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SC allows telcos to pay AGR dues within 10 years; 10 pc of dues to be paid by March 31 next year

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Supreme Court allows telcos to pay AGR dues within 10 years

The Supreme Court on Tuesday 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.

During the hearings, the telecom companies had proposed different timelines for the 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.

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.

Another aspect of the matter that the Court considered was the question of whether the spectrum can be sold by the companies through proceedings under the Insolvency and Bankruptcy Code.

In this aspect, the Court held that whether the spectrum can be sold or not should be decided by the National Company Law Tribunal (NCLT) 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 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.

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.

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