AGR dues: SC slams DoT demand from PSUs

Telecom towers over a commercial building in New Delhi.   | Photo Credit: V.V. Krishnan

The Supreme Court on Thursday said it was "totally impermissible" for the Department of Telecommunications (DoT) to “misuse” a judgment of the apex court to demand ₹4 lakh crore in adjusted gross revenue (AGR) from public sector undertakings.

A three-judge Bench led by Justice Arun Mishra also questioned the viability of the government's 20-year ‘formula’ for telcos to repay their AGR dues to the tune of ₹1.42 lakh crore.

“Twenty years is too long a period. If companies go into liquidation, what will happen? How to secure (the dues)?” Justice Mishra voiced concern.

Impact on firms

Solicitor General Tushar Mehta, for the government, said the formula was chalked out considering the “impact” such huge pay-outs may have on the private telecom sector. He said the companies would be in the best position to tell the court about how they would guarantee payment.

Senior advocates Arvind Datar for Tata, A.M. Singhvi for Airtel, Kapil Sibal for Hughes sought time to file detailed responses to the court’s queries, saying it was a serious matter concerning huge sums.

Senior advocate Mukul Rohatgi, for Vodafone, also sought time to file a reply. However, as an initial argument, he suggested that spectrum, licences purchased by the companies for crores would serve as the “best security” for repayment of dues.

He disagreed with the court's suggestion to provide bank guarantees, saying Vodafone’s dues amount to ₹50,000 crore and no bank would provide a guarantee. Besides, the company has expenses, including payment of staff.

The court finally asked the telecom companies to file affidavits detailing the “personal guarantee” they could put on the table to ensure the payment of dues within a fixed timeframe, to be either fixed by the court or the government.

Meanwhile, the Bench threatened contempt action against the officials responsible for the demand on PSUs.

Justice Mishra pointed out that the court’s October 2019 judgment, directing telcos to pay their AGR dues in three months, was completely silent with regard to public sector undertakings (PSUs) like DMRC, Oil India, Powergrid, Gujarat Narmada Valley Corporation, etc.

“You withdraw this or we will take strict action. We will punish them with contempt. There was no discussion about PSUs in our judgment. Our judgment was silent on the public sector. Then how can they (officials) take this action? They are misusing out judgment... You are demanding ₹4 lakh crore? Totally impermissible,” Justice Mishra addressed Mr. Mehta.

Mr. Mehta suggested that the court add a line in its order clarifying that the October judgment did not include PSUs.

But the court refused his submission and directed the government to file an affidavit within a week, explaining this demand made on PSUs using the apex court verdict as a basis.

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Printable version | Sep 24, 2021 3:34:05 AM |

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