Supreme Court asks Department of Telecom to apprise how it will recover AGR dues from Telcos facing insolvency

The Supreme Court on Monday asked Department of Telecom (DoT) to apprise it as how it plans to recover Adjusted Gross Revenue (AGR) related dues from telecom companies facing insolvency proceedings and whether spectrum given to these companies can be sold.

DoT told the top court that their stand is that the spectrum cannot be sold by the telecom companies facing insolvency proceedings as it not their property.

A bench of Justices Arun Mishra, S Abdul Nazeer and M R Shah asked Solicitor General Tushar Mehta, appearing for DoT to apprise it as how it plan to recovers the AGR related dues from these companies.

“Please tell us what will happen to the DoT’s AGR related dues, if the companies like RCOM, Aircel and Videocon goes into insolvency then what would happen to the said amount. Tell us how you will recover Rs 31,000 from RCOM and Rs 12,000 crore from Aircel. You have to do something. This is a public money,” the bench told Mehta.

It said that the court needs to ascertain the bonafides of the telecom companies who have gone under proceedings under Insolvency and Bankruptcy Code (IBC).

Mehta said that he will be filing an affidavit in this regard. He said telecom companies at varying stage of insolvency proceedings.

The law officer said that their appeal against the National Company Law Appellate Tribunal (NCLAT) order has been pending before the top court on the question whether the spectrum given to the companies can be sold or not.

The bench asked Mehta as why did NCLAT dismissed their petition against sale of spectrum to which he replied that due to delay in filing of appeal against the order.

“Why was delay in filing the appeal? What would happen if the spectrum is sold out by then?” the bench said.

It said that the court want to go into cause of initiation of insolvency for these telecom companies and want to know about their liabilities and what was the urgency for pushing for insolvency.

The bench said it wanted to know as how insolvency proceedings were initiated against Reliance Communication (RCOM) even after the operational creditor the Swedish telecom equipment maker Ericsson was paid its dues.

“How were the proceedings under IBC, revived when the Supreme Court had in its 2019 order directed for settlement of dues of Ericsson?”, the bench said.

Senior advocate Shyam Divan, appearing for Resolution Professional for RCOM narrated the sequence of events to the bench.

The bench said, “our order is binding for all courts and tribunals. How can NCLAT revive insolvency proceedings despite payment to Ericsson?”

The bench asked the companies to file the affidavit giving each and every detail by next date of hearing.

Senior advocate Ravi Kadam, appearing for Aircel said that as per them the spectrum can be sold as it was mentioned in the terms and condition that it is transferable and the company have made an upfront payment for it.

"Since the spectrum is transferable therefore, it can be sold", he said.

He said that this stand of the company has been upheld by the National Company Law Tribunal (NCLT).

Kadam said that Aircel was not going into liquidation as a resolution plan has been approved by the NCLT.

The bench then asked the SG to come prepared on the next date of hearing as how the spectrum can be sold.

On July 20, the top court made it clear it will not hear "even for a second" the arguments on reassessment or re-calculation of the AGR related dues of telecom companies which run into about Rs 1.6 lakh crore.

The apex court had observed that it was not a reasonable proposal that a period of 15 to 20 years be given to the telecom companies to pay AGR dues.

It had reserved the verdict on the issue of timeline for staggered payment of AGR-related dues by telecom companies.

The top court, which on June 18 had asked the telecom companies including Bharti Airtel, Vodafone to file their books of accounts for last ten year and give a reasonable time frame for paying the AGR dues.

The top court had took note of the submission of the Centre that there were “moratorium” in place with regard to some companies like RCom and Videocon as insolvency proceedings against them have started.

It had sought details within seven days from the Centre with regard to the pendency of proceedings against some firms under the IBC and said that it would like to ensure whether IBC was being misused to “escape liabilities”.

The Centre had earlier urged the top court that up to 20 years be given to telecom companies for the payment of dues in a staggered manner.

On June 18, the top court was informed by the Centre that the DoT has decided to withdraw 96 per cent of the Rs 4 lakh crore demand for AGR related dues raised against non-telecom PSUs like GAIL.

The apex court had in October 2019 delivered the verdict on the AGR issue for calculating government dues of telecom companies such as licence fee and spectrum usage charges.

After the top court had rejected pleas by Vodafone Idea, Bharti Airtel and Tata Teleservices seeking review of the judgement which widened the definition of AGR by including non-telecom revenues, the DoT had in March moved a plea seeking staggered payment over 20 years.