A Bench of Justices Arun Mishra, S Abdul Nazeer and MR Shah granted telecom companies to pay Adjusted Gross Revenue (AGR) charges within a period of ten years. However, taking into account the COVID-19 pandemic, 10% of the dues should be paid by the telecom companies and the Court has given them a deadline of March 31, 2021 to do so. The top court also emphasised that in case of default on the payment of annual instalments, interest would accrue and may also result in contempt of court. It was also made clear that no revaluation as regards AGR dues would be entertained.
The following 7 directives have been issued by the Court:
- 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
- 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.
- 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.
- 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.
- The existing bank guarantees that have been submitted regarding the spectrum shall be kept alive by TSPs. until the payment is made.
- 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.
- Let compliance of order be reported by all TSPs. and DoT every year by 7th April of each succeeding year.
The telecom companies had submitted different timelines for clearing of dues, throughout the course of the hearing. Considering the financial strain on the telecom sector and the association of the Banking sector in the matter, the Court agreed to grant the “facility of time” though, it cut down the Cabinet’s proposal of twenty years to half terming the proposed window “excessive”. This was decided on July 20, when the Court had made it explicitly clear that it would not entertain objections regarding the assessment of dues.
“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 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.”
At one point in the hearing, the Bench was considering the bona fides of the ailing telecom companies with regards to payment of their dues vis-a-vis their respective IBC proceedings. This gave rise to the question of whether the spectrum can be sold by the companies through proceedings under the Insolvency and Bankruptcy Code. It was contended by the Department Of Telecommunication that the spectrum cannot be sold, but the telecom companies had disputed that since the right to use spectrum is purchased through an auction, it is an asset and this right or licence can be contingent to IBC proceedings. The Court, on this aspect, held that the National Company Law Tribunal (NCLT) has the charge to decide whether the spectrum can be sold or not.
“We consider it appropriate that the aforesaid various questions should first be considered by the NCLT. Let the NCLT consider the aforesaid aspects and pass a reasoned order after hearing all the parties. We make it clear that it being a jurisdictional question, it requires to be gone into at this stage itself. Let the question be decided within the outer limits of two months.”
The telecom companies are granted a period of 90 days to clear the dues that would accrue. This was declared by the Court after it delivered the judgment on the interpretation of the term “Adjusted Gross Revenue.”