[Breaking] Supreme Court allows telcos to pay AGR dues within 10 years, NCLT to decide whether spectrum can be sold

The Supreme Court today allowed telecom companies to pay Adjusted Gross Revenue (AGR) charges within a period of ten years..The Bench of Justices Arun Mishra, S Abdul Nazeer and MR Shah laid down the timeframe within which telecom companies are required to clear their AGR dues in line with the Court's October 2019 judgment..The Court has given the telecom companies till March 31, 2021 to pay 10% of the dues, in light of the COVID-19 pandemic. It was made clear that interest would accrue in case of default on payment of annual instalments, and that the same may also invite contempt of court. .The Bench once again clarified that no revaluation as regards AGR dues would be entertained..The Court has, as such, issued seven directions: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, at 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 instalments commencing from 1.4.2021 up to 31.3.2031 payable by 31st March of every succeeding financial year. Various companies through Managing Director/Chairman or other authorised 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 instalments, 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..During the hearings, the telecom companies had proposed different timelines for clearing of dues. While Tata Telecom submitted that a window of at least 7-10 years would be required for payment of dues, Vodafone-Idea suggested payment over the course of 15 years. Bharti Airtel was in agreement with Vodafone's proposal of 15 years. The Department of Telecommunications (DoT), however, stuck to the Union Cabinet's proposal of payment within 20 years..Keeping in view the financial stress on the telecom sector and the involvement of the Banking sector in the matter, the Court agreed to grant the "facility of time" albeit, it cut down the Cabionet's proposal of twenty years to half terming the proposed window "excessive".."We consider that the period of 20 years fixed for payment is excessive. We feel that it is a revenue sharing regime, and it is grant of sovereign right to the TSPs under the Telecom Policy. We feel that some reasonable time is to be granted, considering the financial stress and the banking sector's involvement. We deem it appropriate to grant facility of time to make payment of dues in equal yearly instalments."Supreme Court.The judgment on this aspect of the matter was reserved on July 20, when the Court, in unequivocal terms, had said that it would not entertain objections regarding the assessment of dues..AGR: "There can be no adjustment of dues", Supreme Court reserves verdict on timeframe for staggered payment of dues by telecom companies.Another aspect of the matter that the Court considered was the question whether spectrum can be sold by the companies through proceedings under the Insolvency and Bankruptcy Code..On this aspect, the Court held that whether spectrum can be sold or not should be decided by the National Company Law Tribunal (NCLT) at the first instance.."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, it requires to be gone into at this stage itself. Let the question be decided within the outer limits of two months."Supreme Court.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 DoT had argued that the spectrum cannot be sold, the telecom companies had 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.The verdict on this aspect of the matter was reserved on August 24..Read Judgment:.After the Supreme Court delivered its judgment on the interpretation of the term "Adjusted Gross Revenue", it granted the telecom companies a period of 90 days to clear the dues that would accrue..Keeping in view the precarious financial and economic health of the country as well as the telecom industry, the DoT in March sought a modification of the Court's order and proposed a time-frame of twenty years for staggered payment of these dues, in line with a formula evolved by the Union Cabinet..AGR: DoT seeks 20 years time for recovering dues from Telcos, moves Supreme Court for modification of its orders