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Last Updated : Nov 03, 2019 02:18 PM IST | Source:

Telcos bailout will be Supreme Court’s contempt; will set bad precedent: Jio to Ravi Shankar Prasad

SC had earlier upheld DoT's contention that non-telecom revenues should be part of the annual Adjusted Gross Revenue (AGR) -- a percentage of which is paid to the government as statutory dues

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Reliance Jio has written to Union Telecom Minister Ravi Shankar Prasad saying a "financial windfall" for Bharti Airtel and Vodafone-Idea by waiving penal action on unpaid statutory dues of the last 14 years will violate the Supreme Court of India (SC)'s ruling and will set a bad precedent for errant companies.

Jio said that the apex court, in its October 24 order, had settled the base on which statutory levies such as telecom licence fee and spectrum usage charge has to be paid and waiving of interest and penalty on due amounts of the past 14 years will be violative of the judgement.

The Supreme Court had on October 24 upheld DoT's contention that non-telecom revenues should be part of the annual Adjusted Gross Revenue (AGR) -- a percentage of which is paid to the government as statutory dues.


"The judgment records the submission on behalf of the Department of Telecommunications (DoT) to the effect that interest and penalty were being levied strictly as per the contract between the parties and that any reduction, modification or alteration of the interest and penalty provisions contained in the License Agreement would amount to impermissibly rewriting the agreement. This contention was accepted by the Hon'ble Court," the letter reads.

With total liabilities estimated at Rs 1.4 lakh crore, Airtel and Vodafone-Idea, through the telecom sector association Cellular Operators Association of India (COAI), are seeking waiver of at least the penalty and interest on delayed payments, if a complete waiver of past liabilities is not possible. These constitute to around half of the total dues.

Reiterating its position that telecom companies have sufficient resources to meet the liability, Jio said the incumbents such as Airtel and Vodafone-Idea had reaped benefits when they had accepted and moved to a revenue share method of paying statutory dues almost two decades back and urged that no relief on unprovisioned and unpaid liability should now be entertained.

"While considering the issue relating to imposition of interest and penalty, the judgement deals with elaborate reasoning that covers the pendency of multiple proceedings raised at the instance of the Telecom Service Providers (TSPs) in various forums from time to time for some reasons and concludes that these disputes had not been raised in a bonafide manner, but rather, were solely with the aim to somehow or other evade from making the payment, even on the heads / items on which they had lost in the earlier proceedings," the letter adds.

Jio added that the "claimed inability to meet the payment obligations is not on account of any reasons or an event or an effect that the parties could not have anticipated or controlled."

"Rather, the position that emerges from a plain reading of the judgment is that the licensees have indulged in abuse of the process of Court and deliberately delayed payment of dues on frivolous and legally untenable grounds," it said.

Stating that SC has repeatedly held that spectrum is a finite and precious natural resources, Jio said: "any action on the part of the Government of India to modify or waive contractual provisions pertaining to interest and penalty on unpaid dues would not be legally tenable specially when same has been dealt in the judgement of the Supreme Court specifically."

"Any reduction in the financial liability of the licensees arising from the judgment of the Court would in effect be rewarding them for their conduct in initiating frivolous and vexatious proceedings to delay payment of their just dues," it said. "Any proposal for waiver will be considered as loss to the public exchequer and contrary to the Hon'ble Supreme Court judgement," the letter said.

Also, "such largesse, if granted, will become an iniquitous precedent emboldening and encouraging others in similar situations including other sectors and spreading across industry to commit similar breaches and get away with it," it added.

It "deplored" COAI for continuing to not take its comments on record and only propagate the agenda of two select members -- Airtel and Vodafone-Idea.

"In order to help its two select members get a financial windfall from the Government, COAI is in fact canvassing for going against the decision of the Supreme Court judgement," it said.

"The Supreme Court has very fairly and categorically rejected all the frivolous grounds taken by the operators and it has also given sufficient time to the operators to make good their obligations within three months," it added.

"Given the background of the matter, we are of the view that the Government does not have the option of going against the Supreme Court judgement and provide any of the reliefs sought by COAI from plain reading of the legal facts," it said.

Earlier, in a letter to the Union Minister Prasad, Jio had said that it does not agree with COAI's view on the state of the telecom industry and that it was their own doing.

In a press release, Jio had refuted COAI’s stance that the telecom industry would collapse without any support from the government.

Also Read: Jio lashes out at COAI for not taking its views into consideration

Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

(With inputs from PTI)

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First Published on Nov 3, 2019 11:43 am
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