ISRO, Devas gear for legal battle, PM initiates probe (Roundup)

BANGALORE/NEW DELHI - The Indian government Thursday initiated a probe into reported revenue loss by its space agency’s pact with a private firm on allotting S-band frequency - high value and scarce radio waves - as the agency and the firm seemed set for a legal battle.

“The prime minister (Manmohan Singh) has formed a high-level commission, which will submit its report within a month,” Information and Broadcasting Minister Ambika Soni told reporters in New Delhi.

The panel set up by the prime minister, who handles the science and technology portfolio, comprises Planning Commission member and former cabinet secretary B.K. Chaturvedi and Space Commission member and aerospace expert Roddam Narasimha.

The Bharatiya Janata Party (BJP) however termed the panel an attempt at a “cover-up”. Noting Chaturvedi had been the cabinet secretary when the agreement was signed, party spokesperson Nirmala Sitharaman said his appointment “defeats the whole purpose of the exercise”.

The panel “will review the technical, commercial, procedural and financial aspects of the agreement between ANTRIX (ISRO’s commercial arm) and M/s. Devas Multimedia Pvt. Ltd, and to review the adequacy of procedures and approval processes followed by ANTRIX, ISRO and Department of Space, and to suggest improvements and changes,” ISRO said in a statement in Bangalore.

The announcement of the setting up of the probe came as ISRO asserted Antrix right to annul the pact by paying Devas only the upfront costs of Rs.58.37 crore (about $13 million) it has received from the Bangalore-based private firm. Devas, however, said the agreement, entered into on Jan 28, 2005, was “legally binding”.

Devas had “fulfilled all of its obligations in respect of the agreement over the past six years and now awaits the delivery of the contracted space segment capacity, which is more than two years delayed,” the firms president and chief executive officer Ramachandran Viswanathan said in a statement in Bangalore.

Devas is headed by M.G. Chandrasekhar, who was ISROs scientific secretary and member of the agencys apex management council during 1988-1997, before he left ISRO.

Its chief technology officer D. Venugopal was also in ISRO as deputy director, Satellite Communication Programme between 1989-1998. He left ISRO in April 1988.

The probe panel comes in the wake of reports that the Comptroller and Auditor General (CAG) has indicated that the Antrix-Devas deal has caused the nation an estimated loss of Rs.2 lakh crore.

The government has denied any revenue loss and the CAG has said its findings were not final.

In a detailed background note on the pact and its right to annul it, the ISRO said that two satellites, from which the S-band frequency was to be allotted to Devas, were yet to be launched.

Indian government “was under no obligation to utilise these satellites for the ANTRIX-DEVAS contract,” the note asserted.

“ANTRIX may terminate this agreement in the event ANTRIX is unable to obtain the necessary frequency and orbit slot coordination required for operating PS-1 (Primary Satellite-1) on or before the completion of the pre-shipment review of PS-2 (Primary Satellite-2),” the note said.

“In the event of such termination, ANTRIX shall immediately reimburse DEVAS all the upfront capacity reservation fees and corresponding service taxes received by ANTRIX till that date,” it said, adding Devas has so far paid Rs.58.37 crore for this purpose.

The note asserted that “upon such termination, neither party shall have any further obligation to the other party under this agreement nor be liable to pay any sum as compensation or damages (by whatever name called)”.

It said the decision to annul the accord was taken after a review of the need to utilise S-band “in the best national interest because it is needed for strategic and societal communications”.

The S-band frequency spectrum has been in use for the INSAT series since 1983 for broadcasting (for Doordarshan) and later for mobile satellite services. In the 1990s, the ITU (International Telecommunications Union) started allocating a segment of S-band for mobile satellite service and land mobiles, the background note said.

The note did not see a hurdle to the annulment of the deal because it agreed to be “responsible for obtaining all necessary governmental and regulatory approvals relating to the orbit slot and frequency clearance” and thus “It does not mean that orbit slot shall be compulsorily given to ANTRIX by ISRO/government,” citing advice given by the union law and justice ministry and the additional solicitor general.

In his statement, Devas CEO Viswanathan said Devas proceeded with the project after required consents and approvals were obtained from the government and were confirmed by Antrix in February 2006.

Devas, its investors - Deutsche Telekom, Columbia Capital, Telcom Ventures - and its partners “have invested significant time, capital and resources in developing an innovative, novel, integrated satellite system to serve the needs of the Indian consumers and government agencies, including for strategic applications, he said.