[Breaking] SC Grants 10 Years Period For Telecos To Clear AGR Dues; First 10% To Be Paid By March 2021 [Read Judgment]

The Supreme Court has held that the telecom companies who are liable to pay AGR dues shall make payment of 10% of the dues by March 31, 2021. 

A bench headed by Justices Arun Mishra rejected the prayer of the Department of Telecommunication seeking payments by telecom companies in a staggered fashion spanning over 20 years and instead allowed the telcos to make payments in a period spanning 10 years. The court passed directions for payments to be made as follows:

- With respect to AGR dues, there shall not be any reassessment.

- Teleco's have to make payments in yearly instalments commencing from 1.04.2021 upto 31.03.2031

- Adjusting Bank Guarantees to be kept alive by telcos until payments have been made

Court further held that "In case of any default in making payment of annual instalments, interest would become payable as per agreement along with the penalty and interest on penalty and would be punishable by contempt of court."

On the issue of whether spectrum can be a subject matter of resolution process, the Justice Mishra led bench stated that it has asked the NCLT to decide the same.

Further to this, the court held that the suo motu proceedings against the officer of the department (DoT) have been dropped in light of his unconditional apology.

Background:

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).

Directions of the Bench

1. That for the demand raised by the Department of Telecom in respect of the AGR dues based on the judgment of this Court, there shall not be any dispute raised by any of the Telecom Operators and that there shall not be any re­assessment.
2. That, at the first instance, the respective Telecom  Operators shall make the payment of 10% of the total dues as demanded by DoT by 31.3.2021.
3. TSPs. have to make payment in yearly instalments commencing from 1.4.2021 up to 31.3.2031 payable by 31st March of every succeeding financial year
4. Various companies through Managing Director/Chairman or other authorised officer, to furnish an undertaking within four weeks, to make payment of arrears as per the order.
5. The existing bank guarantees that have been submitted regarding the spectrum shall be kept alive by TSPs. until the payment is made.
6. In the event of any default in making payment of annual instalments, interest would become payable as per the agreement along with penalty and interest on penalty automatically   without reference to Court.   Besides, it would be punishable for contempt of Court.  
7. Let compliance of order be reported by all TSPs. and DoT every year by 7th  April of each succeeding year. 

Also Read : AGR Case : SC Asks DoT To Complete Assessment Of Liability In Cases Of Spectrum Trading [Read Order]

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