AGR-SC WANTS PRIVATE TELECOS TO PAY

June 11,2020

By Adv. Elgin Matt John (Managing Partner) Elgin Matt John & Associates

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On June 11, 2020 the Hon’ble Supreme Court heard an application filed by the Department of Tetecom, wherein the department was seeking the effective implementation of the Order dated 24-10-2019 of the supreme court under which it had directed all the Telecom Companies to pay up AGR dues divided primarily between the big 4 companies including Airtel, Idea, Vodafone, JIO etc.

PUBLIC SECTOR LICENSEES

The court took on record a freshly amended Affidavit of one Ms. Vandana Gupta, Deputy Director General (LFP), Department of Telecom, Govt. of India, New Delhi. The Affidavit clarified the basis of raising the demand against private commercial telecom companies but also claimed a demand of about 4 Lack Crores from Government PSU’s owed to the Department of Telecom. The department claimed these demands arose against and as direct result of the enabling judgement of the Hon’ble Supreme Court dated 24-10-2019.

The Affidavit filed by the Department of Telecom relied on the terms of license, which, as per the Department, enabled it to demand the dues under AGR, both, from the PSU’s as well as from the Commercial Players like Idea, Vodafone, Bharti Airtel etc..

The Supreme Court though didnot accept this submission of the counsel of the DOT and was surprised, as to how the Department of Telecom managed to interpret the judgement of the court dated 24-10-2019, which was rendered in the context of commercial private telecom operators and not the Public Sector Units.

We have posed a query to Mr. Tushar Mehta, learned Solicitor General of India, how the demand was raised on the basis of our
judgment with respect to Public Sector Undertakings when the licences were different and the judgment never dealt with the issue
of Public Sector Undertakings and their agreements are quite different

Justice Arun Kumar speaking for the bench then proceeded to cite the differences in usage of words in the clauses of license agreements entered into by the Department of Telecom with commercial players on the one hand and those entered into with Public Sector Units.

The court pointed out that the definition of “Revenue” in the license granted to commercial telecom operators such as Idea, Vodafone etc( NLD and IP-II licenses) carried the caveat for calculating both “Revenue” as well as “Adjusted Gross Revenue” from the incomes received by the private telecom companies from services provided by them under the license to their end customers while this clause was all along missing in the UASL/ISP licenses granted to PSU’s.

The absence of the this clause in the UASL/ISP licenses issued to PSU’s indicated that the licenses were meant for non-commercial purpose, which restrained the PSU’s from earning a “Profit”.

6. That it would appear from the text of the above definitions that the definition of revenue used in UASL/ISP licenses as against the phrases used for the NLD/IP-II licenses are different. Specifically, the phrase ‘by way of providing the service under the license’ has been used in the NLD and IP-II licenses to qualify the term ‘revenue’, while this is not the case of the UASL/ISP. ……

The court re-iterated this aspect of non-commercial use of the license and suggested that the judgement dated 24-10-2019 were made in the context of commercial license granted to the Private Operators and it would be a fallacy to extrapolate the judgement to apply to all forms of license issues by the DOT.

” ……….. The requirement of license by these PSUs may be based upon some of their own internal requirements and not for commercial exploitation the way in which other telecom service providers require the services except the two PSUs not mentioned in the list stated above.”
It is apparent that the licences are different and our judgment in this case could not have been made the basis for raising the demand against Public Sector Undertakings. Even otherwise, the Public Sector Undertakings are not in the actual business of providing mobile services to the general public “

The court while holding that claim of around 4 lack crores against the PSU’s was clearly not based on the terms of agreement or the order of the court dated 24-10-2019, accepted the contention of the PSU counsel that charging of “Aggregate Gross Revenue” or AGR based on the order of the Supreme Court was clearly not in public interest.

………Public Sector Undertakings form a class in themselves as they substantially discharge governmental functions and represent public funds. It is submitted that a liability of more than Rs.4 lakh crores, which would fall upon the PSUs, may not be in larger public interest, more particularly when these PSUs are not providing mobile services the way in which commercial service providers are providing.

The court has directed the Department of Telecom to reconsider its demands made to the PSU’s and file a reply within 3 days from today.

In the circumstances, let the Department of Telecom reconsider the demand that has been sprung, within three days from today, and on the next date of hearing report the compliance of the action taken on the basis of this order. ”


PRIVATE TELECOM OPERATORS

AGR Telecom News | AGR payment: Telcos to wait for SC decision
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The Private Telecom Operators such as idea, Vodafone etc had moved a series of applications before the Supreme Court wherein they had attempted to propose a payment schedule stretched out to 20 years within which individual companies could repay their liabilities to the Department of Telecom.

The court however remained unmoved regarding the request by the private Telecom Operators who were pleading the extension of time and Instead the court considered the issues of time frame as well as the possibility of companies defaulting in such time frame as issues that required to be looked into. In that respect the court went ahead to allow the companies to submit a joint affidavit by the companies wherein both these issues could be addressed.

There are several issues which are to be considered. Firstly, the reasonable time-frame, secondly, how to ensure the payment of the amount even within that time-frame and what kind of securities, undertakings and guarantees should be furnished to ensure that the amount is paid by the Telecom Service Providers…… ……………..Time was prayed on behalf of the Telecom Service Providers to file a joint affidavit with respect to their proposal to secure the amount, which is to be paid under the orders passed by this Court. Let a joint affidavit be filed within five days from today

The present order aimed to clear a lot of confusions that had arisen from the earlier order dated 24-10-19 which allowed the Department of Telecom to extrapolate the order of the Supreme Court to unnecessarily harass PSU’s that were involved in the development of the Telecom infrastructure in the country such as Power Grid Corporation, NTPC etc whose core business was not associated with Telecom however owing to massive reach of their infrastructure utilities, the government was using them as a means to both laying down the physical infrastructure such as optic fiber lines etc. to achieve the national objective of connecting every corner of the country.

Please see the order below