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[AGR Case] Premature For SC To Decide If Spectrum Can Be Sold; DoT Will Decide On Sale If Resolution Plan Succeeds: Salve For Jio

Sanya Talwar
19 Aug 2020 4:19 PM GMT
[AGR Case] Premature For SC To Decide If Spectrum Can Be Sold; DoT Will Decide On Sale If Resolution Plan Succeeds: Salve For Jio
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The Supreme Court continued hearing the case on adjusted gross revenue (AGR) dues of telecom companies.

Senior advocate Harish Salve, appearing for Reliance Jio, said that spectrum is not owned by Telecom Companies and that it cannot be sold without a nod from the DoT.

He argued that Spectrum can be sold only with the DoT nod, as per guidelines. "It is premature for the courts to decide if the spectrum can be sold; the SC should not trouble itself. If the resolution plan succeeds, DoT will decide on the sale of the spectrum at that stage, let the govt decide the issue" Salve said.

Salve: Spectrum is added as an asset in the balance sheets. It is the telecom company's ownership right to USE spectrum - extremely valuable right. Right granted by govt. The Right to Use it continues. Spectrum not held under trust by companies

While referring to various provisions of the IBC and Guidelines Trading of Access Spectrum by Access Service Providers, Salve reiterated that it would be premature to decide if spectrum can be sold or not under Insolvency and Bankruptcy Code (IBC) and that deciding anything in relation to the Spectrum would create a legal problem in existing transactions and financial transactions.

To justify that the Spectrum shall fall under the ambit of natural resources, Salve cited U/A 143(1) Of Constitution vs Of India on 27 September, 2012, [(2012) 10 SCC 1].

Salve: No one can take possession of a spectrum. Spectrum occurs. Just like no one can take possession of a river. The right to use is very different from possession.

Salve concluded his arguments today and stated that he shall also file note to show that the dues have been paid by Reliance Jio.

On August 18, it was informed by Senior Advocate Harish Salve that Reliance Jio had already paid Rs 195 crore AGR dues and that if there were any remaining dues, if at all, they would be paid by Jio as well.

On August 14, the bench had directed the Centre, Reliance Jio and Reliance Communication's to produce necessary documents in order to bring to light who would be liable for AGR dues of Reliance Communications. The bench also sought details of who was using the spectrum of Aircel and Videocon.

On August 10, Court had sought the Centre's response on whether Telecom Spectrum can be sold/auctioned in the insolvency proceedings faced by the telecom companies.

On August 7, the Top Court had reserved orders in the plea by Department of Telecommunications (DoT) seeking to allow telecom companies to make payments of the AGR dues in a staggered fashion over 20 years.

The bench had also made it clear that it shall not entertain any objections for re-assessment/ re-calculation of AGR in light of the decision passed by Top Court in October 2019 and directed Reliance Communications, Sistema, Shyam Teleservices & Videocon to submit their insolvency details within 7 days.

Court noted that, in doing so it needed to ensure that the IBC was not being misused by companies in order to escape liabilities.

While warning all parties to dispense with payments pertaining to public revenue as had already been directed by the Court, the Justice Arun Mishra led bench expressed reservations regarding keeping the payment of dues pending.

"What is the guarantee that you will not escape? Some of you are foreign companies and may even go into liquidation. What is the security that you can give us?" Justice Mishra had asked.

On June 18, the Supreme Court had directed telecom companies to submit their financial documents while considering the instant plea by the Department of Telecommunications to allow them to settle the AGR-related dues in a staggered fashion over 20 years.

On June 11, it had directed the Department of Telecommunication to reconsider the claims raised on Public Sector Undertakings on the basis of the October 2019 verdict in the case pertaining to AGR dues of telecom companies.

The bench had also observed that raising demands on PSUs on the strength of AGR verdict was uncalled for. The bench pointed out that the licenses for telecos and PSUs were of different nature, as the latter was not intended at commercial exploitation.

"This is an outright misuse of our verdict. You are making a demand of over 4 lac crores ! This is wholly and totally impermissible!", Justice Mishra observed on the demands on PSUs.

In March, before the commencement of the ongoing coronavirus-forced lockdown, the Department of Telecom (DoT) had moved the Supreme Court proposing staggered payment over 20 years for telecom firms to discharge their AGR dues.

The Department of Telecommunications (DOT) had filed a plea in the Supreme Court for modification of the order dated October 24, 2019 vis-à-vis arriving at a formula for recovery of past dues from telecom service providers.

In the instant appeal, the union had stated that even though the Court had widened the definition of adjusted gross revenue (AGR), leaving the three telcos, i.e. Vodafone Idea, Bharti Airtel and Tata Teleservices, collectively facing more than INR1.02 lakh crore in additional licence fees, spectrum usage charges (SUC), penalties and interest, it is imperative that the proposal for mode for recovery is approved.

However, on March 18, Supreme Court lashed out at the Centre and telecom companies for doing self-assessment or reassessment of the Adjusted Gross Revenue (AGR) dues fixed by the apex court in its verdict.

In April, the Supreme Court had rejected pleas by Vodafone Idea, Bharti Airtel and Tata Teleservices seeking review of the October 24 verdict that widened the definition of adjusted gross revenue (AGR).


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