The Space Commission has recommended to the Cabinet Committee on Security(CCS) that the controversial S-Band spectrum deal between ISRO's commercial arm Antrix and private firm Devas Multimedia be immediately annulled.

The Space Commission made this recommendation in a note to the CCS, saying priority is required to be given to the country's strategic requirements including societal ones. The CCS is chaired by Prime Minister Manmohan Singh.

The Department of Space may take necessary steps and give instructions for scrapping the Antrix-Devas Agreement, according to the Commission's draft note.

According to sources in the know, K Radhakrishnan, Secretary, Department of Space, wrote a letter to D R Meena, secretary, Ministry of Law and Justice in this regard.

The annulment comes in the wake of a raging controversy over the deal for handing over 70 Mhz of S-Band spectrum to the private firm for Rs 1,000 crore on which the CAG has already initiated action.

According to news reports, this deal could have resulted in a loss of Rs two lakh crore to the exchequer.

Following these reports, the Government and ISRO said that the project was already under review and action has been initiated for termination of the contract.

"In consulation with the Ministry of Law and Justice and the Additional Solicitor General, it was proposed to place the matter before the CCS for a decision," the letter by Radhakrishnan said.

The Draft Note for the CCS, which is likely to be placed at its next meeting, has been approved by the Prime Minister who is understood to have directed that the view of the ministries concerned may be obtained.

According to the Draft Note, the agreement for the lease of Space Segment Capacity on ISRO/Antrix S-Band Spacecraft by Devas Multimedia that was entered on January 28, 2005 needs to be annulled in view of priority needed to be given to the nation's strategic requirements including societal ones.

The Agreement calls for payments by Devas to Antrix of an up-front capacity reservation fee of USD 40 million for two Satellites and lease charges of USD 18 million per year during the operational life of the Satellites, which will be enhanced by 25 per cent, when Devas becomes cash flow positive.

"As of now Devas has paid to Antrix, a total amount of Rs 58.38 crore in as the first instalment of the Upfront capacity reservation fee for PS-1 (during June 2006) and PS-2 Satellites (during June 2007)," the draft note said.

The space segment capacity to be leased to Devas as per the Antrix-Devas agreement would take away 80 Mhz of S-Band spectrum available with ISRO, for the life of 12 years of each satellites.

"...Such a dispensation might not ensure a level-playing field for the other service providers using terrestrial spectrum, especially considering the significant demand for this S-Band spectrum and the current trends on the prices," the note said.