Litigation News

Case concerning payment of AGR dues by Telcos before Supreme Court: LIVE UPDATES

The Court had earlier asked the Department of Telecommunications (DoT) to submit affidavit of details of Spectrum sharing and licence trading agreements of telecom companies.

Bar & Bench

The Supreme Court is hearing the case concerning the payment of Adjusted Gross Revenue (AGR) dues by Telecom companies.

Live upates of the hearing today feature on this page.

The Court had earlier asked the Department of Telecommunications (DoT) to submit affidavit of details of Spectrum sharing and licence trading agreements of telecom companies.

Read an account of the August 20 hearing in the matter here:

Special Bench of Justice Arun Mishra, S Abdul Nazeer and MR Shah assembles. Hearing begins.

The Bench outlines that the question is if Spectrum, which is not a property of the telecom companies, can be sold under IBC proceedings and whether the same will affect payment of AGR dues.

Senior Counsel Harish Salve representing the COC of RCom tells the Court that right to use Spectrum is an asset which can be sold should the company wish to sell.

Salve submits that the resolution plan proposes sale of right to use spectrum in line with the licence trading guidelines.

Salve reiterated his submissions made on the sale of the right to use spectrum. He says that the IBC provides for the sale of the licence to use which is an asset.

Supreme Court observes that this may lead to all AGR dues being wiped out and the new owner starting without any encumbrance.

Bench says that if the licence is directed to be cancelled then the spectrum will have to be surrendered to the DOT which may auction the same for a higher value

Senior Counsel Ranjit Kumar for COC of Aircel says that the sale or auction of Spectrum licence by DOT is a commercial decision to be taken by DOT. Supreme Court cannot make directions in that regard.

Senior Counsel Kapil Sibal for Airtel tells the Court that the spectrum licence trade between Aircel and Bharti Airtel took place in 2016. The licence was purchased in an auction and price paid upfront.

Sibal: No dues were raised by the DOT at the time and I have honoured all my dues till 18 June 2016.

Sibal: It is nobody's case that I haven't paid AGR after 2016. Supposing someone was to raise a demand, I have a right to take it up with the TDSAT.

Justice Mishra: We will examine this question.

Supreme Court now asks Solicitor General Mehta what the government's stand is with respect to Spectrum sharing as per the guidelines. 

Supreme Court: Mr. Salve's submissions also have to be considered.

SG Mehta explains his understanding of Salve's submissions, proceeds to read his submissions.

Mehta: DOT is allowed to seek recovery from sellers and buyers. All dues are required to be cleared before Spectrum Trading is carried out.

Mehta: Impression was given that only seller was required clear dues

Mehta: There are two types of payments a telecom service provider is supposed to pay. When a teleco purchases spectrum in an auction, there is some amount to be paid at the threshold and other is paid annually for 15-16 years. This is unrelated to AGR.

Mehta: AGR has two components.

Mehta: My understanding is that there are these dues:

  • Spectrum Purchase charges to be paid in instalments

  • AGR which is further divided into (a) Spectrum Usage charge (b) Licence

Bench asks about dues to be recovered from Videocon. Mehta informs the Court that the the demand made from Videocon is under process.

Salve seeks to argue in light of the DOT's position being submitted before the Court now.

Salve argues that the guidelines mandate that the seller (of spectrum licence) shall clear dues prior to concluding sale of spectrum.

Justice Shah intervenes to ask: in the event these dues are not cleared, whether the burden would shift to the buyer.

Salve argues that past dues cannot be put on something that is already sold.

Sibal, for Airtel, adds (in the case concerning Airtel and Videocon): Everybody knew what the dues were because they were challenged before the TDSAT.

Sibal: If the liability of past dues of videocon were to be shifted on Airtel, why wait for so long? DOT should have clarified long back on Airtel being made liable for Videocon's dues, they were known to the DOT.

(SG not on screen)

Justice Mishra: Mr. Mehta, where are you? Maybe SG is in other hearing or gone since it's time...

Mehta: I had got disconnected... I had to be logged in. Connectivity

Sibal: My friend's connectivity is unquestionable

(All laugh)

Court asks Mehta if DOT has raised any demands with respect to spectrum sharing since the October 2019 judgment.

Court: Seek instructions, Mr. Mehta, otherwise the judgment will be wrong.

Supreme Court concludes the hearing. Senior Counsel Kapil Sibal expresses gratitude to the Bench for giving such a patient hearing.

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