Supreme Court grants 10 years to telecom companies to pay AGR dues

The Supreme Court on September 1, 2020, granted the telecom companies, including Vodafone Idea and Airtel Bharti, a time period of 10 years to clear their pending Adjusted Gross Revenue (AGR) dues to the Indian government.

The three-judge bench which was headed by Justice Arun Mishra passed the order through the video conference. During the hearing, the telecom companies had also sought a period of 15-20 years for the repayment of AGR dues.

The court had on July 20, 2020, reserved its order on the time period for the repayment of AGR dues by the Telecom companies, as they requested a period of 15-20 years for the repayment.

Key Highlights:

•  In its judgment, the apex court has directed the telecom companies to pay up to 10% of their dues by March 31, 2021.

•  The Balance of Payments will also need to be made annually thereafter by February 7 of every year, in equal installments.

•  As per the bench led by Justice Arun Mishra, default on the payment installments will invite penalty, interest, and contempt of the court.

•  The Solicitor general of India, Tushar Mehta, and Telecom Operators had sought more time to repay the dues because of the financial stress and its impact on the economy.

•  The telecom companies had demanded the timeline for the repayment to be 15-20 years while the government had suggested the time of 20 years.

Judgement on the repayment of AGR dues:

The three-Judge bench via video conference asked the National Company Law Tribunal (NCLT) to decide on the spectrum trading as part of the Insolvency and Bankruptcy Code.

The bench was hearing the petition which was filed by the Central Government through the Telecommunication Department seeking the approval of the formula allowing the telecom service providers to make the annual installments of unpaid or the remaining AGR dues in the next 20 years or more.

The plea also added that if the telecom companies face proceedings under the Insolvency and Bankruptcy Code, it will face adverse impacts on the service and competition in the telecom sector.

However, in its final decision, the court gave a period of 10 years, as the request for 15-20 by the telecom companies for the repayment of AGR dues in a staggered manner seemed unreasonable.

Earlier payment of AGR dues:

Earlier on February 14, the Supreme Court had directed the Telecom companies to pay their AGR related liabilities to the central government by March 17.  Thereafter, as per the direction, the telecom companies had partly or fully paid their self-assessed AGR dues to the government.