The Supreme Court stated that it was wary of AGR-linked dues owed to the Government being erased out in light of the bankruptcy actions initiated by Telecom Companies.
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On Thursday, the Supreme Court stated that it was wary of AGR-linked dues owed to the Government being erased out in light of the bankruptcy actions initiated by Telecom Companies. A bench comprising of Justices Arun Mishra, Dinesh Maheshwari & Sanjiv Khanna was examining a plea by Department of Telecommunications (DoT) requesting payment of AGR-related fees differently, covering over 20 years. Senior Advocate Ravi Kadam, appearing for the creditors of Aircel, said that the Right to use Spectrum is an unquantifiable asset falling under sec. 18(1)(f) of the IBC.
Aircel’s monitoring committee, which comprises resolution professionals and lenders, said the company’s bankruptcy declaration process has concluded, with UV Asset Reconstruction Co Ltd (UV ARC) developing as the highest bidder. Kadam added that the DoT took a role in (resolution) meetings with the creditor. Only a portion of the AGR dues will be reimbursed, less than 1% of the total need (of the DoT). Senior Advocate Ranjit Kumar who appeared for economic creditors to Aircel, said that dues of banks are on average with those of the Government, which has permitted Spectrum as security used by banks to distribute loans to telecom operators and that one cannot be given priority over the other. Kumar appealed the Court to accept the IBC proceedings take its due course, which, if not done, could force the telecoms to liquidation, which in turn could be hostile to the statutory terms.
The Supreme Court also summoned the Solicitor General to provide details of all agreements signed by telecom operators to share Spectrum. It asked the DoT the specifics of Spectrum allotted to RCom and Aircel since 1999. The Court will listen to the case next on August 21 at 2 PM.
On August 18, it was notified by Senior Advocate Harish Salve that Reliance Jio had by now paid Rs 195 crore AGR payments and that if there were any residual dues, if at all, they would be compensated by Jio as well. On August 14, the bench had instructed the Centre, Reliance Jio, and Reliance Communication’s to generate necessary documents to get to light who would be responsible for AGR dues of Reliance Communications. The bench also sought specifics of who was using the range of Aircel and Videocon. On August 10, Court had requested the Centre’s reaction on whether Telecom Spectrum can be auctioned in the bankruptcy proceedings encountered by the telecom companies. On August 7, the Top Court had earmarked orders in the petition by the Department of Telecommunications (DoT) requesting to allow telecom companies to make fees of the AGR dues differently over 20 years.
The bench had also made it unblemished that it shall not amuse any objections for re-assessment of AGR in light of the judgment passed by Top Court in October 2019 & instructed Reliance Communications, Sistema, Shyam Teleservices, and Videocon to present their bankruptcy details within seven days. Court noted that, in doing so, it necessary to guarantee that the IBC was not being abused by companies to avoid liabilities. While advising all parties to distribute with payments about public revenue as had by now instructed by the Court, the Justice Arun Mishra led bench conveyed reservations regarding maintaining the payment of dues pending.
Justice Mishra had asked- What is the assurance that you will not evade? Some of you are overseas companies and may even go into bankruptcy. What is the confidence that you can give us? On June 18, the Supreme Court had ordered telecom companies to present their financial documents while contemplating the instant plea by the Department of Telecommunications to permit them to settle the AGR-related dues differently over 20 years. On June 11, it had instructed the Department of Telecommunication to reassess the claims created on Public Sector Undertakings on the base of the October 2019 judgment in the case relating to AGR dues of telecom companies. The bench had also noted that raising demands on PSUs on the potency of AGR judgment was uncalled for. The bench indicated out that the licenses for telecoms & PSUs were various, as the latter was not meant at commercial manipulation.
Justice Mishra remarked on the requirements on PSUs that this is an absolute abuse of our verdict. They are creating a demand of over 4 lac crores, which is impermissible. In March, before the onset of the current coronavirus-forced lockdown, the Department of Telecom (DoT) had gone the SC advising stunned payment over 20 years for telecom companies to fulfill their AGR dues. The Department of Telecommunications (DOT) had lodged a plea in the Supreme Court for revision of the order dated October 24, 2019 vis-à-vis coming at a formula for the revival of past dues from telecom service providers. In the immediate appeal, the union had asserted that even though the Court had expanded the definition of adjusted AGR, leaving the three telecoms, i.e., Vodafone Idea, Bharti Airtel & Tata Teleservices, together with facing more than INR1.02 lakh crore in extra license fees, spectrum usage charges (SUC), fines and interest, it is essential that the plan for mode for recuperation is approved. However, on March 18, SC pounded out at the Centre and telecom companies for performing self-assessment of the AGR charges set up by the apex court in its ruling.
In April, the SC had rebuffed pleas by Vodafone Idea, Bharti Airtel & Tata Teleservices requesting a review of the October 24 ruling that expanded the definition of AGR.
