SC allows telcos to pay AGR dues within 10 years, NCLT to decide whether spectrum can be sold

The Supreme Court on Tuesday allowed telecom companies to pay Adjusted Gross Revenue (AGR) charges within a period of ten years.

The Bench of Justices Arun Mishra, S Abdul Nazeer and MR Shah laid down the timeframe within which telecom companies are required to clear their AGR dues in line with the court's October 2019 judgment, legal news website Barandbench.com has reported.

The Court has given the telecom companies till March 31, 2021 to pay 10% of the dues, in light of the COVID-19 pandemic. It was made clear that interest would accrue in case of default on payment of annual instalments, and that the same may also invite contempt of court. These annual instalments are required to be paid on February 7 every year.

The Bench once again clarified that no revaluation as regards AGR dues would be entertained.

During the hearings, the telecom companies had proposed different timelines for clearing of dues. While Tata Telecom submitted that a window of at least 7-10 years would be required for payment of dues, Vodafone-Idea suggested payment over the course of 15 years. Bharti Airtel was in agreement with Vodafone's proposal of 15 years. The Department of Telecommunications (DoT), however, stuck to the Union Cabinet's proposal of payment within 20 years.

The judgment on this aspect of the matter was reserved on July 20, when the Court, in unequivocal terms, had said that it would not entertain objections regarding the assessment of dues.

Another aspect of the matter that the court considered was the question whether spectrum can be sold by the companies through proceedings under the Insolvency and Bankruptcy Code.

On this aspect, the court held that whether spectrum can be sold or not should be decided by the National Company Law Tribunal (NCLT) at the first instance.

These questions had arisen for consideration when the Bench was considering the bona fides of the ailing telecom companies as regards payment of their dues vis-a-vis their respective IBC proceedings. While the DoT had argued that the spectrum cannot be sold, the telecom companies had argued that the right to use spectrum, purchased through an auction, is an asset and this right or licence can be subject to IBC proceedings.

The verdict on this aspect of the matter was reserved on August 24.

After the Supreme Court delivered its judgment on the interpretation of the term "Adjusted Gross Revenue", it granted the telecom companies a period of 90 days to clear the dues that would accrue.

Keeping in view the precarious financial and economic health of the country as well as the telecom industry, the DoT in March sought a modification of the Court's order and proposed a time-frame of twenty years for staggered payment of these dues, in line with a formula evolved by the Union Cabinet.