The Supreme Court (SC) on August 17 heard the adjusted gross revenue (AGR) dues case. Further hearing in the matter has been adjourned to August 19.
Pointing out that Jio is earning revenue by sharing RComm spectrum, the court has sought the government'position on making Jio liable for RComm's AGR dues on account of the spectrum sharing.
A bench comprising Justices Arun Mishra, S Abdul Nazeer and MR Shah is hearing the case. The top court had in October 2019 upheld the expanded definition of AGR as given by the Department of Telecommunications (DoT).
Solicitor General Tushar Mehta to SC:
>> SC had indicated that entity using the spectrum must discharge the AGR dues. Sharing of spectrum different from spectrum trading.
>> View of DoT differs from views of Ministry of Corporate Affairs (MCA) on sale of spectrum under the Insolvency and Bankruptcy Code (IBC). View finalised by SC is that spectrum cannot be sold under IBC.
>> Assets owned by third party help by the company under insolvency, in trust, cannot be sold. People of the country are owners of spectrum, held by the government in trust, cannot be sold under IBC.
>> Use of spectrum allowed to telcos under contract, ownership does not get transferred. Spectrum is not defined as an asset under the IBC. Government continues to hold spectrum, in trust.
>> We issued notice in March 2019 to Reliance Communciations (RCom) to show cause why spectrum should not be revoked due to non-payment of dues.
>> Spectrum can never be subject matter of IBC, which is the consistent position of DoT.
>> MCA had sought to allow spectrum sale for maximization of value. Resolution plan for RCom has not yet been approved.
>> Government's official position is that any decision that SC takes to help recovery of AGR dues, the govt will support.
Senior Advocate Shyam Divan, RCom's resolution professional, to SC:
>> Asset reconstruction company (ARC) will issue zero coupon bonds, redeemable in five years to be issued to banks. Bonds can be redeemed, realised as the ARC monetizes the assets. Bonds of Rs 15,140 crore will be issued to banks.
>> 141 parties had approached for RCom, including Bharti Airtel. UVARC was the successful resolution applicant, plan was approved.
>> Fair value of RCom is 10,200 crore.
>> In 2018-19 Banks, RCom wanted to sell the company to evade insolvency proceedings. Sale of RCom did not materialise, IBC was the preferred route.
>> Spectrum is an asset in the hands of the company, it can be subject of IBC, can be bought and sold. Current dues are being paid to the DoT, during the IBC moratorium.
>> Want to know year wise demands raised against RCom.
>> (In relation to RCom) We want to know who was the successful resolution applicant.
>> At the time of proposed sale to Jio, before IBC, RCom claimed assets of Rs 3,5000 crore. We want to know where the assets have gone? How has the value of assets depreciated so significantly?
>> Can spectrum be bought and sold under IBC?
>> Jio is earning revenue by sharing RComm spectrum, can it be held liable when they are generating revenue from shared spectrum? We want government's position on Jio sharing RComm spectrum, on Jio discharging RComm spectrum dues.
Here's what else happened at the previous hearings:
>> Vodafone Idea has to pay a balance of Rs 50,399 crore, while Bharti Airtel's outstanding amount is Rs 25,976 crore, Solicitor General Tushar Mehta said on July 20.
>> On August 10, The SC had asked the government to prepare a plan for recovery of dues from telecom companies under insolvency.
>> The SC had asked the government, Reliance Jio and RCom's resolution professional to put together documents to determine who will bear RCom's AGR dues.
>> Both Vodafone Idea and Bharti Airtel, which owe the maximum amounts, had on July 20 revised their demand from 20 years to 15 years for the staggered payments after SC's stringent stance on payment period.
>> The SC has made it clear that it will not permit any self-assessment by the companies or re-calculation.Disclaimer: Reliance Industries Ltd., which also owns Jio, is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.