Supreme Court judgment today on payment of AGR dues

The Supreme Court (SC) will pronounce its verdict on Tuesday on whether to allow telecom companies, or telcos, to makes staggered payment of their adjusted gross revenue (AGR) dues.

The judgment will be pronounced at 11.30am by a three-judge SC bench, headed by Justice Arun Mishra.

Major telcos, including Vodafone-Idea and Bharti Airtel, owe substantial amounts to the Department of Telecom (DoT).

The total liability on Vodafone-Idea is Rs58,254 crore out of which it has paid more than Rs7,000 crore, while over Rs50,000 crore is the outstanding amount.

Bharti Airtel had a total liability of Rs43,980 crore, out of which it has cleared more than Rs18,000 crore and is yet to pay Rs25,976 crore.

The apex court in its judgment delivered on October 24, 2019, had upheld the interpretation given to the definition of AGR by the DoT and included revenues from various heads for calculation of the dues while imposing a cumulative burden of over 1.69 lakh crore on 16 telcos.

Review petitions against the judgment were dismissed by the apex court on January 16.

Later, the DoT itself had approached the SC in March seeking permission to allow the telcos to pay outstanding AGR dues to the tune of 1.43 lakh crore in annual instalments over a period of 20 years.

DoT had argued that if as a consequence of the judgement, any of the major service providers face the most drastic consequence of proceedings under the insolvency and bankruptcy code, then the consumers would be jeopardised because porting of mobile numbers from non-operational to operational service providers would take considerable time leading to disruption of services.

It was submitted that competition in the telecom sector and quality of services given by mobile companies would be adversely impacted and it would lead to loss of direct and indirect employment besides negatively impacting foreign investment sentiment.

During the course of the hearing, telcos sought 15 years to complete the payment.

The SC had on July 20 reserved its verdict on whether to allow the prayer to make payment in instalments.

Later, the court also heard the matter separately with respect to the companies under liquidation and the recovery of amounts from them.

Out of 1.43 lakh crore outstanding dues, Rs38,959 crore are due from four companies which are under liquidation. Reliance Communication (R-Comm), which is one of the companies under insolvency, alone owes more than Rs25,000 crore out of the Rs38,959 crore due from the four bankrupt telcos.

The court considered the question of whether spectrum could be sold or assigned under the Insolvency and Bankruptcy Code (IBC). The court had during the hearing expressed its reservations that subjecting spectrum to resolution process under IBC could result in government dues being wiped out.

The telcos have maintained that though they do not have ownership of spectrum, and they can transfer the same under contract.

Spectrum sale is crucial for banks that are financial creditors under IBC since the value of teclos under insolvency will reduce greatly without spectrum.

The court will consider whether spectrum-sharing agreements will cast additional obligation on Jio and Airtel.

Jio had entered into spectrum-sharing agreement with R-Comm, while Aircel and Videocon had traded their spectrum to Airtel.

The judgment on this aspect was reserved on August 24.

The SC judgment is expected to clarify whether additional AGR liability will be fastened on Jio and Airtel on account of the past dues of Aircel, R-Comm and Videocon.

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