The law ministry had in June last year advised "immediate termination" of the contract between Isro's commercial arm Antrix Corporation and a Bangalore-based private firm.
The opinion from the ministry had come in response to a query from the Department of Space on whether the contract signed with Devas Multimedia Pvt Ltd in January 2005 could be annulled due to a change in "strategic requirements" of the country since then.
Anticipating fresh trouble when the government was besieged with the 2G scam, the legal opinion by then advisor to law minister, TK Viswanathan, in consultation with additional solicitor general Mohan Parasaran, had given the go-ahead to scrap the deal which allowed Devas access to the spectrum for its satellite systems.
The space department argued since the government was not a party to the contract, it would not be advisable for it to directly scrap the deal.
The ministry, however, clarified on June 18 last year that "as the satellite was yet to be launched and even after the launch, the orbit slot will be given to Isro and not Antrix, the government had a right to prevail upon the contract".
"...Antrix may terminate the agreement with Devas... All fees charged from the company and service taxes received from them should be reimbursed."
The ministry pointed out that any dispute arising from the contract termination will be referred to International Court of Arbitration, Paris. "Hence... the Department of Space must defend its case and keep us informed," the ministry said.
The space department had cited requirement of adequate spectrum in its satellite to meet the demand for strategic needs of the paramilitary forces.
The contract between Antrix and Devas says the latter is entitled to get 90% of the capacity of each satellite on lease. "The result is that there would be a little space available for catering to the strategic demands," the department said.