Case Note & Summary
The Supreme Court was hearing applications in the ongoing AGR dues matter, where the Union of India sought extension of time for payment. The Court had earlier passed a judgment on 24.10.2019 defining Adjusted Gross Revenue (AGR) and the dues payable by telecom service providers. In the present proceedings, the Court noted that several telecom service providers had initiated insolvency proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC). The Court expressed concern that these proceedings might be a subterfuge to avoid paying AGR dues. The Court examined the contractual nature of telecom licences under Section 4 of the Indian Telegraph Act, 1884, and the guidelines on spectrum trading and sharing. The Department of Telecommunications argued that spectrum cannot be subject to IBC proceedings and that AGR dues are not operational dues. The Court directed the companies under insolvency (Aircel Group, Reliance Communication/Reliance Telecom, Sistema Shyam Teleservices, Videocon Telecommunications) to place all documents relating to liquidation and orders passed in proceedings on record. The Court reserved orders on the payment schedule but decided to separately examine the bona fides of the insolvency proceedings. The Court also noted that no fresh disputes on AGR calculation would be entertained and that the amounts mentioned in the order were final.
Headnote
A) Telecom Law - Adjusted Gross Revenue (AGR) - Definition and Dues - Indian Telegraph Act, 1884, Section 4 - The Supreme Court held that the definition of AGR and dues payable thereunder are contractual and final, and no fresh disputes can be raised. The Court rejected attempts to wriggle out of the judgment under guise of reassessment. (Paras 1-3) B) Insolvency Law - Bona Fides of Insolvency Proceedings - Insolvency and Bankruptcy Code, 2016, Sections 14, 18 - The Court directed examination of whether telecom service providers under insolvency initiated proceedings bona fide or as a subterfuge to avoid AGR dues. The Court noted that spectrum cannot be subject of IBC proceedings and AGR dues are not operational dues. (Paras 3-5) C) Telecom Law - Spectrum Trading and Sharing - Guidelines on Spectrum Trading, 2015, Paras 10-12 - The Court noted that as per guidelines, seller must pay licence arrears before trading spectrum, and purchaser must pay arrears. The liability for traded or shared spectrum is borne by respective providers. (Paras 4, 6-8)
Issue of Consideration
Whether the insolvency proceedings initiated by telecom service providers under the Insolvency and Bankruptcy Code, 2016 are bona fide or a subterfuge to avoid payment of AGR dues; whether spectrum/licence can be subjected to resolution process as an asset; whether AGR dues are operational dues under the IBC.
Final Decision
The Court directed telecom service providers under insolvency (Aircel Group, Reliance Communication/Reliance Telecom, Sistema Shyam Teleservices, Videocon Telecommunications) to place all documents relating to liquidation and orders passed in proceedings on record within 10 days. The Court reserved orders on payment schedule but decided to separately examine bona fides of insolvency proceedings. The Court closed the matter on the prayer for installment payments and security.
Law Points
- Adjusted Gross Revenue (AGR) definition
- contractual nature of telecom licence
- spectrum cannot be subject of IBC proceedings
- AGR dues are not operational dues
- no fresh disputes on AGR calculation
- insolvency proceedings as subterfuge
