Breather for telcos, SC gives ten years for payment of AGR dues

In a breather to telecom service providers struggling to pay rupees 93,520 crores of Adjusted Gross Revenue (AGR) related dues, the Supreme Court on Tuesday gave them a 10 years period to clear their outstanding amount to the government.
The top court, which held that demand raised by the Department of Telecom (DoT) in respect of AGR dues will be final, said there shall be no dispute raised by the telcos and that there shall not be any re-assessment. ‘ It said that telecom operators shall make the payment of 10 per cent of the total dues as demanded by DoT by March 31, 2021 and rest amount to be paid in yearly instalments commencing from April 1, 2021 to March 31, 2031.
A bench headed by Justice Arun Mishra said that in the event of any default in making payment of annual instalments, interest would become payable as per the license agreement along with penalty and interest on ‘penalty automatically without reference to Court. ‘ Besides, it would be punishable for contempt of Court, it said.
The bench, also comprising Justices S Abdul Nazeer and M R Shah said that various companies through Managing Director/Chairman or other authorised officer, will furnish an undertaking within four weeks, to make payment of arrears as per the order.
‘That, at the first instance, the respective Telecom Operators shall make the payment of 10 per cent of the total dues as demanded by the DoT by March 31, 2021. Telecom Service Providers (TSPs) have to make payment in yearly instalments commencing from April 1, 2021 up to March 31, 2031 payable by March 31, of every succeeding financial year,’ the bench said.
Dealing with the 20-years’ time period to be given for staggered payment of AGR related dues by the telcos as sought by the Centre, the bench said that the arrears have accumulated for the last 20 years and some of the companies are under insolvency proceedings, validity of which is to be examined, and they were having huge arrears of AGR dues against them.
‘For protecting the telecom sector, a decision has been taken on various considerations mentioned above, which cannot be objected to. However, we consider that the period of 20 years fixed for payment is excessive. We feel that it is a revenue sharing regime, and it is a grant of sovereign right to the TSPs under the Telecom Policy,’ the bench said.
It said that some reasonable time needs to be granted, considering the financial stress and the banking sector’s involvement. ‘ ‘We deem it appropriate to grant the facility of time to make payment of dues in equal yearly instalments. Rest of the decision quoted above, taken by the Cabinet, shall stand except the modifications concerning the time schedule for making payment of arrears. But, at the same time, it is to ensure that the dues are paid in toto,’ the bench added.
The top court directed that the existing bank guarantees that have been submitted regarding the spectrum shall be kept alive by TSPs until the payment of AGR related dues is made and DoT has to report compliance of order by all telcos every year by April 7, of each succeeding year.
The bench in its 47-page verdict asked the National Company Law Tribunal (NCLT) to decide within two months the questions including whether spectrum can be subject to the proceedings under Insolvency and Bankruptcy Code (IBC) and whether AGR dues can be wiped off by resorting to the proceedings.
‘We consider it appropriate that the aforesaid various questions should first be considered by the NCLT. Let the NCLT consider the aforesaid aspects and pass a reasoned order after hearing all the parties. We make it clear that it being a jurisdictional question, it requires to be gone into at this stage itself. Let the question be decided within the outer limits of two months,’ the bench said. ‘ Dealing with the spectrum sharing done by various telcos and to the liability of sharing operator, the bench said that spectrum sharing is permitted and approved by the Sharing Guidelines dated September 24, 2015 and the Parliament has approved spectrum sharing as part of “National Telecom Policy, 2012”. ‘ The bench, also gave a breather to billionaire Mukesh Ambani led Reliance Jio, which has been sharing spectrum of Reliance Communication (RCom), the company facing insolvency proceedings, on payment of AGR dues saying such operators sharing the spectrum cannot be saddled with the liability of payment of past dues of AGR of licensee. ‘ “Even otherwise, the past dues of sharing operator/licensee covers AGR for the spectrum used by holder of licence, certain TSPs such as Reliance came into existence later on, and as observed, the liability of such operator of the AGR, would only be to the extent it has used the said spectrum. Shared operator TSPs. cannot be saddled with the liability to pay the past dues of AGR of licensee, that have shared the spectrum with the original licensees,’ the bench said.
Dealing with the aspect of spectrum trading done by some telcos, the bench said ‘We direct DoT to complete the assessment in such cases of trade and raise demand if it has not been raised and to examine the correctness of self assessment and raise demand, if necessary, after due verification. In case demand notice has not been issued, let DoT raise the demand within six weeks from today,’ the bench said.