SC rejects telecom companies’ curative petitions on AGR dues, upholds 2019 ruling
THE JHARKHAND STORY DESK Advertisement New Delhi, September 19: In a significant development, the Supreme Court has dismissed curative petitions filed…
THE JHARKHAND STORY DESK
New Delhi, September 19: In a significant development, the Supreme Court has dismissed curative petitions filed by telecom companies (including Vodafone Idea, Bharti Airtel and Tata Teleservices) against a 2019 ruling of the Court regarding payment of adjusted gross revenue (AGR) dues, reports Live Law.
A bench of CJI DY Chandrachud, Sanjiv Khanna and BR Gavai rendered the decision, holding that no ground was made out to exercise curative jurisdiction in terms of the Court’s decision in Rupa Ashok Hurra v. Ashok Hurra.
To recap, in a setback to telecom companies, the Supreme Court in October 2019 allowed the Centre’s plea to recover adjusted gross revenue (AGR) of about Rs. 92,000 crores from them. A three-judge bench, headed by Justice Arun Mishra, upheld the definition of ADR formulated by the Department of Telecom (DoT).
The telecoms filed review petitions against this decision, but the same were dismissed in January, 2020.
On 1 September 2020, the Supreme Court passed an order requiring telecom companies to pay their AGR dues over a period of 10 years. It was made clear that there would be no revaluation of AGR dues, and any default would be met with the imposition of interest, penalties, and contempt of court charges, Live Law reported.
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One year later, the Court dismissed a plea seeking corrections in the AGR dues demand, with telecom companies claiming that there were multiple errors in the computation (amounting to over Rs.1 trillion).
In 2023, telecom companies including Vodafone filed curative petitions against the Court’s January 2020 decision (dismissing the review petitions).
As per their case, the Department of Telecommunications (DoT) had committed grave errors in computing the final demand. For instance, the Department had raised a demand of Rs.58,254 crores in case of Vodafone, whereas the company’s own assessment was of Rs.21,533 crores.
An urgent listing of the curative petition(s) was sought in July this year, when CJI Chandrachud assured that the decision on listing would be taken soon. Appearing on behalf of Vodafone, Senior Advocate Harish Salve had said that the company was looking to raise debt funding to pay its dues, but potential lenders required clarity on the company’s exact liability, as reported by Live Law.
Thereafter, the curative petitions were considered by three senior-most judges of the Court and dismissed on August 30.
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Background
The issue related to the interpretation given by the Supreme Court in its October 2019 judgment to the term “Adjusted Gross Revenue” in the spectrum licensing agreements between telecom companies and the DoT. The license fee is computed based on AGR.
The Supreme Court held that ‘AGR’ includes revenue from non-telecom operations of the companies like rent, profit on sale of fixed assets, dividend and treasury income. This resulted in an additional liability to the tune of Rs. 92,000 crores on the telecom companies collectively.
In January, 2020, the Court rejected the pleas by Vodafone Idea, Bharti Airtel and Tata Teleservices seeking review of the 2019 verdict that widened the definition of AGR.
Few months later, the DoT moved the Supreme Court proposing staggered payment over 20 years for telecom firms to discharge their AGR dues. The DOT’s plea was for modification of the order dated October 24, 2019 vis-à-vis arriving at a formula for recovery of past dues from telecom service providers.
It stated that even though the Court had widened the definition of adjusted gross revenue (AGR), leaving the three telecoms, i.e. Vodafone Idea, Bharti Airtel and Tata Teleservices, collectively facing more than Rs.1.02 lakh crores in additional license fees, spectrum usage charges (SUC), penalties and interest, it was imperative that the proposal for mode for recovery be approved.
In September 2020, the Court granted the telecom companies a period of 10 years to clear their AGR dues to the DoT, with 10% payment to be made every year by March 31. (Courtesy: Live Law)
