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SC Gives Telecom Firms 10 Years to Clear AGR Dues of Rs 1.6 Lakh Crore; 10% to be Paid by March 31

·3-min read

The Supreme Court on Tuesday gave telecom firms 10 years to clear Adjusted Gross Revenue-related dues, which run into about Rs 1.6 lakh crore. The court said 10 per cent of the outstanding amount is to be paid by March 31, 2021, giving the extended timeframe in view of the Covid-19 pandemic.

A three-judge bench led by Justice Arun Mishra said the instalments will have to be paid by February 7 of every succeeding year and any default will accrue interest. Non-payment will also invite contempt of court proceedings, the bench said, and once again clarified that no revaluation of AGR dues would be entertained.

The news of the verdict tanked Vodafone Idea shares by nearly 15 per cent, while shares of Bharti Airtel were up nearly 6 per cent after the order.

Reacting to the verdict, senior advocate Kapil Sibal, who had represented Bharti Airtel, told CNBC-TV18: “Government was willing to give 20 years but SC said 10. Each company will decide if they want to file a review petition.”

The department of telecommunications (DoT) had in March appealed to the top court seeking 20 years for payment of AGR dues, including spectrum usage charge, license fee, interest, penalty and interest on penalty. However, the SC had reservations about granting 20 years to telcos, expressing doubt over recovery of dues, especially from Vodafone Idea that is reeling under liquidity stress.

The top court had in October 2019 delivered the verdict on the AGR issue for calculating government dues of telecom companies, such as Vodafone Idea, Bharti Airtel and Tata Teleservices, as licence fee and spectrum usage charges.

During the hearings, the telecom companies had proposed different timelines for clearing of dues. Vodafone Idea and rival Bharti Airtel had sought 15 years for payment of dues, while Tata Teleservices Ltd requested a window of 7-10 years. The DoT, however, had stuck to the Union Cabinet's proposal of payment within 20 years.

Reliance Jio Infocomm Ltd, which launched in September 2016, paid its relatively minuscule dues of ₹195.18 crore in January.

The bench, which also comprised justices B R Gavai and Krishna Murari, had reserved the verdict on July 20 on the aspect of granting timeline to telcos for staggered payment of AGR- related dues by saying that it will not hear "even for a second" the arguments on reassessment or re-calculation of the AGR.

Prior to this, it had asked the telecom companies to file their books of accounts for last 10 years and give a reasonable time-frame for paying the AGR dues and later got miffed when some senior lawyers started disputing the dues being calculated by the DoT.

It had said that the period of 15-20 years sought by some of the telecom companies was not reasonable and had asked the Centre as to how it would secure the payment of dues by them. Later, the top court on August 24 was informed by the DoT that all liabilities including AGR-related dues should be cleared by telecom firms prior to spectrum trading as per the guidelines.