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'Does The Court Have No Value?' : SC Issues Contempt Notices Against Telecom Companies Which Have Not Paid AGR Dues [Read Order]

Radhika Roy
14 Feb 2020 5:52 AM GMT

The Supreme Court on Friday issued contempt notices to the telecom companies which have not yet paid the dues arising out of the October 2019 judgment which interpreted that the meaning of Adjusted Gross Revenue(AGR) in telecom license agreements will include revenue from non-telecom sources as well.

A bench comprising Justices Arun Mishra, Abdul Nazeer and M R Shah has asked the the defaulting telecom companies, including Bharti Airtel, Vodafone, Idea and Tata Teleservices, to clear the dues to the tune of Rs 1.47 lakh crores before March 17, the next date of hearing.

If they fail, the Chief Managing Directors/ Managing Directors of those companies will have to be personally appear before the Court on the next day of hearing.

The Court has also issued contempt notice against the officer of Department of Telecommunications, who has allegedly issued notification freezing the recovery of AGR dues.

"A desk officer staying the SC order!", exclaimed Justice Arun Mishra, who was visibly unhappy with the default in payment.

"What is happening in this country ? All these companies haven't even paid a single penny and your officer has the audacity to stay the order ? Does the Supreme Court have no value ? This is the outcome of money power !", Justice Mishra said.

On Friday, the Court was hearing the applications filed by the telecom companies seeking a new schedule of payment of statutory dues to the tune of Rs 1.47 lakh crore to the Department of Telecommunications.

Jusitce Mishra did not hide his displeasure at the applications seeking more time for payment.

"Who is filing these applications ? What have you made of this system ? How can this be done ?", Justice Mishra asked.

Justice Mishra also lashed out at the DoT officer.

""Call that desk officer here ! Have taken any action against him ? Do you want us to wind up the Supreme Court ? Who is doing this ? We will draw up contempt against everyone !", Justice Mishra told Solicitor General Tushar Mehta.

The telecom companies want to negotiate a fresh payment schedule with the Department of Telecommunications (DoT), which has issued demand notices to them.

Earlier on January 16, a bench headed by Justice Arun Mishra had dismissed review petitions of telecom firms seeking review of its earlier order asking them to pay Rs 1.47 lakh crore in statutory dues by January 23, saying it did not find any "justifiable reason" to entertain them.

The apex court had on October 24 last year ruled that the statutory dues need to be calculated by including non-telecom revenues in AGR of telcos.

It had upheld the AGR definition formulated by the DoT and termed as "frivolous" the nature of objections raised by the telecom service providers.

In an affidavit filed in the top court, DoT said that according to calculations, Airtel owes Rs 21,682.13 crore as licence fee to the government and dues from Vodafone totalled Rs 19,823.71 crore, while Reliance Communications owed a total of Rs 16,456.47 crore. BSNL owed Rs 2,098.72 crore and MTNL Rs 2,537.48 crore.

"The definition of gross revenue is crystal clear in the agreement. How the adjusted gross revenue to be arrived at is also evident. It cannot be submitted that the revenue has not been defined in the contract. Once the gross revenue is defined, one cannot depart from it and the very meaning is to be given to the revenue for the agreement," the apex court had said in its October verdict.

According to the New Telecom Policy 1999, telecom licensees are required to share a percentage of their AGR with the government as annual licence fee (LF).

The 1999 policy came after operators made representation to Centre for relief against steep licence fee which they had consistently defaulted since 1994 and an option to licensees to migrate from fixed licence fee to revenue sharing fee was made applicable in the year 1999.

In addition, mobile telephone operators were also required to pay spectrum usage charges (SUC) for use of radio frequency spectrum allotted to them.

Telecos had moved the top court against the Telecom Disputes Settlement and Appellate Tribunal's (TDSAT) order which ruled that certain non-telecom revenues like rent, profit on sale of fixed assets, dividend and treasury income would not be counted as AGR on which licence fee would have to be paid to government.

The TDSAT had exempted a large number of streams from the definition of AGR, like capital receipts, bad debt, distribution margins to dealers, forex fluctuations, sale of scrap and waiver of late fee.

It had also said revenue from non-core sources such as rent, profit on sale of fixed assets, dividend, interest and miscellaneous income must be included while computing a carrier's AGR, dealing a setback to telecos who would have to shell out more towards licence and spectrum usage fees.

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