AGR Case: Supreme Court questions government’s ability to recover dues from insolvent telecos
New Delhi, August 10: The Supreme Court Monday asked the central government to detail how it intends to recover the AGR dues from telecom companies that are currently undergoing insolvency resolution. On July 20, the apex court had reserved its order on granting more time to telecom operators for payment of pending dues relating to the Adjusted Gross Revenue matter.
While the government proposed allowing the proposed allowing the payments to be staggered over 20 years, the apex court was not in favour of it. That decision is awaited. The top court had then also expressed its intention to look into insolvency resolution proceedings initiated against telecom operators who were party to its October verdict and had asked for the details of these cases. The court had said that it would examine the insolvency resolution proceedings were bona fide or an effort to escape payment of AGR dues. In the hearing on Monday, Solicitor General Tushar Mehta apprised the court of the status of insolvency proceedings of the telecom companies, Bloomberg reported.
Mehta told the court that Aircel Ltd. has listed the spectrum it owns as an asset to potential bidders – a claim that’s being opposed by the central government. The insolvency resolution process against Aircel began in 2018 when the company voluntarily approached the tribunal under the Insolvency and Bankruptcy Code provisions. Senior Advocate Shyam Divan appeared for the resolution professional of insolvent Reliance Communications Ltd., an Anil-Ambani promoted company, and informed the bench about the proceedings against the company. The Solicitor General pointed out that the resolution plan for Aircel has been approved while the plan for RComm is in its final stages, according to a Live Law report on the day’s court proceedings.
Justice Arun Mishra’s bench made it clear that it expects to ascertain how the government intends to recover its dues from these companies. The judges had inquired whether spectrum could be sold in insolvency proceedings. The Solicitor General today informed them according to the government spectrum cannot be considered an asset of the company during the insolvency resolution process.
The Solicitor General’s stance was countered by Aircel which argued that it had made an upfront payment for the spectrum and therefore it’s a transferable asset which can be sold.
As, on Monday, the court focused on companies facing insolvency, no discussion took place on the request of other telecom companies for an extension of payment timelines. Given the difference in their calculation of AGR dues versus that of the government’s, the carriers had requested the court to stagger the payment of the remaining amounts. The government has expressed its approval for a staggered payment. Vodafone Idea Ltd. has sought a 20-year window which was declined by the court in the last hearing. The operator said it was willing to provide security through licence and spectrum for the pending dues. It then modified its request to a 15-year payment period. Companies such as Bharti Airtel Ltd. and Tata Teleservices Ltd. have also requested for more time.
In October 2019, the Supreme Court had ruled that adjusted gross revenue should include non-core revenue. It directed telecom operators to pay pending dues, ending a 14-year-old legal battle between mobile operators and the government. The court subsequently dismissed review petitions filed by the telecom companies and had made it clear that it would not allow self assessment of dues by the companies. The top court had even threatened to hold India’s beleaguered telecom operators in contempt for not complying with its order to pay thousands of crores worth of dues within the deadline. The court now will next hear the case on Friday.
Sign up for our weekly newsletter to stay up to date on our product, events featured blog, special offer and all of the exciting things that take place here at Legitquest.
Add a Comment