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AGR Dues to be Paid In 10 years and First 10% to be Paid by March 2021: SC Verdict [READ JUDGMENT]

AGR Verdict SC DOT
In March, the Department of Telecommunications moved a plea seeking permission for allowing staggered payment of Adjusted Gross Revenue (AGR) dues by Telcos over a period of 20 years. 

The plea was heard by the Supreme Court and the verdict was reserved on 20th July. The court said that it will not hear even for a second the arguments on reassessment or re-calculation of the AGR-related dues.

Supreme Court passed the Judgment on Tuesday and granted 10 years to telecom firms such as Vodafone Idea, Bharti, Airtel, and Tata Teleservices for paying the Adjusted Gross Revenue (AGR)-related dues to the Department of Telecommunications (DoT) with certain conditions.

The court also asked the Telcos to pay 10% of the AGR dues by March 2021. The bench headed by Justice Arun Mishra cautioned the telecom firms that failure to pay the installments of dues would incur penalty, interest, and contempt of court. 

Background of the case

There was a dispute between the Department of Telecommunication (DoT) and telecom operators on the definition of AGR. The companies went to various courts and forums challenging the definition of AGR and finally knocked the Supreme Court.

On 24th October 2019, the SC passed the verdict and cleared the definition of AGR in favor of the Department of Telecommunication and ruled that telecoms must pay outstanding dues to the DoT.

While considering the present plea for the extension of the period to settle AGR dues, the court on 11th June ordered the DoT to reconsider the claims raised on Public Sector Undertakings on the basis of the verdict of October 2019. The court on June 18th directed the telecom companies to submit their financial documents. 

On several questions raised as to whether the spectrum can be a subject matter of resolution process, the court said that ”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,  requires to be gone into at this stage itself. Let the question be decided within the outer limits of two months. We also make it clear that we have not observed on the merits of the case, and we have kept all the questions open to be examined by the NCLT.”

The court on Tuesday passed the following directions as to how the payments are to be made:-

  • 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, in 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 installments commencing from 1.4.2021 up to 31.3.2031 payable by 31st March of every succeeding financial year.
  • Various companies through the Managing Director/Chairman or other authorized 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 installments, 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.
Further on the Suo Motu contempt petition, the court said that “in view of the reply filed and compliance reported, and an unconditional apology tendered, which we accept, we discharge notice issued to Shri. Mandar Deshpande and drop the proceedings.”

 

[READ JUDGMENT] 


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