Supreme Court gives partial relief on AGR
The Supreme Court has given telecom players 10 years to pay their balance adjusted gross revenue (AGR) dues in a staggered manner, instead of in one go.
The apex court also directed the National Company Law Tribunal (NCLT) to decide within two months whether operators such as Reliance Communications (R-Com) and Aircel can resort to insolvency proceedings to avoid the payment of their dues and whether their financial creditors can lay claim over the dues to the government.
The top court, which held that the demand raised by the Department of Telecom (DoT) in respect of the AGR dues will be final, said there shall be no dispute raised by the operators and that there shall not be any re-assessment.
It said the operators shall make the payment of 10 per cent of the total dues as demanded by the DoT by March 31, 2021 and the rest amount to be paid in yearly instalments commencing from April 1, 2021 to March 31, 2031.
A bench headed by Justice Arun Mishra said that in the event of any default in making the payment of annual instalments, interest would become payable according to the licence agreement along with penalty and interest on penalty automatically without reference to the court. Besides, it would be punishable for contempt of court, it said.
The bench, also comprising Justices S. Abdul Nazeer and M. R. Shah said that various companies through managing director/chairman or other authorised officer, will furnish an undertaking within four weeks, to make payment of arrears as per the order.
The apex court had earlier raised scepticism over the insolvency proceedings raised in the NCLT by some of the operators as a “subterfuge” to avoid the payment of AGR and spectrum dues to the government.
Dealing with the spectrum sharing done by various operators and to the liability of the sharing operator, the bench said that spectrum sharing is permitted and approved by the Sharing Guidelines dated September 24, 2015 and Parliament has approved spectrum sharing as part of “National Telecom Policy, 2012”.
The bench, also gave a breather to Mukesh Ambani-led Reliance Jio, which has been sharing spectrum of R-Com on the payment of AGR dues saying such operators sharing the spectrum cannot be saddled with the liability of the payment of the past dues of the licensee.
The apex court considered the plea of the operators to pay over 20 years as too long.
“The arrears have accumulated for the last 20 years. It is also to be noted that some of the companies are under insolvency proceedings, validity of which is to be examined, and they were having huge arrears of AGR dues against them. For protecting the telecom sector, a decision has been taken on various considerations mentioned above, which cannot be objected to,” the Supreme Court said.
“However, we consider that the period of 20 years fixed for payment is excessive. We feel that it is a revenue sharing regime, and it is grant of sovereign right to the TSPs (operators). under the Telecom Policy.
“We feel that some reasonable time is to be granted, considering the financial stress and the banking sector's involvement. We deem it appropriate to grant facility of time to make payment of dues in equal yearly instalments.”