Supreme Court directs telcos to pay AGR dues in 10 years

A Bench said there would be no re-assessment of the dues and the first 10% dues should be paid by March 31, 2021.

Updated - September 01, 2020 08:22 pm IST

Published - September 01, 2020 12:00 pm IST - NEW DELHI:

The Supreme Court on Tuesday allowed telecom companies 10 years’ time to pay their adjusted gross revenue (AGR) dues to the government.

The government had proposed in court a 20-year “formula” for telcos to make staggered payments of the dues. The formula was devised after extensive discussions, even at the Cabinet level, taking into account the financial dent the dues would cause the telecom sector. Even after part payment, the dues still run to ₹1.43 lakh crore.

“We consider that the period of 20 years fixed for payment is excessive”, a three-judge Bench led by Justice Arun Mishra stood firm in a 42-page judgment.

An October 2019 judgment of the court in the AGR issue originally wanted the telcos to make the repayments in three months. The court had concluded that the private telecom sector had long reaped the fruits of the Centre’s liberalised mode of payment by revenue sharing regime. “The sector has benefited immensely under the scheme as apparent from the gross revenue trend from 2004 to 2015”, it had noted.

However, on Tuesday, the Bench softened its stance somewhat to allow the companies a “reasonable time” of a decade to pay their dues in “equal yearly instalments”. The court said it changed its mind taking into consideration the financial stress and the involvement of the banking sector. 

“But at the same time, it is to be ensured that the dues are paid in toto. The concession is granted only on the condition that the dues shall be paid punctually within the time stipulated by this court. Even a single default will attract the dues along with interest, penalty and interest on penalty at the rate specified in the agreement”, the court warned the telcos.

Series of directions

In a series of directions to the telcos, the court said they shall raise no dispute nor will they be any reassessment of the dues.

The telecom operators would make the payment of 10% of the total dues as demanded by Department of Telecom by March 31, 2021.

The yearly instalments would commence from April 1, 2021 up to March 32, 2031. The instalments would be paid by March 31 every year.

The Managing Director/Chairman or other authorised officer should give an undertaking within four weeks, to make payment of arrears. The telcos shall keep alive the existing bank guarantees they had submitted regarding the spectrum until the payment is made. Telecom majors like Vodafone had said they were in no position to give fresh bank guarantees for repayment of the AGR dues. 

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. 

Compliance of the court order should be reported by the telcos and the telecom department every year on April 7. 

Besides, the court has referred to the National Company Law Tribunal (NCLT) a series of questions on whether “deferred/default payment instalments of spectrum acquisition cost can be termed to be operational dues besides AGR dues”.

The court wants the tribunal to decide whether a scarce natural resource like spectrum can be used without pay of requisite dues. The court wants the NCLT to decide the issue within the “outer limits of two months”.

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