The court rapped the Department of Telecom for seeking dues from PSUs, and said that the demand was impermissible, and said that their order never dealt with PSUs.

SC takes up AGR matter asks telcos to provide roadmap for 20-yr payment plan
Money Telecom Thursday, June 11, 2020 - 16:51

The Adjusted Gross Revenue matter was taken up in the Supreme Court on Thursday, with the Department of Telecom proposing a 20-year timeline for telecom companies -- including Vodafone Idea, Tata Teleservice, and Bharti Airtel — to pay off their AGR dues as a bailout package. It will be difficult for companies to pay in one go, said the DoT. Telcos owe a Rs 1.4 lakh crore in AGR dues, as per the government.

A bench headed by Justice Arun Mishra and comprising Justices S Abdul Nazeer and M. R. Shah queried Solicitor General Tushar Mehta, who was appearing for the DoT: "What is the guarantee telecom companies will pay in that time frame (decided by the Centre)?"

The court questioned what would happen if one of the companies went into litigation, and stated that the matter has already been ongoing for 20 years. Litigation in the matter started in 1999.  

“Who has seen 20 years? Nobody knows what will happen in the next 20 years, not even companies. Your plea of 20 years can't be reasonable, especially when this matter is already pending for 20 years. The litigation began in 1999,” the bench reportedly said. 

Furthermore, it asked them what the guarantee was that telcos would abide by the time frame. “How can you secure the sum? Undertakings won't suffice. Some may rather go to jail than paying up. How will you ensure payments,” it asked. 

The bench told the lawyers to check with their clients about bank guarantees, and personal guarantees. Vodafone Idea said that a bank guarantee would not be possible. 

“We have to pay Rs 50,000 crores out of which only 15,000 crores is the principal amount. We don't even have money to pay our employees so if we have 15,000 to 20,000 crores, we will pay it upfront,” said lawyer Mukul Rohatgi, representing Vodafone Idea. 

Public Sector Undertakings (PSUs) were also asked to pay off Rs 4 lakh crore AGR dues. This demand by the DoT, the court said, was impermissible, and the DoT must consider withdrawing it. 

The bench said its judgement was silent on the PSUs. When SG Mehta said PSUs held telecom spectrum, the Bench asked Mehta how the government used the AGR judgement to devise a formula to raise demands from PSUs when the judgement didn't deal with the issue.

The Bench asked why demands were made only after the AGR verdict in 2019.

Justice Mishra said, "Every day, I think about how our judgement (AGR matter) has been used and misused."

The court said that the government must explain how their judgment has been misused. 

“We would request you to withdraw this (demand on PSUs) otherwise we will take strict action against them,” the bench said. 

"We want them to file an affidavit on how this could be done by them (DoT officer)? We will punish them! We will punish them!" said the bench.

PSUs that were asked for dues include RailTel, Gujarat Narmada Valley Fertilizers & Chemicals and Power Grid Corp. 

The court will next take up the matter on June 18. But then, the bench said that the government must reconsider the demand for dues from the PSUs, and telcos have to file affidavits regarding how they will pay off their dues, the time required and the guarantees.

What happened earlier

In the previous hearing on March 18, the apex court slammed the Centre and telecom companies for not complying with its order on the payment of dues and penalties, saying: "Actions of telecom companies tantamount to seeking to bypass our judgement. All dues as per our judgement will have to be paid, including interest and penalty."

Previously, telcos had self-assessed the dues, and paid the dues accordingly. "Who permitted self-assessment without permission of this court? This is sheer contempt of court," the bench had said. 

The bench had upheld the DoT definition of AGR in the court ruling on October 24, 2019.

On March 16, Mehta, appearing for the DoT, had sought staggered payment over 20 years of AGR dues by telecom companies. Bharti Airtel had already paid Rs 18,000 crore as AGR dues so far, and Vodafone Idea has paid Rs 3,500 crore.

According to Vodafone Idea's own assessment, its AGR dues stand at Rs 21,533 crore and the principal amount out of the total dues is Rs 6,854 crore. However, according to the DoT's estimate, the company's overall dues stand at Rs 53,000 crore.

Bharti Airtel said that it has paid its full AGR dues of about Rs 13,000 crore. Bharti Airtel Chairman Sunil Bharti Mittal said that as per the government's direction, the company has paid the full amount. He said that the full AGR dues are about Rs 13,000 crore, and Rs 5,000 crore is extra, adding that the company has also submitted its self-assessment document. The government's assessment put Airtel’s dues at Rs 35,586 crore

With inputs from agencies