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AGR Case : Supreme Court Asks Bharti Airtel To Move Alternate Forum Challenging DoT Demand For Videocon Dues

Srishti Ojha
24 Aug 2021 10:38 AM GMT
AGR Case : Supreme Court Asks Bharti Airtel To Move Alternate Forum Challenging DoT Demand For Videocon Dues
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The Supreme Court on Tuesday granted liberty to Bharti Airtel to move the appropriate forum against the direction issued to it by the Department of Telecommunications (DoT) to pay the AGR(Adjusted Gross Revenue) dues of Videcon Telecommunications Ltd.The Court also restrained the DoT from invoking the bank guarantees furnished by Airtel for three weeks.A bench comprising Justices L Nageswara...

The Supreme Court on Tuesday granted liberty to Bharti Airtel to move the appropriate forum against the direction issued to it by the Department of Telecommunications (DoT) to pay the AGR(Adjusted Gross Revenue) dues of Videcon Telecommunications Ltd.

The Court also restrained the DoT from invoking the bank guarantees furnished by Airtel for three weeks.

A bench comprising Justices L Nageswara Rao, S Abdul Nazeer and MR Shah was hearing an application filed by Bharti Airtel to restrain Department of Telecommunication from demanding the AGR dues of Videocon Telecommunications Ltd from it. Videocon had sold its spectrum to Airtel in 2016.

Senior Advocate Shyam Divan, appearing for Airtel, submitted that the DoT issued a communication to his client on August 17 asking it to pay the AGR dues of Videocon nearing Rs 1500 crores within a week, failing which its bank guarantees will be invoked.

Referring to the spectrum trading guidelines, Divan submitted that the liabilities of a telecom company before the sale of its spectrum are to be borne by it only and not by the subsequent purchaser. Therefore, the AGR dues of Videocon before it sold its spectrum to Airtel cannot be recovered from Airtel. Divan pointed that the order passed by the Supreme Court in September 2020 had also stated that the dues of a telecom service company existing before the sale of spectrum are to be borne by the seller and not by the buyer.

The second point raised by Divan was that by adding the dues of Videocon to the demand made from Airtel, the DoT has violated the Supreme Court's order that AGR dues cannot be recalculated or reassessed.

However, the bench said that it will not interfere with the order and will instead grant liberty to Airtel to move any other alternate forum to redress its grievances. Responding to a query from the bench, Divan said that the alternate forum will be the Telecom Disputes Settlement and Appellate Tribunal(TDSAT).

Solicitor General Tushar Mehta submitted that it is the case of the DoT that the TDSAT has no jurisdiction to deal with the matter. He requested the bench to keep all contentions, including the question of jurisdiction, open.

Divan also sought for an order restraining the DoT from invoking the bank guarantees. In this regard, he submitted that Airtel has paid so far over Rs 18,000 crores, which is more than 10% of its total AGR dues to the tune of Rs 45,000, which it had to pay by March 2021 as per the Supreme Court's order. 

Ultimately, the bench allowed Airtel to withdraw the application with liberty to approach the alternate forum, and restrained the DoT from invoking its bank guarantees for 3 weeks.

 The issue arises from the interpretation given by the Supreme Court in its October 2019 judgment to the term "Adjusted Gross Revenue" in the spectrum licensing agreements between telecom companies and the DoT. The license fee is computed based on AGR. The Supreme Court held that 'AGR' includes revenue from non-telecom operations of the companies like rent, profit on sale of fixed assets, dividend and treasury income. This resulted in an additional liability to the tune of Rs 92,000 crores on the telecom companies collectively.

In September last year, the Supreme Court had permitted the telecom companies to pay off the AGR dues in a staggered manner over 10 annual installments, starting from April 1, 2021. In the same order, the Supreme Court had prohibited any sort of re-assessment of the AGR dues.




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