SC says AGR ruling not applicable to PSUs, asks govt to reconsider charges in 3 days

12 Jun

SC says AGR ruling not applicable to PSUs, asks govt to reconsider charges in 3 days

Court sceptical of govt plan to give telcos 20 years to pay, seeks payment guarantees from pvt telcos to pay up within reasonable time.

New Delhi: The Supreme Court said its ruling on adjusted gross revenue (AGR) should not have been used to impose licence and spectrum usage charges worth Rs 4 lakh crore on public sector units (PSUs) on par with those levied on private telecom companies. It asked the Department of Telecommunications (DoT) to reconsider the decision in three days.

The bench asked the private telecom companies to submit securities, undertakings and guarantees against AGR-based dues worth around Rs 1.7 lakh crore as per the October 2019 ruling before it would consider allowing them a reasonable window to pay the money.

“It is apparent that the licences are different and our judgement in this case could not have been made the basis for raising the demand against the PSUs,” the bench said. “Even otherwise the PSUs are not in actual business of providing mobile services to the general public.”

The three-judge bench led by justice Arun Mishra expressed scepticism about the government plan to allow staggered recovery of AGR-related dues over a maximum 20 years from the private phone companies. However, it asked the carriers to submit a payment schedule for their dues–which include licence fees, spectrum usage charges (SUC), penalties and interest–and the securities they would offer as guarantees before the next hearing on June 18.

They will have to file a joint affidavit in five days regarding the guarantees and when they propose to pay, the order uploaded on the website said. The bench will examine what would be a reasonable time frame for payments, how to ensure these are made and what securities are needed to back them up.

“What is the guarantee telcos will pay in that time? What if one of the companies goes into liquidation? Who will pay?” Mishra had asked in court. “Litigation started in 1999; 20 years have already gone.” Alongside Mishra on the bench were justices MR Shah and S Abdul Nazeer.

Solicitor general Tushar Mehta suggested that the court could seek “undertakings” from the operators.

Senior advocate Mukul Rohatgi said that Vodafone Idea would not be able to provide any bank guarantees, given its financial state. He said that licences and spectrum were the best security against dues of over Rs58,000 crore that the Department of Telecommunications (DoT) has sought from the company.

“We can’t give bank guarantees. We don’t have enough money to even pay our employees and meet our expenses,” he claimed, offering to back his statement with an affidavit. The cash-strapped telco, which has on several occasions warned of going bust if made to pay AGR dues in one shot, has paid nearly Rs7,000 crore so far.

Mishra was unconvinced. “Find out what security can be furnished… personal property of directors… Else we cannot consider giving time,” he said.

Bharti Airtel, through senior advocate Abhishek Manu Singhvi, said that it had paid all of the Rs13,004 crore owes according to its own calculation. The telco–faced with DoT’s demand of nearly Rs44,000 crore–will confirm the amount that’s still owed and pay that, he said.

Senior advocate Arvind Datar appearing for Tata Teleservices–which faces a demand of nearly Rs17,000 crore, of which it has paid Rs4,197 crore–sought more time to file his reply. Hughes Communications was represented in the case by senior advocate Kapil Sibal.

Bharti Airtel shares dropped 2.8% to Rs551.60 at the Thursday close on the BSE. Vodafone Idea fell 13.2% to Rs9.39.