AGR order not meant to demand Rs 4 lakh crore from PSUs: Supreme Court

New Delhi: The Supreme Court on Thursday said its ruling on adjusted gross revenue (AGR) should not have been used to impose licence and spectrum usage charges worth Rs 4 lakh crore on public sector units (PSUs) on par with those levied on private telecom companies. It asked the Department of Telecommunications (DoT) to reconsider the decision in three days.

The SC bench asked the telcos to submit securities, undertakings and guarantees against AGR dues worth around Rs 1.7 lakh crore as per the October 2019 order before it would consider allowing them a reasonable window to pay dues. “It is apparent that the licences are different and our judgement in this case could not have been made the basis for raising the demand against the PSUs,” the bench said. “Even otherwise the PSUs are not in actual business of providing mobile services to the general public.”

The three-judge bench led by Justice Arun Mishra expressed scepticism about the government’s staggered payment plan.

Court to Take a Final Call
According to the proposal, recovery of AGR-related dues will be staggered over a maximum 20 years from the private phone companies. However, it asked the carriers to submit a payment schedule for their dues — which include licence fees, spectrum usage charges, penalties and interest — and the securities they would offer as guarantees before the next hearing on June 18.

They will have to file a joint affidavit in five days regarding the guarantees and when they propose to pay, the order uploaded on the website said. The bench will examine what would be a reasonable time frame for payments, how to ensure these are made and what securities are needed to back them up.

“What is the guarantee telcos will pay in that time? What if one of the companies goes into liquidation? Who will pay?” Mishra had asked in court. “Litigation started in 1999; 20 years have already gone.” Alongside Mishra on the bench were justices MR Shah and S Abdul Nazeer.

Solicitor general Tushar Mehta suggested that the court could seek “undertakings” from the operators.

Licences, Spectrum as Security
Senior advocate Mukul Rohatgi said that Vodafone Idea would not be able to provide any bank guarantees, given its financial state. He said that licences and spectrum were the best security against dues of over ₹58,000 crore that the Department of Telecommunications (DoT) has sought from the company.

“We can’t give bank guarantees. We don’t have enough money to even pay our employees and meet our expenses,” he claimed, offering to back his statement with an affidavit. The cash-strapped telco, which has on several occasions warned of going bust if made to pay AGR dues in one shot, has paid nearly Rs 7,000 crore so far.

Mishra was unconvinced. “Find out what security can be furnished… personal property of directors... Else we cannot consider giving time,” he said.

Bharti Airtel, through senior advocate Abhishek Manu Singhvi, said that it had paid all of the Rs 13,004 crore that it owes according to its own calculation. The telco — faced with DoT’s demand of nearly Rs 44,000 crore — will confirm the amount that’s still owed and pay that, he said.

Senior advocate Arvind Datar appearing for Tata Teleservices — which faces a demand of nearly Rs 17,000 crore, of which it has paid Rs 4,197 crore — sought more time to file his reply. Hughes Communications was represented in the case by senior advocate Kapil Sibal.

Bharti Airtel shares dropped 2.8% to Rs 551.60 at the Thursday close on the BSE. Vodafone Idea fell 13.2% to ₹9.39.

The bench was critical of the government move to impose similar AGR demands on state-owned companies such as GAIL and Power Grid Corp. and wanted these waived.

Action against DoT Officials
Mishra wondered how these charges had been invoked against them after 30 years as the court’s ruling had been made against the private telcos. He said that the order of October 24 last year did not mention PSUs at all.

“We will request you to withdraw the demand on PSUs, otherwise we will take strict action. Outright misuse of our verdict,” Mishra said. “You are making demand of Rs 4 lakh crore. This is wholly and totally impermissible.”

He seemed to suggest that this had been done as an afterthought following the October ruling and threatened to take action against DoT officials responsible for passing such orders.

“Every day I think about how our judgement has been used and misused,” Mishra said.

Mehta defended the move and said their business agreements with DoT envisaged such licence and spectrum usage charges. He conceded that the PSUs were not telecom companies and were not using spectrum for commercial exploitation and needed to be treated differently from private telcos.

The solicitor general initially asked the court to clarify that its judgement in the AGR case would not apply to PSUs, but the bench refused to pass any such orders and placed the onus on the government to treat state-run companies separately. Mehta then offered to file an affidavit explaining the reasons for charging the PSUs.