News agencies reported that an order issued by the ED's special director (southern region) in Chennai found Devas Multimedia Pvt Ltd, Antrix and others "contravening" the provisions of the Foreign Exchange Management Act (FEMA) on at least three counts.
The Enforcement Directorate (ED) on Monday slapped a Rs 1,200 crore FEMA violation notice in connection with alleged "wrongful" gain made to private multi-media company Devas by Antrix Corporation Ltd, the commercial arm of Indian Space Research Organisation (ISRO).
News agencies reported that an order issued by the ED's special director (southern region) in Chennai found Devas Multimedia Pvt Ltd, Antrix and others "contravening" the provisions of the Foreign Exchange Management Act (FEMA) on at least three counts.
If the charges stand after the adjudication process that will begin now, the accused will be liable to pay penalty which could be three times of the amount contravened.
The show-cause notice said ED probed the Foreign Direct Investment (FDI) received by Bengaluru-based Devas Multimedia from various overseas investors, including CC Devas Mauritius, Telecom Devas Mauritius, Deutsche Telkom Asia, Devas Employees Mauritius and the Indian firm (Antrix), between May 2006-June 2010, received a total of $131.44 million (about Rs 578.54 crore).
It said this FDI was in violation of FEMA and FIPB rules.
The order came after ED completed the over three-year investigation in the deal that was struck in 2005. ED had registered a FEMA case in 2012. It is also probing the deal under anti-money laundering laws.
Antrix had signed a deal with Devas in January, 2005 to provide it with crucial S-Band wavelength, which is primarily kept for strategic interests of the country.
As per the order, accessed by PTI, the total violation under FEMA that has been established in the case is Rs 1,217.76 crore.
"The share subscription agreements entered into by the Indian company contained clauses relating to settlement of disputes at courts other than India and applicability other than Indian laws on matters of dispute and thus the FDI received by Devas were contrary to the conditions specified in the approvals granted by the Foreign Investment Promotion Board (FIPB) and thus contravening the provisions of FEMA. The extent of contravention on the said count is Rs 578.54 crore," said the order.
The second contravention pertains to Devas Multimedia assuring overseas investors an annual 8% priority dividend (in addition to the other dividends and distributions) on cumulative basis.
"Such assured dividends are not the nature of any equity instrument and contrary to the provisions of FDI regulations under FEMA. The investments received by the Indian company with such assured returns is Rs 571.72 crore," it said.
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