01 Sep 2020: SC gives telecom companies 10 years to clear AGR dues
Faced with a humongous debt of Rs. 1.47 lakh crore, Indian telecom giants got a huge relief today as the Supreme Court allowed them to clear pending AGR dues in 10 years.
Each installment must be given on February 7, every year, a three-judge bench ruled.
10% of the amount must be paid by March 31, 2021, added the court.
Here are more details.
Case: Context: SC ordered telecos to pay up, they sought time
The case dating back 1999 sparked after DoT and telecos disagreed on the definition of AGR, short for Adjusted Gross Revenue.
While DoT believed that AGR ensconces all revenues (before discounts), the companies contested saying only revenue accrued from core services should contribute towards AGR.
In October last year, SC upheld DoT's definition, ordering telecom giants to pay the aforementioned amount in 90 days.
Share: Bharti Airtel owes Rs. 35,000 crore, Voda-Idea Rs. 53,000 crore
Reportedly, Bharti Airtel owes Rs. 35,000 crore to DoT; Vodafone-Idea was asked to pay Rs. 53,000 crore. Only Reliance Jio, owned by Mukesh Ambani, has cleared its AGR dues.
The initial deadline to pay up lapsed on January 24, following which it was extended till March 17, upon the telcos' request.
In February, when companies showed inhibitions in releasing money, the top court fumed.
Looking back: Despite deadline, telecos showed laxity, bench slammed them
A three-judge bench, headed by outgoing Justice Arun Mishra, and also including Justices Abdul Nazeer and MR Shah, asked the telecos why contempt proceedings must not be initiated against them.
"Is there no law left in this country? I am literally anguished. I should not work in this country at all. I am saying this with some responsibility," Justice Mishra had asked.
Fact: Should we wind up SC, questioned Justice Mishra
"This cannot happen in this country. We cannot function in this fashion. Let's wind up the Supreme Court...It is better to leave this country. They (Telecom Companies) can stay the order? There is so much money power," Justice Mishra went on.
Details: When DoT sought time for telecos, SC fumed, yet again
In March, the bench expressed displeasure once again when DoT made a case for the telecos, seeking 20 years' time for them to clear the dues.
Saying that the previous order will remain unchanged, the bench said, "You are making a nonsense of everything! How can there be self-assessment or re-assessment of payable dues? Who has permitted this? How is this not sheer contempt?"
Aftermath: After verdict, Airtel's shares rose; Vodafone also gained
While the bench had taken a strong stance all along, it handed over a major relief to telecos today. However, it remarked that the judgment regarding staggered payment is final, and if companies fail to adhere to it, they would invite contempt proceedings.
After the verdict, Bharti Airtel's shares rose by 6.6% and cash-strapped Vodafone also recorded gains.