Top Stories

[AGR Case] SC Seeks Centre's Response On Whether Reliance Jio Should Pay R-Com's Dues

Sanya Talwar
17 Aug 2020 4:24 PM GMT
[AGR Case] SC Seeks Centres Response On Whether Reliance Jio Should Pay R-Coms Dues
Your free access to Live Law has expired
To read the article, get a premium account.
    Your Subscription Supports Independent Journalism
Subscription starts from
(For 6 Months)
Premium account gives you:
  • Unlimited access to Live Law Archives, Weekly/Monthly Digest, Exclusive Notifications, Comments.
  • Reading experience of Ad Free Version, Petition Copies, Judgement/Order Copies.
Already a subscriber?

The Supreme Court on Monday asked the Department of Telecommunications (DoT), to file a detailed response on the issue of recovering Reliance Communications' Adjusted Gross Revenue (AGR) dues from Reliance Jio.

A bench of Justices Arun Mishra, BR Gavai & Krishna Murari told the Centre that there exists a difference of opinion between two of its ministers (Department of Telecommunication and Ministry of Corporate Affairs) on the issue of sale of spectrum during insolvency proceedings. The Bench will continue hearing the case tomorrow, i.e. August 18. Bench also asked the Centre to give a year-wise chart of dues owed by RCom by Tuesday.

Solicitor General Tushar Mehta, appearing for Centre and DoT submitted that "the government would support any view taken by the top court resulting in recovery of the AGR related dues".

Mehta also submitted that the Centre had always maintained its stand spectrum cannot be sold during insolvency proceeding. "The spectrum is allowed to be used by the telecom companies under a contract but the ownership of it does not get transferred" said Mehta.

The bench said it wants to know, since when RCom has not paid its dues and DoT should also give the year-wise details of demand raised against the company.

The bench also referred to the earlier proposed deal of RJio and RCom and said RCom claimed its assets valued at Rs 35,000 crore.

"How has the value depleted? Where have the assets disappeared?," the bench asked.

Senior Advocate Shyam Divan said that this was done to evade the insolvency proceedings but the deal did not materialise and the IBC became the preferred route.

At the end of the hearing, Senior Advocate Harish Salve told the bench that he will address the court on legal issues of whether the spectrum can be sold under the bankruptcy process.

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.

Similar direction is issued to other companies which are under insolvency, including Aircel Limited, Aircel Cellular Limited and Dishnet Wireless Limited and Videocon Telecommunications Ltd. to specify who is using the spectrum an arrangement along with documents be placed on record.

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.

The Court posed this query while examining the bona fides of bankruptcy claims of Reliance Communications, Aircel and Videocon.

In 2016, Airtel had bought Aircel's 4G airwaves in the 2,300 MHz band and Videcon's spectrum. Earlier this year, the National Company Law Tribunal (NCLT) approved the sale of Aircel's assets to UV Asset Reconstruction Company (UVARCL).

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).

Next Story