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Do Corruption Allegations Allow Courts to Set Aside Proceedings? - Analyzing Devas v. Antrix

- Vipashyana Hilsayan & Shivankar Sukul


The Antrix-Devas saga, which prolonged on for a decade hopefully saw a conclusion when a division bench of Delhi HC upheld the order setting aside the arbitral award and dismissed an appeal u/s 37 of IAA preferred by Devas. From a policy point of view, the decision was necessary as it rescued the public exchequer from a 4500 crore liability arising from a one-sided agreement. However, this post intends to shed light on the inadvertent yet dangerous precedents it sets, by undoing a long jurisprudence which had reduced executing court’s scope of interference at post award stage.

Brief Facts and Procedural History

In the advent of the telecommunications revolution, the commercial arm of the ISRO, Antrix entered into an agreement with Devas for developing multimedia and information broadcasting services. The agreement required Antrix to lease 70Mhz of S-Band Spectrum on satellite intended for providing information and multimedia services.

However, corruption allegations soon surfaced concerning this agreement when a CAG Report highlighted procedural irregularities in its execution such as selling of national largesse at throwaway prices. Put into context, the CAG Report pointed out that on a previous instance, an auction of 70Mhz of similar spectrum fetched an amount to the tune of Rs. 38,543 Crore as against Rs 1,120 Crore for which the current 80Mhz was allotted. Moreover, it was also uncovered that Devas misrepresented the technologies it possessed at the time of signing the agreement.

These allegations led the UPA government to terminate the agreement in 2011 citing national security requirements of the said spectrum constituting a force majeure event.

Devas responded by initiating an arbitration before the ICC which resulted in an award directing Antrix to pay Devas, a sum of Rs. 4500 Crore with simple interest @ 18% p.a delivered in September 2015.

Against this backdrop, the CBI also filed an FIR 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. However, the allegations of fraud were not pleaded before the arbitral tribunal. Acting on the same, the ISRO on the advice of the Ministry of Law and Justice decided to file an application under Section 271(c) of the Companies Act, 2013 for winding up Devas on the ground that the company had been incorporated for fraudulent purposes before the NCLT Bangalore, this order was later upheld by the NCLAT and SC. Later, the ICC award was also set aside by a Single Judge of the Delhi HC on the grounds of public policy. This order also passed muster with the Division Bench whose order this post intends to discuss.

Understanding Delhi HC Ruling

Devas’ appeal u/s 37 of IAA of the setting aside order was dismissed by the Division Bench. The Court maintained its earlier position quashing ICC’s arbitral award on the grounds of fraud and public policy pursuant to Section 34 of IAA. This comes in the backdrop of murky waters concerning the contours of these grounds. While making multiple references to the Supreme Court ruling (also echoed by the Single Bench decision), the court took the view that fraud in Devas’ incorporation did vitiate the impugned arbitral award. To arrive at this conclusion, the court had two issues to deal with, first, if it had the jurisdiction to reopen the finding of facts recorded by an arbitral tribunal at the setting aside stage. Second, if the instant arbitral award was induced by corruption and can be held contrary to public policy.

Justifying Reopening of Evidence to Raise Fresh Grounds

Despite a clear suspicion of corruption from 2011, apparent from undue benefits given to Devas identified in the CAG Report, Antrix and the Indian government did not plead corruption and fraud before the arbitral tribunal, where its case was solely based on force majeure due to change in sovereign policy. Thus, the issue of whether courts under Section 34 have the power to re-appreciate evidence and enable a party to raise fresh grounds at the post-award stage was crucial.

It looked at the cogency of reopening of fact-finding for annulling awards. There exists a catena of decisions which bar the courts from re-appreciating evidence at the setting aside stage, which was reiterated recently in a three-judge bench decision in Atlanta Limited v. Union of India. Where it was held that an arbitrator’s decision is paramount when supplemented with a requisite explanation. The lack of evidence would not render the arbitral award invalid because the arbitrator has discretion over the quantum and quality of evidence taken into consideration to construct their decision. The rationale behind this approach is that the arbitrator is often legally trained; accordingly, his words assume finality as long as he is not capricious and arbitrary. In the absence of a ground under Section 34, the re-examination of facts for reconsidering the decision cannot be permitted. This protects the arbitration process from excessive judicial intervention. For challenging domestic awards, such illegality should strike the root of the matter and exclude the mere erroneous application of law from its ambit.

However, after affirming the holdings in Delhi Metro Rail Corporation Limited, and Associate Builders v. DDA, wherein the court had reiterated the bar on the court’s ability to re-appreciate evidence, it decided to suo motu discover additional grounds at the post-award stage. Ultimately relying on Hindustan Construction Company, it was held that the language of Section 34(2)(b) which uses the phrase “the court finds that” provides the court with a carte blanche to disturb the findings of facts established by the tribunal.

The Requirement of Causative Link between Fraud and Arbitral Award

The Explanation to Section 34(2)(b)(ii) of the IAA restricts the scope of “public policy” exception to limited circumstances. To this effect, it mentions that an award will be in contravention of public policy only if the making of the award is “induced or affected” by fraud or corruption. In this context, the court also had to interpret the term “induced and affected” to determine if a causative link was needed to set aside the award on grounds of public policy.

The court addressed the causative link standard for fraud and the delivery of awards to respond to Devas’ submissions. Devas analysed the HC order through a direct causative link standard laid down in Bloomberry Resorts & Hotels Inc. v. Global Gaming Philippines. For a challenge based on fraud to sustain, alleged ‘fraud’ having a role in the conduct of arbitration or peripheral should have a causative link with the delivery of the award (‘affected’ was deemed as ‘induced’). It was further argued that Antrix's challenge of the award did not feature the ground of fraud in its Section 34 application until the two amendment applications were filed. The relevant aspects then are the dates of receipt of the award and whether the delivery of the award was tainted by fraud and not the subsequent chargesheets and summons etc. CBI’s corruption chargesheet in the matter does not allege fraud with regard to the ICC award. Thus, Devas contended that the challenge was barred by limitation, having been filed beyond the prescribed period of 3 months and 30 days through the two amendment applications which should be treated as fresh applications, not permissible under Section 34, IAA.

The Bench held Bloomberry Resorts case to be incongruous since it relied on Section 24 of the SIAA which is an additional ground not envisioned under the Model Law or Section 34(2)(b)(ii), IAA. Alternatively, the Bench turned to the Indian construction of “public policy”, cursorily touching upon the aspect of reassessment of evidence. In Renusagar Power Co. Ltd. v. General Electric Co, the Court gave a three-pronged test–the enforcement of a foreign award would be denied on the grounds of public policy if it is contrary to the policy of Indian law or the interests of India or justice or morality. The Bench opined that Devas perpetrated the fraud at numerous steps of the transaction, from incorporation, and misrepresentation to fabrication of documents which was to procure monetary benefits from the State thus the magnitude of this fraud, the court held, was against the state’s interest and public policy of India.

Cross-Jurisdictional Analysis of Power to Reopen Evidence to Post Award Stage

The issue of corruption allegations at the post-award stage has met a varied treatment across the globe. This is because the question of allowing new evidence at post-award stage presents courts with a dilemma to choose between the conflicting interests namely the finality of arbitral awards and a state’s resolute policy against corruption.

Dealing with this dilemma, while countries like Germany and France have liberally interpreted the executing court’s power to examine corruption allegations in the post-award stage. Whereas, the English, Swiss and Canadian courts have opted for a far more restrictive view.

This divergence is evident in the recent Alstom case where English and French courts reached diverging opinions on the admissibility of new allegations of corruption when ruling on the fate of the same arbitral award, tainted by bribery allegations.


The French courts have been fairly open to the idea of admitting new grounds and arguments at the Post Award Stage, this inclination to allow the parties to raise new arguments and evidence at the post-award stage was evident in the matters of Schooner v. Poland where the Court of cassation allowed parties to challenge the arbitral award on new grounds which were not raised before the tribunal. This maximalist approach was also echoed in the decision of the Alstom Case where the court ruled that the courts at setting aside stage can look into the new facts regarding corruption. More recently this was also reiterated in the Gabon v. Santullo Sericom where the jurisdiction of the court to conduct a de novo enquiry of facts when dealing with a setting aside application was yet again cemented.


The issue of whether a new fact can be adduced before a court in setting aside proceedings came to be considered by the English court in the matters of Westacre Investments Inc v. Jugoimport-SDRP Holding Co Ltd, where the court held that evidence which has not been pleaded before the tribunal cannot be considered by the court while adjudicating a setting aside petition unless in extraordinary situations where they are “new and fresh”. The test for determining the relevance of evidence was as follows.

  1. The evidence should be strong and cogent to a degree that it is decisive to the outcome of the case.

  2. The Party should not be in possession of the evidence at the time of hearing of the arbitral proceedings.

Applying this test, the court in Alexander Brothers v. Alstom also precluded a party from adducing new facts and evidence as it was available to the party during the pendency of the proceedings.

Delhi HC

The indulgence granted to an applicant in setting aside proceedings has undergone a paradigm shift after the 2019 Amendment, where the words"furnishes proof that" in Section 34 (2)(a) has been substituted by the term “establishes on the basis of the record of the arbitral tribunal”. This exhibits a clear intention of the legislature to circumscribe the scope of enquiry of the executing court only to the facts and issues established by the tribunal on record.

However, a reading of the Delhi HC order shows that it ducked the effect of this substantially reduced scope of enquiry by reading the provision (2)(b) in isolation and ruling that courts can discover new grounds in suo motu manner when grounds under (2)(b) are pleaded. Notably not only does this ruling give carte blanche power to the courts to conduct a de novo enquiry in setting aside proceedings but it also runs contrary to the recent SC ruling in Alpine Housing Development Corporation v. Ashok S Dhariwal where the scope of review and mandate to restrict the enquiry to matters established on record was also extended to the grounds enumerated in sub section (2)(b). Therefore, the Delhi HC order creates uncertainty with respect to the scope of an executing court’s power to reopen evidence and disturb the finding of facts established by the tribunal. Moreover, it sabotages the legislature’s attempts to circumscribe the scope of review under setting aside proceedings to record established by the tribunal.

Inconsistencies With Established Position On Causative Link between Fraud and Arbitral Award

The issue of setting aside an award on the basis of fraud on grounds of public policy was raised before the apex court in the matters of Venture Global v. Tech Mahindra where the award debtor approached the court to have the award in favour of Satyam Computer Services Ltd set aside in light of financial irregularities. In this case, the apex court gave a restricted interpretation to the term “induced” in Section 34 of the IAA by making it incumbent on the contesting party to show a causative link between fraud and the making of an award. Devas and Antrix's case dismissed the standard of a causative link argued by Devas in arriving at the ground of public policy. The Supreme Court’s discussion centered around such a link between the fraud committed by Satyam and the award rendered, when admitting patent illegality as a ground Section 34, IAA in Venture Global v. Tech Mahindra. The Court examined the award challenge through a four-point test—

  1. Whether the award was in conflict with the public policy of India,

  2. Whether the award can be annulled because of subsequent disclosure of fraud,

  3. Whether Mr. Raju’s act constituted misrepresentation and suppression and

  4. Whether they have any causative link between the alleged fraud and the making of an award.

In this case, dissenting opinions were delivered after a series of back and forth on the issue of whether fraud formed a causative link with the making of the award. But the Justices assumed their respective positions while being unanimously clear about the role of causative link contrary to the Devas dispute.

“if the concealed facts, disclosed after the passing of the award, have a causative link with the facts constituting or inducing the award, such facts are relevant in a setting-aside proceeding” (¶ 41)

As a result, a contesting party does not discharge its burden by merely proving that the underlying agreement is tainted by corruption but also has to prove the relationship between the fraud, concealment and the award pronounced. However, this requirement was dispensed by the Division bench of Delhi HC, overlooking the established precedents.


Though the egregious fraud and corruption that were brought to the notice by the CAG Report, necessitated the state to terminate the Devas-Antrix deal, the stumbling block of the dispute laid when it omitted to raise this as a ground before the arbitral tribunal.

This also created a precarious situation for Delhi HC which dealt with an award where incontrovertible evidence pointing to corruption was not even pleaded before the tribunal. In such a situation the court chose not to overlook the corruption evidence but in the process opened up the ground of public policy enabling judicial intervention through the introduction of new evidence at the post-award stage. Moreover, it also diluted the standard of testing an award on the ground of fraud by reading down the “causative link” contrary to the decision of the Apex Court.


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