The Supreme Court on Friday directed the managing directors and directors of telcos and other firms to explain why contempt action should not be taken against them for non-compliance of its order to pay adjusted gross revenue (AGR) of Rs 1.47 lakh crore to the Department of Telecommunications.
— CNBC-TV18 (@CNBCTV18Live) February 14, 2020
The apex court issued contempt notices to telecom giants Vodafone and Bharti Airtel over non-payment of AGR and summoned the managing directors of the firms for the next hearing in March, according to a report in The Indian Express.
Taking strong note of the non-compliance of its order, a bench of Justice Arun Mishra, Justice S Abdul Nazeer and Justice M R Shah expressed anguish over the order passed by DoT's desk officer staying the effect of its verdict in AGR matter, according to a report in The Indian Express.
#AGR Judgment | SC asks telecom companies, DoT to ‘show cause’ as to why contempt proceedings should not be launched against them
— CNBC-TV18 (@CNBCTV18Live) February 14, 2020
Hearing pleas filed by Vodafone Idea, Bharti Airtel, and Tata Teleservices seeking more time for payment of AGR related dues, the apex court expressed serious displeasure as to how a desk officer can pass such an order which stays the effect of the apex court's judgment.
"How can a desk officer do this to the Supreme Court's order. Is this the law of the country. Is this the way you treat the courts," the three-member Supreme Court bench said.
Justice Arun Mishra, who was heading the bench, said, "We don't know who is creating this nonsense. Who is generating all this? Is there no law left in the country? I am literally anguished. I feel I should not work in this court and in this system. I am very anguished. I am saying this with full sense of responsibility."
"I don't get angry like this, but I am totally lost how to work in this system and this country," he said.
Solicitor General Tushar Mehta tendered an apology before the bench also comprising Justice S Abdul Nazeer and Justice M R Shah, and said the desk officer cannot do this.
"As the solicitor general of the country, have you asked him (desk officer) to withdraw this? This cannot be tolerated. We cannot function in this fashion. Let us wind up the Supreme Court if your desk officer has this audacity. News reports are being published. Who is sponsoring all this?" the bench asked.
"I never bother about myself. You don't understand me, not even an inch. Your desk officer is staying the Supreme Court order. Is he sitting over the Supreme Court? How?," Justice Mishra said, adding it was "better not to live in this country, rather leave it".
"We have to draw contempt against this man (desk officer) and also against these companies. How are they behaving? We had dismissed the review plea and not even a single penny has been deposited yet. The desk officer is staying our order. We are concerned with the health of judiciary, of this country and of this system," the bench said.
Mehta requested the bench to defer the matter and said action should not be taken right now and they would file an explanation about the desk officer.
"What kind of applications are being filed? What kind of mentioning is being made? If you want to avoid us, you do it and we will recuse," the bench said.
It observed that the companies have violated its order in substance and this shows that they have scant respect for the order of the Supreme Court.
Referring to the desk officer's letter to the attorney general, the apex court bench said, "This is nothing but a device to oblige the companies. This kind of order could not have been passed by a desk officer."
The bench directed the managing directors and directors of all the telcos and companies concerned to appear before it on next date of hearing on 17 March and explain why they have not deposited the money and why coercive action should not be taken against them.
“Pay up by the next date of hearing. This is the last opportunity all companies have. We must do this. Corruption of all kinds must stop,” a bench headed by Justice Arun Mishra said.
After the SC judgment, shares of Vodafone Idea fell as much as 13.40 percent while stocks of Bharti Airtel was up 3.99 percent.
— CNBC-TV18 (@CNBCTV18Live) February 14, 2020
On 16 January, the Justice Mishra-led bench had dismissed review petitions of telcos seeking review of its earlier order asking them to pay Rs 1.47 lakh crore in statutory dues by 23 January, saying it did not find any "justifiable reason" to entertain them.
The top court had on 24 October last year ruled that the statutory dues needed to be calculated by including non-telecom revenues in AGR of telcos.
Vodafone seeks 10 years to make payment
On 5 February, Vodafone said it has sought waiver of interest and penalty from statutory dues demand raised by the government from Vodafone Idea and a time of 10 years to pay only the principal amount with a two-year moratorium.
The Supreme Court in October upheld the demand raised by the government from telecom operators to pay levies on the revenues earned by them.
Vodafone Idea Ltd (VIL), in which Vodafone holds 45.39 percent stake, is staring at unpaid statutory dues of Rs 53,038 crore, including Rs 24,729 crore of spectrum dues and Rs 28,309 crore in licence fee, and has already warned of shutdown if no relief is given.
Specifically, we have requested an immediate two-year moratorium on spectrum payments, lowering of licence fees and taxes, waving off interest and penalties on the AGR (adjusted gross revenue) case and ability to make the payment on principal over 10 years with a 2-year moratorium," Vodafone Chief Executive Officer Nick Read said during investors presentation.
In January, the Supreme Court rejected the review petition filed by VIL and other industry participants in relation to the AGR judgment. Both VIL and Bharti Airtel have subsequently filed modification petitions to request the court to order the Department of Telecommunications to determine a payment schedule in relation to AGR dues and other reliefs.
VIL is actively seeking various forms of relief from the Centre to ensure that the rate and level of payments it makes to the government is sustainable and it can meet its other commitments also.
"Following the AGR ruling of the Supreme Court, the situation in India is critical. The telecom industry in India has asked the government to take action urgently in order to support the continuation of three (private operators) plus one (public firm) player market," Read said.
India business 'remains critical' says Vodafone's Global CEO Nick Read; adds that co is actively seeking various forms of relief from the indian Govt on the AGR issue
— CNBC-TV18 (@CNBCTV18Live) February 5, 2020
Vodafone in November wrote off the carrying value of its share in the loss-making joint venture.
Read reiterated that there is no change in the Vodafone position announced in November and the company will not inject any additional capital in the Indian market.
He said procedural delay in the merger of Indus Towers with Bharti Infratel is putting Vodafone Idea under "incredible strain".
Bharti Infratel and Vodafone India hold 42 percent stake each in Indus Towers. VIL holds an 11.15 percent stake in the mobile tower firm which it plans to sell off once the merger is complete.
Bharti Infratel on 24 December had extended the deadline for the second time for the merger with Indus Towers by two more months to 24 February, as it did not receive the necessary government approval.
What is the case about
Fifteen telecom companies owe the government Rs 92,642 crore in unpaid licence fee and another Rs 55,054 crore in outstanding spectrum usage charges. These liabilities arose after the Supreme Court in October last year held that non-core revenues have to be considered for calculating statutory dues from Adjusted Gross Revenue (AGR).
In the case of Bharti Airtel, the liabilities added up to nearly Rs 35,586 crore, of which Rs 21,682 crore is licence fee and another Rs 13,904.01 crore is the spectrum usage charge dues (not including the dues of Telenor and Tata Teleservices). Vodafone Idea -- which is staring at unpaid statutory dues of Rs 53,038 crore, including Rs 24,729 crore of spectrum dues and Rs 28,309 crore in licence fee -- has already warned of shut down if no relief is given.
Bharti Airtel, Vodafone Idea Ltd, and Tata Teleservices have, meanwhile, jointly filed a modification application in the Supreme Court seeking more time to pay the statutory dues. The plea for relief on the payment schedule came after a three-judge Supreme Court bench headed by Justice Arun Mishra, earlier this month, dismissed the review petitions filed by telecom companies against the apex court's 24 October, 2019 verdict.
The telecom department has also estimated another Rs 2.4 lakh crore in liability for non-telecom companies such as state-owned gas utility GAIL India Ltd and power transmission firm PowerGrid, which had taken licences to trade broadband on optic fibre running along their pipelines and transmission lines.
The DoT has sought additional license fee of Rs 1.72 lakh crore from gas utility GAIL India Ltd, Rs 48,000 crore from OIL, around Rs 22,000 crore from Power Grid Corporation (PowerGrid), and has raised similar demands from RailTel and other public sector undertakings (PSUs).
PSUs including Oil India Ltd (OIL) and Power Grid Corporation have filed a clarificatory/modificatory petition in the Supreme Court against demands raised by the telecom department.
--With inputs from agencies
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Updated Date: Feb 14, 2020 14:24:26 IST