New Delhi: Expressing concern over non-payment of the Adjusted Gross Revenue (AGR) related dues by the telecom companies which are under insolvency the Supreme Court said Thursday ‘without paying for the horse, telecos are taking a ride’. The apex court said it is ‘extremely worried’ that almost the entire AGR dues will be ‘wiped out’ in the IBC process.
The top court wondered can a liability like AGR related dues be wound up, under the guise of selling spectrum under the Insolvency and Bankruptcy Code (IBC).
A bench of Justices Arun Mishra, S Abdul Nazeer and MR Shah said spectrum trading is altogether different from sale of spectrum under the IBC.
“Without paying for the horse, telecos are taking a ride. Unless dues are paid, nobody can start using the spectrum. Can a liability like AGR be wound up, under the guise of selling spectrum under the IBC,” the bench said. It further observed, “We are extremely worried that almost entire AGR dues will be wiped out in the IBC process.”
The bench said after the sale of spectrum, the new user will extinguish any pending demand against the spectrum in question.
During the hearing, senior advocate Ravi Kadam, appearing for Aircel Monitoring Committee, told the bench that from April 8, 2016, there have been eight instances of spectrum trading with Bharti Airtel. He said that the Department of Telecom (DOT) had approved the sale and had raised demand for the dues.
Senior advocate Kapil Sibal, appearing for Airtel, said the company has paid all relevant dues with respect to spectrum trading and have paid Rs 18,004 crore towards AGR dues. The bench said it wants details from DOT of spectrum allocated to Reliance Communication (RCom) and Aircel since 1999.
It said the court want relevant details of all instances of spectrum sharing and asked whether Aircel is looking to sell spectrum under the IBC.
Kadam said that right to use spectrum is an asset and to keep the company running, this right will be sold on approval of the resolution plan. He said the resolution process has been concluded, UV Asset Reconstruction Company (UVARC’s) plan has been approved and dues of the DOT has been recognized by the Committee Of Creditors (CoC) .
Kadam said that right to use spectrum is an intangible good under IBC that can be sold and license agreement recognises right to use it as an asset. He said the company has the power to transfer the right to use the spectrum.