AGR case: Supreme Court fears telco dues will be wiped out in IBC process

The Supreme Court on Thursday expressed concerns that nearly the entire Adjusted Gross Revenue (AGR) dues pending against the telcos facing insolvency proceedings will be wiped out in the Insolvency and Bankruptcy Code (IBC)  proceedings. A bench of Justices Arun Mishra, S Abdul Nazeer and MR Shah also said that a new buyer, after sale of spectrum under the insolvency process, will extinguish any pending demand against the spectrum in question.

The top court made these observations while hearing arguments from telcos facing insolvency in a matter related to spectrum sharing. Successful resolution applicants for RCom and Bharti Aircel can deny paying the dues after spectrum is transferred under the IBC, the apex court said. The apex court on Wednesday was  informed by Reliance Communications (RCom) that it will be forced to go into liquidation if spectrum is not allowed to be sold under the insolvency process.

The apex court said that spectrum trading is not the same as sale of spectrum under IBC, CNBC TV-18 reported. Nobody can begin using the spectrum unless pending dues are paid to the government, it added. SC asked: "Can a liability like AGR be wound up in this fashion, under the guise of selling spectrum under IBC?"

During the hearing, SC also asked the government to provide details of spectrum allocated to RCom and Bharti Aircel since 1999.

Meanwhile, telcos such as Bharti Airtel, Vodafone Idea and others had appealed to the apex court to allow them to make staggered payments of their AGR dues. The Supreme Court will now continue to hear the matter on Friday.

On Tuesday, Reliance Jio told the Supreme Court that it has already paid Rs 195 crore in AGR-related dues which included spectrum sharing charge of RCom. It said there is no question of one operator paying the dues of another firm, as suggested by the apex court earlier, and it has cleared all its dues. Harish Salve, appearing for Jio and Committee of Creditors (CoC) of RCom, had told the top court that it would be premature to decide if spectrum can be sold or not under IBC.

On August 10, the Supreme Court had asked the DoT to apprise it on August 14 about how it plans to recover AGR related dues from telecom companies facing insolvency proceedings and whether spectrum given to these companies can be sold. On July 20, the top court had reserved its order on permitting telecom firms to make staggered payments of AGR dues over 15 years. In October 2019, the SC had upheld the government's broader definition of AGR.Also read: AGR case: No technicalities to come in way of recovery of dues, says SC

Also read: AGR case: 'Should Reliance Jio pay RCom's dues,' Supreme Court asks govt