The Supreme Court on Monday observed the government to prepare a plan to recover adjusted gross revenue (AGR)-related dues from bankrupt telecom operators including Reliance Communications Ltd, Aircel Group, and Videocon Communications Ltd.
The apex court observed that recovery of dues may not be possible from telcos undergoing insolvency while asking the government to explain whether the spectrum can be sold under the Insolvency and Bankruptcy Code (IBC). The case has been adjourned to 14 August.
The court, however, did not mention the order reserved on the timeline of staggered payment by Vodafone Idea Ltd, Bharti Airtel Ltd, and Tata Teleservices. Both Vodafone and Airtel have sought 15 years to clear the dues, while Tata Teleservices wants 7-10 years.
A bench headed by Justice Arun Mishra asked the department of telecommunications (DoT) to file the orders of the National Company Law Tribunal and National Company Law Appellate Tribunal (NCLAT) that had allowed the sale of spectrum before the next hearing.
The government apprised the apex court that spectrum owned by these telcos cannot be sold under the IBC as it is national property, adding that it has challenged the NCLT’s order in the Supreme Court permitting the sale of spectrum. However, both RCom and Airtel argued that the spectrum is transferable and can be sold and bought. SC observed the government to prepare a plan to recover adjusted gross revenue (AGR)-related dues from bankrupt telecom operators.
According to DoT estimates, RCom owes ₹25,199 crore, including spectrum usage charges (SUC) and license fees, which is nearly half of ₹49,054 crore calculated under the company’s insolvency proceedings. Aircel owes ₹12,389 crore to the DoT.
Senior lawyer Shyam Divan, representing RCom’s resolution professional, apprised the bench that the insolvency process was pending before the NCLT. “Monetisation process outside the IBC failed due to lack of consensus among lenders,” said Divan.
A three-judge bench of the SC, led by Justice Arun Mishra, asked why the government had not insisted on quick adjudication from the top court, where the issue is pending.
“If you don’t appeal quickly how will you prevent spectrum from being sold off,” Justice MR Shah, who is part of the bench, asked solicitor-general Tushar Mehta. The bench also asked if there was any delay in appealing against the decisions in the SC. SC observed the government to prepare a plan to recover adjusted gross revenue (AGR)-related dues from bankrupt telecom operators.
“What if spectrum is sold in the meantime,” Justice Shah.
Divan said, “RCom’s primary asset is the spectrum, it can be sold or monetized under the IBC to realize value for banks,” to which the court replied that the proceeds from the resolution should also be used to clear dues of the DoT. RCom has admitted the DoT as an operational creditor, which means that it will not get priority in recovering the due.
The apex court on 24 October upheld the DoT’s broader definition of AGR and ordered telcos to pay levies based on that definition, along with interest on the principal amount and penalty. The DoT calculates levies such as SUC and license fees based on AGR.
The court directed 15 telcos, including the ones that have shut operations, to pay ₹1.47 trillion in AGR dues within three months.