in 2011 following the policy decision of the Indian government to reserve the spectrum band for national and strategic purposes.
This resulted in losses to Devas and they took the matter to court. And they won the dispute across various international forums, including at the Permanent Court of Arbitration in The Hague, Netherlands.
Devas was supposed to get $650million from the Indian government, which has not been paid so far. And with all the interest adding up, the amount is up to $1.2 billion now.
What happened next?
While this was awarded by an international court, back home in India, the government ordered the winding up of Devas Multimedia, claiming that the whole company had been incorporated in a fraudulent manner to siphon funds to dubious foreign accounts.
They took the matter to another court, through their foreign arms called Devas Mauritius Ltd., Devas Employees Mauritius Pvt. And Telcom Devas Mauritius Ltd.
The matter was heard by the Superior Court in Montreal, Canada, and they've ruled in favour of Devas. To get their money, the court has allowed Devas to seize property belonging to the Airport Authority of India (AAI) held by the International Air Transport Association (IATA).
How this works
The AAI collects air navigation charges, incurred during flights through India’s air space, and aerodrome charges, which include use of airport, ground or navigation facilities etc. These charges are payable by airlines and countries to AAI to be allowed to fly over India’s air space and to use its airport or navigation facilities.
But since IATA is an international trade organization, AAI uses them to collect this money on its behalf, and then remit it to India. And IATA is headquartered in Montreal.
The Montreal court has found AAI to be an 'organ of the State of India inseparable from India' or an alter ego of India. As a result, IATA will pay $111 million which they were to transfer to AAI to Devas' international arms instead.