Apex court reserves order on AGR dues of insolvent telcos
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.