Supreme Court allows telcos to pay AGR dues within 10 years

The Supreme Court Bench of Justices Arun Mishra, S Abdul Nazeer and MR Shah allowed telecom companies to pay Adjusted Gross Revenue (AGR) charges within a period of ten years in line with the Court’s October 2019 judgment. The Bench also clarified that no revaluation as regards AGR dues would be entertained.

The telecom companies have to pay 10% of their dues by March 31, 2021 in light of the COVID-19 pandemic. The Court stated that interest would accrue in case of default on payment of annual instalments, and that the same may also invite contempt of court. The telcos have to pay the annual instalments on February 7 every year.

During the hearings, the telecom companies had proposed different timelines for clearing of dues. Tata Telecom submitted a window of 7-10 years that would be required for payment of dues, while Vodafone-Idea proposed a timeline of 15 years to clear the dues. Bharti Airtel concurred with  Vodafone’s proposal.

The Court also considered the question of whether spectrum can be sold by the telecom companies through proceedings under the Insolvency and Bankruptcy Code (IBC) and held that National Company Law Tribunal (NCLT) had the discretion to decide on whether spectrum can be sold or not 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 Department of Telecommunications (DoT) had argued that the telcos had no right to sell spectrum, the telecom companies 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.