Supreme Court restrains Department of Telecom from invoking bank guarantees of Bharti Airtel for non-payment of Videocon's AGR dues

The Supreme Court made it clear that it will not alter its earlier judgment on payment of dues but granted liberty to Airtel to approach Telecom Disputes Settlement and Appellate Tribunal (TDSAT) for remedy.
Supreme Court restrains Department of Telecom from invoking bank guarantees of Bharti Airtel for non-payment of Videocon's AGR dues
Justices L Nageswara Rao, Abdul Nazeer and MR Shah, AGR, Supreme Court

The Supreme Court on Tuesday directed the Department of Telecom (DoT) not to encash Bharti Airtel's financial bank guarantees for three weeks in relation to non payment of Adjusted Gross Revenue (AGR) dues of Videocon which comes to a total of ₹1,376 crores.

A Bench of Justices L Nageswara Rao, Abdul Nazeer and MR Shah was hearing Bharti Airtel's plea against the Central government's demand that Airtel should pay the AGR dues of Videocon.

This demand was raised since Airtel has a spectrum agreement with Videocon, which owes the government ₹1,376 crores.

Airtel had entered into a ₹ 4,428 crore deal to purchase spectrum owned by Videocon Telecommunications in six circles - Bihar, Haryana, Madhya Pradesh, Uttar Pradesh (East), UP (West) and Gujarat - in March 2016.

Airtel, however, opposed the Centre's demand for Videocon's AGR, saying it could not be held responsible for the company's past dues.

The Supreme Court made it clear that it will not alter its earlier judgment but granted liberty to Airtel to approach Telecom Disputes Settlement and Appellate Tribunal (TDSAT) for remedy.

Accordingly the plea in Supreme Court was withdrawn but the Court interim protection to Airtel by directing DoT to not encash the bank guarantees for three weeks.

"Liberty to withdraw granted and to approach appropriate forum. DoT will not invoke the financial bank guarantees for a period of three weeks from today," the order said.

Senior Advocate Shyam Divan appeared for Airtel while Solicitor General Tushar Mehta represented DoT.

Currently, if a telecom company fails to pay its quarterly licence or spectrum-related dues, then the bank guarantees with the telecom department are encashed. The bank guarantees are also periodically replenished.

Last year, the Supreme Court had refused to stop the government from taking coercive action against telcos to raise AGR dues. The 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 to around ₹ 1.6 lakh crore.

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