New Delhi: Senior Advocate Harish Salve today submitted before the Supreme Court that it would be premature to decide if spectrum can or cannot be sold under IBC. The court was hearing the telecommunications companies undergoing IBC proceedings on the larger question of whether spectrum can be sold under IBC proceedings, as well as Jio’s liability towards RComm’s AGR dues.
A three-judge bench of Justices Arun Mishra, S. Abdul Nazeer and M.R. Shah heard the matter regarding staggered payment of adjusted gross revenue (AGR) related dues by telecom giants including Vodafone Idea, Bharti Airtel and Tata Teleservices.
The Court has yet to decide the reasonable period for staggered payment of AGR dues. While the government had proposed 20 years, telecoms companies such as Airtel and Vodafone had asked for at least 15 years. Airtel’s AGR demand was Rs 43,989 crores, out of which it paid Rs 18,004 crores and Voda Idea has paid Rs 7,854 crores out of its total AGR demand of Rs 58,254 crores.
The court, in its last hearing, had asked if Jio can be held liable for RComm’s AGR dues when they are generating revenue from shared spectrum. It had directed Jio and RComm to submit details of spectrum sharing agreement, since the RComm spectrum is being used by Jio. The court had also asked the insolvent telcos under the bankruptcy process to furnish details on use of their spectrum.
During the hearing today, the court observed that it cannot let the case go as there are huge dues payable. The court had directed payment within a certain period, but the government is seeking 20 years. What would be done if the companies go into insolvency, the court asks.
Justice Mishra also observed that the Bench is conscious of the scope of the conflict, and that two sides of the government are saying different things. The court wishes to settle the dispute and will not exceed its jurisdiction as it is fully conscious of the scope of proceedings.
The court also noted that if a period of 20 years is allowed for payment, all kinds of manipulation and legal filings may take place. It was shocked that the appeal against the NCLT order was passed belatedly and happened right under their noses and hence it needs to decide the issue.
“Mr Salve you may raise technical points, but no technicalities will come in our way of enforcing recovery of AGR dues,” Justice Mishra said.
Senior Counsel Harish Salve submitted before the court that RComm’s insolvency was triggered by Ericsson, and it could not have been withdrawn even if Ericsson paid. RComm’s resolution plan is accepted by the COC and it envisions auction of the spectrum, but subject to permission from the DoT.
According to Salve it would be premature to decide if spectrum can be sold or not under IBC. It should be decided only when the RComm resolution applicant moves DoT for spectrum sale.
Salve added that the top bidder for RComm – UVARC – is not fronting for anyone. UVARC’s equity comes from public sector banks and public sector insurance companies. Even Jio has submitted that they are not interested in bidding for RComm.
The bench stated that the DoT allowed the sharing only to earn more AGR. Salve submitted that spectrum sharing began as soon as the DoT allowed and sharing guidelines were issued and the entire RComm spectrum was subject matter of sharing.
Salve submitted that DoT recognised spectrum as a security. UVARC submitted resolution plan for both corporate, other debtors. tripartite licence agreement recognises spectrum as security to raise funds.
Regarding question of Jio’s liability to pay R.Comm’s AGR dues, Salve stated that there is no question of one operator paying AGR dues of another and Jio has cleared its dues pertaining to spectrum usage by paying Rs 194 crores as part of their dues after the October 2019 judgment.
The Bench then questioned the reduction in RComm’s assets. “How did RComm claim to have assets of over Rs 35,000cr, whereas now the fair value is just a little over Rs 10,000 crore? How has there been a dramatic fall in value of assets of RComm,” the bench has asked.
Salve responded by saying that the promoter of RComm, Anil Dhirubhai Ambani, is not going to get anything out of this as his shareholding is going to be extinguished.
Regarding the right for usage of spectrum, the Salve submitted that the right to use the spectrum is acquired in an auction on payment of the fee, and that right is an asset. Once the government enters into a contract with a licensee for national resources, the licensee does not become a trustee, and the contracts have to be seriously implemented.
The Court will continue hearing the case on August 19.
-India Legal Bureau