Jio has cleared its own AGR dues of Rs 198 crore while Rcom now owes the government Rs 25,194.58 crore in statutory dues, including those of Sistema Shyam Teleservices (Rs 222.1 crore), which was merged with it.
New Delhi | Mumbai: The Supreme Court on Friday said Reliance Jio must pay adjusted gross revenue (AGR) dues of Reliance Communications NSE 4.44 % since it has been using the latter’s spectrum since 2016, and asked all bankrupt telcos — who have expressed their inability to pay dues worth ₹57,000 crore — to explain who used their airwaves while the insolvency resolution proceedings were on.
“Reliance Jio must pay ailing RCom’s AGR dues if it has been using RCom’s spectrum since 2016,” a three-judge bench led by justice Arun Mishra observed. The top court was examining whether claims of these companies under the Insolvency & Bankruptcy Code (IBC) were bona fide.
The bench also sought details of who was using the spectrum of Aircel and Videocon, the other two ailing telecom companies. Back in 2016, Airtel had bought Aircel’s 4G airwaves in the 2,300 MHz band and Videcon’s 4G spectrum in the 1,800 MHz band through the spectrum trading route. Earlier this year, the National Company Law Tribunal (NCLT) approved the sale of Aircel’s assets to UV Asset Reconstruction Company (UVARCL).
“Is Reliance Jio using RCom’s spectrum? If so, since when?” the bench asked the RCom’s resolution professional who was represented in the court by senior advocate Shyam Divan.
Divan said that “a part” of the spectrum was “lying idle” and “another part” was being “shared” with “Reliance Jio” under a 2016 deal. That involved use of 800 MHz spectrum. The bench then sought to know why it should not assign the whole of the AGR dues of RCom to Jio to be paid off.
“How can you avoid liability of paying AGR dues? We catch hold of you (Jio) and make you pay. The person using spectrum must pay. Why should we not treat the (2016) deal as effectuated?” asked the bench.
Reliance Jio, through its advocate KV Vishwanathan, argued that spectrum “trading” and “sharing” were two different things and “sharing” would only entail paying spectrum usage charges (SUC). He sought more time to argue these points.
The top court bench also demanded to know who was buying RCom through the insolvency resolution process.
RCom Owes Govt ₹31,000 Crore
Ericsson had settled and China Development Bank had withdrawn from the resolution process, justice Mishra observed. “So why is RCom still in resolution?”
Justice Mishra, who was sitting with Justices S Abdul Nazeer and MR Shah, sought details of the identity of the owner of UVARCL, the company which has been cleared by RCom’s panel of lenders to buy its spectrum. UVARCL has also bought Aircel’s assets, including airwaves.
Friday’s development comes as an unpleasant surprise for Reliance Jio which appeared to have been the least affected by the top court verdict of October 2019 that had widened the definition of AGR to include non-core items.
Jio had cleared its own AGR dues of ₹195 crore. RCom owes the government ₹31,000 crore in statutory dues, including those of Sistema Shyam Teleservices, which was merged with it, as per the government’s submissions in the last hearing.
RCom and its unit Reliance Telecom (RTL), once owned by Anil Ambani, Mukesh’s younger brother, had entered into an agreement with Jio in 2016 for trading spectrum in eight circles and sharing airwaves in 17 circles.
Jio shares around 38% of total spectrum currently held by RCom, on which SUC is being paid as required under the rules, a person familiar with the matter said.
“The AGR dues of RCom and RTL are in no manner connected with this shared spectrum... AGR has been paid by by both RCom/RTL and RJIL on the revenue generated from the shared spectrum,” the person said.
The SC bench has been trying to find ways to ensure that all telcos pay up their AGR dues. While it has so far managed to get the profitable ones to commit to pay within a deadline which is yet to be fixed, the top court is still grappling with how to recover the dues from those who claim to be bankrupt.
‘Spectrum Owned by Sovereign’
“We need to secure the AGR dues. Spectrum is owned by the sovereign. The government parts with what is a natural resource which is held by the government as a public trustee,” justice Mishra said. “How can the sovereign’s revenue-sharing process (involving spectrum) be overriden by other debtors? How can secure creditors get everything?”
The resolution process ensures that the financial creditors i.e. banks get their dues. But not the government which was only an operational creditor. The telcos have claimed that the spectrum licences that they hold are assets in their hands which could be sold to pay off their dues. The government has contested a finding to this effect by the NCLT and National Company Law Appellate Tribunal in the Aircel case but that is yet to be decided.
The bench stated in no uncertain terms on who would decide the fate of spectrum. “We are the master of the spectrum. We can’t allow NCLT and NCLAT to fritter it away. We will ensure that the government dues are paid.
Source:-Economic Times :-used here for educational purposes for CS students and pictures added for making the topic understanable.
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