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SC says telcos must pay AGR dues, issues contempt notice to DOT officer who restrained recovery

Vodafone-Idea, Airtel and other telcos owe a reported sum of Rs 1.47 lakh crore to the Department of Telecom.

, ET Bureau|
Last Updated: Feb 15, 2020, 07.33 AM IST
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SC orders telecos to clear AGR dues by March 17
SC orders telecos to clear AGR dues by March 17
NEW DELHI: The Supreme Court on Friday came down heavily on both telecom companies and the telecom department (DoT) over non-payment of adjusted gross revenue (AGR) dues of Rs 1.47 lakh crore. A three-judge bench headed by Justice Arun Mishra issued showcause notices to the managing directors and directors of the errant companies asking why contempt proceedings should not be initiated against them. It also drew contempt proceedings against a telecom department official who had ‘passed an order’ stating no coercive action should be taken against the telcos for not sticking to the Supreme Court’s stipulated January 23 payment deadline.

The apex court further said the managing directors of the telecom companies would need to appear in person before the bench at the next hearing on March 17 if the dues were not paid. The court passed this order while hearing the pleas of telcos to modify its October 24, 2019, order, which had widened the definition of AGR to include non-core items, leaving telcos saddled with thousands of crores in outstanding dues.

A few hours after the order, Bharti Airtel wrote to DoT, saying it would pay up Rs 10,000 crore by February 20, and the balance amount — as per their self-assessment — by March 17. According to DoT, the telco owes over Rs 35,500 crore in licence fees, spectrum usage charge (SUC), interest and penalties, but Airtel may come up with a lower figure after self-assessment.

A big question mark hangs over the future of cash-strapped Vodafone Idea, which owes about Rs 53,000 crore, according to official estimates. So far the two promoters of the company — Vodafone UK and the Aditya Birla Group — have said they will not infuse any additional funding.

A senior government official, however, expects Vodafone Idea to pay up. If the promoters stick to their previous position, the company will have to explore the option of filing for bankruptcy. But it is unclear if moving the bankruptcy tribunal will give it protection from the Supreme Court order. Vodafone Idea chairman KM Birla met telecom minister Ravi Shankar Prasad in the evening. The company did not comment on the order.

Vodafone Idea’s stock plunged 23.2% to Rs 3.44 during the day. Airtel’s shares, however, jumped 4.7% to close at Rs 565.10 after touching an all-time high intra-day on hopes that it will gain market share if Vodafone Idea shuts shop.

Tata Teleservices, which had sold its consumer mobility business to Airtel, faces payment of nearly Rs 14,000 crore dues, which Tata Sons is expected to fund.

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Confusion still persists over the quantum of dues that the telcos have to pay up as there are differences between the government estimates and the self-assessments of telcos.

During the court hearing, Justice Mishra said for 20 years, no company had deposited money. “Ensure that the amount is deposited,” he said during the proceedings. His fellow judge on the bench, Justice MR Shah, intervened to say that at least a “sizeable” amount must be paid by the companies to prove their “bona fides” before they can seek any more relief from the court.

Later in the day, telecom minister Ravi Shankar Prasad met Prime Minister Narendra Modi to brief him about the order and possibly discuss the consequences. A rattled telecom department too swung into action and quickly rescinded the ‘order’ that had invited the ire of the apex court. Official sources were quick to claim that this was a ‘letter’, telling all sides to await a court decision on the modification applications filed by the telecom companies.

A DoT officer in the UP (West) circle sent a notice, ordering telcos to pay up their AGR dues by 11.59 pm on February 14. Other circles too sent notices, with differing deadlines, for making the payment.

State-run companies such as GAIL, Power Grid and Oil India, who hold some telecom licences and have been served over Rs 2.65 lakh crore of licence fee demand notices by the DoT, had sought clarification if they came under the wider definition of the top court’s October 24 order. But these companies withdrew their petitions after the SC bench told them to approach the ‘appropriate forum’.

Scathing Criticism
The bench was scathing in its criticism of the telecom companies as well as the telecom department.

“The companies have violated the order passed by this court in pith and substance. In spite of the dismissal of the review application, they have not deposited any amount so far,” the bench said in its order.

“It appears the way in which things are happening that they have scant respect to the directions issued by this court,” it added.

Though no deadline was set for the payment, any such amount would have to be paid before the next hearing by the companies to purge themselves of contempt. “How much harsher must we be? A message must go,” Justice Mishra said. “Are they running this country?”

The bench was upset at the “temerity” of the “desk officer” to override its order. “This is nothing but a device to scuttle order of this court,” it said.

“This kind of order should not have been passed by the desk officer at all. In the circumstances, we draw contempt proceedings against the desk officer for passing the order and violating the order passed by this court,” the bench ruled.

The companies, including the likes of Bharti Airtel, Vodafone, Tata Teleservices and Hughes, had sought a modification of the October 24 court order and had asked for permission to negotiate with the DoT for more time to pay their dues.

The court took up the modification plea Friday only to observe that “not a penny had been paid yet”.

“What is happening? What has happened? A review was dismissed. There’s no stay. Despite this, there is an order of no-recovery?” Justice Mishra said in court.

“There is no finality to Supreme Court judgements,” Justice Shah, the third senior-most judge, observed. “There is no respect for the Supreme Court,” Justice Mishra said.

Justice Mishra shook off joint pleas by Solicitor General Tushar Mehta and senior advocate Fali S Nariman to defer the hearing to another day. He then considered initiating contempt notices against the MDs and directors of the telecom companies but at the urging of Justice Shah issued showcause notices.

The maximum jail for contempt is six months or fine or both should the court not accept an explanation. But the court can take any action against an errant party under its extraordinary powers to do justice in any case.

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