AGR Verdict: SC Gives Telcos 10 Years To Pay Dues, Contempt If Default

Telecos need to deposit 10% of their dues upfront till March, with a failure to pay installments amounting to contempt.

The Supreme Court of India on Tuesday granted telecom companies a period of 10 years to clear their adjusted gross revenue (AGR) dues. This 10-year window would kickstart from April 1, 2021. In the 10-month interim till then, however, companies have to deposit 10% of the dues upfront. SC also added that non-payment of instalments would attract penal interest, and would be civil contempt of court. Managing Directors of the companies are further required to furnish personal guarantees in 4 weeks. The SC has also decided to drop contempt proceedings against officials from the Department of Telecommunications (DoT).

The Supreme Court's verdict came on a plea by the telecom companies on allowing staggered schedule to repay AGR dues as decided by its October 24, 2019 verdict. In March 2020, Bharti Airtel Ltd, Vodafone Idea Ltd, and Tata Teleservices Ltd had sought 20 years expressing their inability to pay the entire amount upfront. When the top court expressed reservations for staggered payment over 20 years, Airtel and Vodafone Idea sought 15 years, while Tata Teleservices sought 7-10 years.

The DoT had proposed 20 years. The bench led by Justice Arun Mishra on July 20, had reserved its order on this issue. During arguments, the bench had pulled up the telecom companies for allegedly making an "attempt…to wriggle out of our order in the garb of reassessment or recalculation".

"However, there can be no adjustment regarding the dues apart from what was stated in the Supreme Court verdict. No objection will be entertained," the bench clarified.

Besides the core issue on the timeline for repayment on dues, the court had also heard arguments on how dues could be recovered from companies that had gone bankrupt. While bankrupt companies like Reliance Communications Ltd (RCom), Aircel Group and Videocon Telecommunications Ltd are non-operational, companies like Reliance Jio and Airtel are using the spectrum or airwaves the defaulting companies once held. The court had then inquired why the companies using these airwaves should not pay the AGR dues.

While hearing arguments on recovery of AGR dues from bankrupt telecom operators, the issue of who owns the spectrum was raised. Telecom companies and banks argued that spectrum is an asset and should be sold under Insolvency and Bankruptcy Proceedings (IBC), whereas the Centre argued that spectrum was a national asset.

On October 24, 2019, the SC upheld the government's definition of calculating AGR dues under the revenue-sharing model that telecom companies had with the central government. While the Centre maintained that AGR spanned core revenue, and proceeds from interest, rent and disinvestment and other non-core activities; telecom companies asserted that AGR dues were to be paid to the Centre only on income derived from their core activities.

The verdict then bought additional stress on already financially beleaguered telecom incumbents. Vodafone Idea's dues were the highest at that time, at ₹58,254 crores, followed by Airtel with ₹43,980 crores. The dues of Tata Teleservices were ₹16,798 crores. Reliance Jio's dues were ₹194 crores.

Also Read:Explained: What Is 5G And Why It Is Important For India's Economy

If you value our work, we have an ask:

Our journalists work with TruthSeekers like you to publish fact-checks, explainers, ground reports and media literacy content. Much of this work involves using investigative methods and forensic tools. Our work is resource-intensive, and we rely on our readers to fund our work. Support us so we can continue our work of decluttering the information landscape.

BECOME A MEMBER
📧 Subscribe to our newsletter here.

📣You can also follow us on Twitter, Facebook, Instagram, Youtube, Linkedin and Google News
Show Full Article
Next Story