Apex court re­serves or­der on AGR dues of in­sol­vent tel­cos

Hindustan Times (Chandigarh) - - Comment - Romita Ma­jum­dar and Jap­nam Bin­dra

MUMBAI/NEW DELHI: The Supreme Court on Mon­day re­served judge­ment on re­cov­er­ing ad­justed gross rev­enue (AGR) dues of in­sol­vent tel­cos. The court said that un­der spec­trum trad­ing guide­lines, if the seller did not clear dues be­fore the spec­trum sale, li­a­bil­i­ties get trans­ferred to the buyer. The court will clar­ify the mat­ter in its judg­ment.

Tele­com ser­vice providers (TSPS) are re­spon­si­ble for spec­trum pur­chase prices, de­ferred spec­trum in­stal­ments and AGR dues in­clud­ing spec­trum us­age charges (SUC) and li­cence fees, the court said.

Since Jus­tice Arun Mishra, who heads the bench re­tires, on 2 Septem­ber, the ver­dict is ex­pected within the next seven work­ing days. If the court di­rects tel­cos us­ing spec­trum of bank­rupt com­pa­nies to pay past dues, both Bharti Air­tel and Reliance Jio In­fo­comm Ltd will be hit hard—air­cel owes ₹12,289 crore in AGR dues, Video­con ₹1,376 crore and Reliance Com­mu­ni­ca­tions (Rcom) owes ₹25,199 crore. Air­tel bought spec­trum from Video­con and Air­cel while Jio ac­quired part of Rcom’s spec­trum. Ver­dict is awaited on the tel­cos’ plea for stag­gered AGR pay­ments (judg­ment was re­served on 20 July); whether the spec­trum or the right to use it can be trans­ferred, as­signed or sold un­der bank­ruptcy law; and whether Jio and Air­tel will face ad­di­tional li­a­bil­i­ties for past dues of Rcom, Video­con and Air­cel.

The bench said tel­cos can­not sell spec­trum, which is gov­ern­ment prop­erty. Such ac­tions will al­low for dues to be wiped out if the buyer takes over spec­trum with­out the li­a­bil­i­ties. “How can you sell some­body else’s prop­erty? Wip­ing out gov­ern­ment dues is not per­mis­si­ble. If tel­cos are un­will­ing to pay, we will direct the can­cel­la­tion of spec­trum al­lo­ca­tion,” said Mishra.

The bench di­rected depart­ment of telecom­mu­ni­ca­tions (DOT) to sub­mit its as­sess­ment on quan­tifi­able dues since 2016. DOT main­tained that AGR dues were only crys­tallised af­ter the court’s Oc­to­ber 2019 judge­ment. DOT also filed an af­fi­davit stat­ing AGR dues have to be cal­cu­lated based on the “spec­trum shar­ing” and “spec­trum trad­ing” agree­ment signed be­tween the two TSPS.

Se­nior ad­vo­cate Har­ish Salve, ar­gu­ing for Rcom, said the right to use the spec­trum al­lo­cated to it rested with the firm and hence it can be sold. It is not for the court to de­cide, DOT can de­cide on sale of spec­trum at the ap­pro­pri­ate stage, Salve said. “Li­cence agree­ment recog­nises spec­trum as a se­cu­rity, can be mon­e­tised un­der IBC. The spec­trum sale be­tween Rcom and Jio is a small part of its to­tal hold­ing,” said Salve.


The ver­dict is likely within the next seven work­ing days.

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