No open-court hearing on AGR: Supreme Court
The two telcos - hit most by the AGR verdict wherein Airtel has to pay over Rs 35,500 crore and Vodafone Idea has to put in over Rs 53,000 crore - need to pay up by January 23. Both have issued warning bells that without sufficient government or judicial relief, they may go kaput. The telcos reportedly brought up the urgency of the matter before SC.
|, ET Bureau
Last Updated: Jan 09, 2020, 10.02 AM IST
Mumbai: The Supreme Court has rejected the request of Bharti Airtel, Vodafone Idea, Tata Teleservices, Hughes Communications India and some state-run firms for an open-court hearing of their petitions to review the verdict on adjusted gross revenue (AGR), which has left companies facing combined dues of more than Rs4.45 lakh crore.
But the review petitions will be heard 'in chamber' by the same three-judge bench led by Justice Arun Mishra, which had delivered the October 24 order that backed the Department of Telecommunications (DoT) and widened the definition of AGR to include non-core revenue, leaving telcos and even non-telcos facing hefty statutory dues. The other two members on the bench are Justices AA Nazeer and MR Shah.
The telcos and state-run companies on Wednesday mentioned the case before Justice Mishra and sought an urgent hearing, a lawyer who was present in the court said.
It's not clear when the review petitions will be heard. In India, less than 2% of review petitions have been successful.
The urgency of the telecom operators as well as non-telecom companies that hold telecom licences stems from the fact that they have just two weeks to pay the arrears — the deadline is January 23. While companies say payment of such huge dues would erode their finances and could bring operations to a halt, the government has refused to provide any relief unless directed by the court.
Advocates Kapil Sibal, Abhishek Manu Singhvi, Arvind Datar, Shyam Divan and Mahesh Agarwal represented the private companies while solicitor general Tushar Mehta represented the state-run enterprises in the court.
Airtel’s shares closed 3% higher at Rs458.95 on Wednesday, while Vodafone Idea rose more than 9% to end at Rs651, on the BSE where the benchmark Sensex remained nearly flat.
Telecom and non-telecom companies holding telecom licences were left facing huge dues around licence fees, interest and penalties after the top court ruled that revenue accruing to telecom operators, including those from handset sales, rent, dividends, interest income, profit from sale of scrap, termination fees and roaming charges, would also be included in AGR. However, gains from the sale of capital assets and insurance claims would not be a part of it.
Till then, telcos had argued that only revenue derived from licensed services should be considered part of AGR.
The widened AGR definition — that has been a bone of contention between telcos and the telecom department since 2003 — left 15 telcos, including some that are defunct now, facing more than Rs1.47 lakh crore in dues. Airtel, with dues of over Rs35,500 crore, and Vodafone Idea, which needs to pay more than Rs53,000 crore, are the worst affected. Tata Teleservices, which has sold its consumer mobility business to Airtel, faces dues of Rs 13,823 crore.
Soon after the order, Airtel and Vodafone Idea said it could be a swan song for them without government or judicial relief.
The three companies in late November filed separate petitions in the SC, seeking a review of penalties and interest on the dues, and questioning some components of the non-core items that the court said should be included while computing the AGR of telcos.
In its review petition, Airtel had talked about job losses, erosion of shareholder value, collateral damage on vendors and hurdles in 5G roll out if the dues were extracted. It also highlighted that the company had never shied from paying its dues and there was no "wilful default".
Airtel then filed a separate application, appealing to the apex court to allow the telco and the government to agree on the quantum of AGR-based dues that needed to be paid and the timeline for payments.
The SC order, which said all revenue, including from non-core sources, would count as gross revenue for calculating AGR, implied that all companies with even minor telecom businesses will have to pay dues based on their entire revenue with retrospective effect. Non-telecom companies hold nearly 3,500 telecom licences, such as to provide Internet and national long-distance services.
Non-telcos telecom companies like Gail India, Power Grid Corp of India, Oil India, RailTel and Gujarat Narmada Valley Fertilizers & Chemicals have already been served notices by the telecom department, demanding a combined over Rs3 lakh crore in licence fees, interest and penalties. They have opposed the demand, saying they weren’t even a party to the case.
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