The Union government on Thursday informed the Supreme Court that it had withdrawn 96% of its ₹4 lakh crore demand in adjusted gross revenue (AGR) from non-telecom public sector undertakings (PSUs).

The turnaround comes days after the court pulled up the government for “misusing” its October 2019 judgment to get money from PSUs like DMRC, Oil India, GAIL and Gujarat Narmada Valley Corporation.

A three-judge Bench, led by Justice Arun Mishra, had made it clear that its AGR verdict last year was only limited to AGR dues owed by telecom companies and not PSUs who had nothing to do with the sector.

On May 11, the court said the Department of Telecom’s move to employ the judgment to demand money from PSUs was “totally impermissible”. The court had threatened to haul up officials for contempt.

“Since these PSUs are not in the business of providing telecom services, we are withdrawing 96% of the ₹4 lakh crore demand...” Solicitor General Tushar Mehta briefed the court at the very outset of the virtual court hearing on Thursday.

Vodafone stand

Meanwhile, telecom major Vodafone said it was in no position to give a fresh bank guarantee for repayment of its AGR dues. The court is considering the viability of the government's proposed ‘formula’ to stagger the repayment of the dues over a period of 20 years.

The October 2019 judgment originally wanted the telcos to make the repayment in three months. But the Centre intervened, saying it would create a huge financial dent in the telecom sector.

Finally, in the previous hearing, the court began to test the government proposition and asked the telcos to respond on whether they could provide any bank guarantee for ensuring the re-payment of AGR dues without fail for the next 20 years.

Senior advocate Mukul Rohatgi, for Vodafone, said no bank would give a guarantee. Individual directors cannot afford guarantees for over ₹50,000 crore the company owed the government in AGR dues. “This is not one crore or five crore to give guarantee”, he stated.

He said his client intended to “work and pay” its AGR dues. Besides, he pointed out, Vodafone had ₹15,000 crore worth bank guarantee with the government for licence fee and operation of spectrum. The company had not enjoyed any profits for several years. The situation was “extremely precarious”.

Senior advocate A.M. Singhvi, for Bharti Airtel, also referred to the guarantee given on spectrum and licences.

Justice M.R. Shah, on the Bench, asked the companies, “This is guarantee given on licence and spectrum... What will happen to AGR?”. He said telecom was the only sector making money during the pandemic. The government needs funds to fight the pandemic.

The court said the companies would have to “work it out” and make a “down payment”. It sought their financial documents by the next hearing.

The court scheduled a hearing in July third week.