[AGR Case] Concerned That AGR Dues Will Be 'Wiped Out' In The IBC Process: SC

The Supreme Court on Thursday remarked that it was wary of AGR-related dues owed to the Government being wiped out in light of the insolvency proceedings initiated by Telecom Companies.

A bench of Justices Arun Mishra, Dinesh Maheshwari & Sanjiv Khanna was hearing a plea by Department of Telecommunications (DoT) seeking payment of AGR-related dues in a staggered fashion, spanning over 20 years.

Senior Advocate Ravi Kadam, appearing for the lenders of Aircel stated that Right to use Spectrum is an intangible asset falling under section 18(1)(f) of the IBC.

Aircel's monitoring committee, which includes resolution professional and lenders, said the company's insolvency resolution process has concluded, with UV Asset Reconstruction Co Ltd (UV ARC) emerging as the highest bidder.

"The DoT took part in (resolution) meetings with lenders… Only a fraction of the AGR dues will be paid, less than 1% of the total demand (of the DoT)", added Kadam.

Senior Advocate Ranjit Kumar who appeared for financial creditors to Aircel said that dues of banks are on par with those of the government, which has allowed spectrum as security used by banks to disburse loans to telecom operators & that one cannot be given precedence over the other. 

Kumar urged the Court to allow the IBC proceedings take its due course, which if not done could push the telco's to liquidation, which in turn could be antithetical to the statutory provisions.

The Supreme Court also asked the Solicitor General to furnish details of all agreements signed by telecom operators to share spectrum.

It asked the DoT the details of spectrum allocated to RCom and Aircel since 1999.

The court will hear the case next on 21 August at 2 PM.

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).