The case is being heard by SC bench headed by Justice Arun Mishra and including Justices MR Shah and S Abdul Nazeer
Hearing the adjusted gross revenue (AGR) case on June 11, the Supreme Court of India has directed the Department of Telecommunications (DoT) to reconsider demands raised against public sector utilities that amount to over Rs 4 lakh crore.
The apex court will hear the case next on June 18.
The SC during the hearing questioned the DoT on what basis demand against PSUs was raised, when the court’s judgements never dealt with PSUs.
“The government admits to difference in licenses of PSUs and telcos. Our judgment could not have been made the basis of launching demand against PSUs. The DoT is thus directed to clarify raising of demands within three days of the orders,” it said.
It further heard the Solicitor General’s plea on a 20-year timeline for staggered payment of AGR dues and directed telcos to file a reply on roadmap of payment, time to be allowed, and securities.
Stating: “Have heard various telcos. Several issues which are to be considered such as reasonable time for staggered pay out. We also need to consider some security to ensure that telcos pay the AGR dues. Telcos are directed to file reply on roadmap of payment, time to be allowed, and securities.”
On March 16, Solicitor General Tushar Mehta appearing for the DoT had sought staggered payment over 20 years of AGR dues by telecom companies. The plea also asked that telcos not be charged a penalty and interests on penalty and principal beyond the date of the judgement.
Today's hearing comes after the one held on March 18, where the apex court pulled up the Department of Telecommunications (DoT) for allowing telcos to self-assess payable dues. The case is being heard by a bench headed by Justice Arun Mishra and including Justices MR Shah and S Abdul Nazeer. The same bench, on March 18, held that “no further objections would be allowed against payable dues.”
AGR case update live | Undertakings must, can't allow staggered payout without security, says SC
There is a lot riding on this case. Company reports and Lok Sabha submissions give an idea of how much is at stake.
For Bharti Airtel, the AGR dues as per DoT is Rs 35,500 crore whereas it is Rs 13,000 crore as per the company's self-assessment. So far, it has paid Rs 18,800 crore. As per DoT, it still has to pay Rs 17,500 crore.
For Vodafone Idea, DoT claims that the remaining payable is Rs 53,000 crore while the company claims it is Rs 21,500 crore. So far, the company has paid Rs 6,900 crore. As per DoT, it still has to pay Rs 46,100 crore.
For Tata Teleservices (TTSL) the DoT bill is pegged at Rs 16,789 crore, of which it has so far paid Rs 4,197 crore in two installments. The balance amount due per DoT calculations is Rs 12,601 crore. However, the company's self-assessment has pegged Rs 2,197 crore - which was also its initial payment, as the due amount.
Case proceedings
As the hearing began, Solicitor General Mehta informed the SC that the Centre has examined the AGR issue and determined its impact on sectors if the amount is collected in one go. “Some telcos may close operations. Limited porting abilities will hurt crore of customers and will impact quality of service, besides hindering migration of crore of customers,” the SG said.
To this Justice Mishra has asked for details of the timeframe and how many years of staggered payments the government is asking for. “What is the guarantee that telcos will pay as per timeframe? What is the security that telcos are ready to furnish? Are telcos willing to submit personal guarantees by directors?” Mishra asked.
The Solicitor General has informed the court that telcos will have to “provide some security to satisfy the court.”
Justice Mishra also raised issue with the SC order being “misused”.
“Our judgement was silent on public sector utilities (PSUs) as they were never an issue. So, who authorises demands to be raised against PSUs? What nonsense is being done in the name of our judgement… Demand against PSUs must be withdrawn. How could demands have been issued when our judgment does not touch them.. Government must explain how our ruling is used for that purpose. This is misuse of judgement,” he stated.
He further demanded that the government clarify if the demand order is revoked. Adding: “There is vast differences in licenses of PSUs and licenses of telcos. Is the government trying to overwhelm us by raising surcharge demands?”
The Solicitor General has however clarified that the thought was that the government was “required to raise demands, so we went ahead.” He pleaded with the court: “Please empathise with the officers. They feared being targeted if they had not raised demands.”
Mishra however was not in a relenting mood and reiterated that DoT officers need to explain the demands or action will be taken. “Demands to the tune of 4 lakh crore is being raised with ulterior motives.”
To this the Solicitor General responded that "PSUs were license holders is our justification" adding that necessary affadavits explaining the government's position will be filed.
On the 20-year staggered payment, the Solicitor General noted that the Cabinet has proposed the period due to “various considerations”, but Justice Mishra was unconvinced. “Nobody has seen the next 20 years, can't allow extension based on a "gentleman's promise". How can 20 years be said to be reasonable?”
Senior Advocate Abhishek Singhvi for Airtel has argued that the telco has already paid Rs 18,000 crore which is 70 percent of its Rs 25,600 bill from DoT. Argued that “biggest reassurance is that our license can be cancelled if don’t pay over the agree time period.”
Senior Advocate Mukul Rohatgi for Vodafone-Idea also reiterated that best reassurance is that “license, spectrum cancelled if we don’t pay.” Rohatgi told the court that the telco does not have enough money to issue bank guarantee for the balance Rs 50,000 crore due.
Justice Mishra has asked: “Are telcos prepared to issue Bank guarantee? Are directors prepared to issue personal guarantee? Are there other securities that can be furnished as guarantee? Undertakings will have to be there, cannot allow such staggered pay out with securing government dues?”
The SC in its order stated that today’s hearing questioned the DoT on what basis demand against PSUs was raised, when the court’s judgements never dealt with PSUs. Stating: “The government admits to difference in licenses of PSUs and telcos. Our judgment could not have been made the basis of launching demand against PSUs. The DoT is thus directed to clarify raising of demands within three days of the orders.”
The Order also directed telcos to file reply on roadmap of payment, time to be allowed, securities. Stating: “Have heard various telcos. Several issues which are to be considered such as reasonable time for staggered payout. We also need to consider some security to ensure that telcos pay the AGR dues. Telcos are directed to file reply on roadmap of payment, time to be allowed, and securities.”
