Apex Court reiterates USD21bn demand for AGR dues, threatens execs with contempt

14 Feb 2020

India’s Supreme Court has refused to modify its October 2019 ruling on Adjusted Gross Revenue (AGR), ordering telcos to pay dues totalling INR1.47 trillion (USD20.6 billion) by 17 March and threatening executives with contempt notices for failing to deposit the funds by the original deadline of 23 January, the Economic Times reports. The court had previously indicated that it intends to draw a line under the prolonged dispute as soon as possible, having stated in an earlier hearing that it would not allow the parties involved to ‘litigate for decades’. Maintaining this stance, the court expressed its frustration at the cellcos’ inaction, with Justice Arun Mishra quoted as saying: ‘A review has been dismissed. There’s no stay, but not a penny has been paid.’ The Supreme Court stopped just short of issuing contempt of court notices to the telcos’ managers, and instead directed the officials to explain why they should not be held in contempt for failing to comply with the court’s October decision. Another of the justices advised the telcos to deposit ‘sizeable’ amounts by the end of the day (14 February) to avoid a contempt of court action.

As previously reported by TeleGeography’s CommsUpdate, India’s telcos are facing an INR1.47 trillion bill after the Supreme Court ruled in October that revenue from non-core activities should be included in the calculation for AGR, upon which operators’ licence and spectrum fees are based. A request to modify the ruling was rejected by the court in January, with the companies then seeking permission to negotiate with the DoT regarding a timeframe for the payment of the dues.

The apex court also castigated the government, criticising the Department of Telecommunications’ (DoT’s) handling of the case, in particular its decision to stay the recovery of dues. The DoT was instructed to withdraw the order and the official responsible for the order was issued a contempt of court notice. In its ruling, the court said its ‘conscience has been shaken’ by what it saw as the DoT’s attempt to overrule the court, stating that there was ‘no respect’ for the body.

In its efforts to resolve the matter quickly, the Supreme Court has sown further confusion, and it remains unclear how the bench expects the ruling to be interpreted with regards to companies that hold telecom licences but are not service providers. For these licensees, the fees would greatly outstrip their minimal earnings from telecom operations. The group includes a number of public sector undertakings (PSUs) such as GAIL India, Power Grid Corporation and RailTel which are now facing AGR-related bills totalling an estimated INR3 trillion. RailTel, for example has been issued with a demand for INR2.9 billion in AGR-related fees. In its ruling, the Supreme Court simply dismissed the pleas from the operators and instructed them to challenge their demand notices with the government in appropriate fora. However, the matter had been referred to the apex court after the DoT said it did not have the authority to rule on the matter.