Devas Multimedia Pvt Ltd v Antrix Corporation Ltd & Anr, 2 Comp LJ 1 (SC) 2022

Key question: Can NCLT wind up a company for fraud under Section 271(c) of the Companies Act, 2013?

The Supreme Court said yes. If a company is set up for fraud or runs in a fraudulent way, NCLT can order winding up. Fraud cannot hide behind arbitration awards or contract terms.

• Does NCLT have power to order winding up under Section 271(c) where incorporation/operations are tainted by fraud?
• Can companies rely on arbitral/contractual rights to avoid a fraud-based winding up?

• Section 271(c) & 271(e): NCLT can wind up if the company was incorporated for a fraudulent purpose or its business is carried on fraudulently.
• Fraud first: Courts place fraud above arbitral and contractual claims. Justice and morality stand against fraud.
• Limitation: Where the benefit of fraud continues, limitation does not defeat action merely due to passage of time.

Held: The Supreme Court dismissed the appeal. The winding up ordered by NCLT and affirmed by NCLAT was valid under Section 271(c).

• Devas lacked the required technology at the time; funds were siphoned abroad → shows fraudulent intent.
• Failure to advertise the petition in newspapers did not cause prejudice as there were no active customers/creditors.
• “Fraud” in Section 271(c) covers both single acts and a series of acts.
• Ongoing enjoyment of benefits from fraud meant limitation did not defeat the case.
• NCLAT rightly refused late cross-examination; process must be efficient.

• NCLT power: If a company is born for fraud or run fraudulently, wind it up (S.271(c), 271(e)).
• Priority of fraud: Fraud beats arbitral and contractual shields.
• Wide meaning: Fraud includes a pattern of acts; not just a single event.

It draws a clear line: corporate fraud ≠ protected. Tribunals and courts will lift the curtain and shut down a company that misuses corporate form or arbitration to keep ill-gotten gains.

Mnemonic: “F-A-L-E” — Fraud proved • Awards don’t save you • Limitation bends to continuing fraud • End the company (wind up).

1. Spot fraud at birth or in business.
2. Check if any award/contract is being used as a shield.
3. Apply S.271(c)/(e) → support winding up.

Issue: Can NCLT wind up Devas for fraud under Section 271(c)?

Rule: Sections 271(c) & 271(e) empower winding up for fraudulent incorporation/operations; fraud prevails over arbitral/contractual claims.

Application: Lack of technology + siphoning funds showed fraud; no prejudice from missing advertisement; late cross-exam rightly refused.

Conclusion: Winding up upheld; appeals dismissed.

Section 271(c)

Companies Act 2013 ground to wind up if company was formed or run fraudulently.

NCLT / NCLAT

Specialised company law tribunals: original and appellate forums.

Force Majeure

Unexpected events making performance impossible/illegal; used to terminate contracts.

• Section 271(c) fraud winding-up precedents
• Corporate fraud vs arbitration awards
• NCLT powers & due process safeguards