AGR Case: Supreme Court Asks Telecom Operators Why They Shouldn’t Be Held In Contempt For Not Paying Dues
A lawyer walks past members of the media assembled outside the Supreme Court in New Delhi. (Photographer: T. Narayan/Bloomberg)

AGR Case: Supreme Court Asks Telecom Operators Why They Shouldn’t Be Held In Contempt For Not Paying Dues

The Supreme Court threatened to hold India’s beleaguered telecom operators in contempt for not complying with its order to pay thousands of crores worth of dues within the deadline.

“It appears the way in which things are happening, they have scant respect for the directions issued by this court,” a bench headed by Justice Arun Mishra said, adding that the dues on adjusted gross revenue weren’t deposited even after the review petitions were dismissed.

The bench took offence at a directive from the telecom ministry that offered leeway for payment of dues. The top court initiated contempt proceedings against the Department of Telecommunications’ officer for violating its orders.

This case projects a very disturbing scenario. The companies have violated the order passed by this Court in pith and substance. In spite of the dismissal of the Review application, they have not deposited any amount so far. It appears the way in which things are happening that they have scant respect to the directions issued by this court. A Desk Officer of the Department of Telecommunications has the temerity to pass the order to the effect of issuing a direction to the Accountant General, another Constitutional Authority, “not to insist for any payment pursuant to the order passed by this Court and not to take any coercive steps till further orders.” This is nothing but a device to scuttle order of this Court. This kind of order should not have been passed by the Desk Officer at all.
Supreme Court Order 

The apex court also summoned managing directors and directors of all telecom operators to show cause as to why they should not be held in contempt for violating the court’s order. They’ve been asked to be present in court on March 17, in case the dues have not been paid by then. “It’s made clear that in case the order passed by this court is not complied with, the above persons shall remain personally present in court on the next date of hearing.’’

The Supreme Court had in October ruled that non-core revenue must be included in revenue while calculating levies, ending a 14-year-old legal battle between mobile operators and the government on the definition of AGR. The top court’s order resulted in liabilities worth more than Rs 90,000 crore for telecom operators. India’s two incumbent service providers—Vodafone Idea Ltd. and Bharti Airtel Ltd.—together owe more than Rs 88,000 crore in pending AGR dues to the Department of Telecommunications. The apex court had set a three-month deadline to make the payments.

That dealt a crippling blow at a time the telecom operators were already bruised by free calls and cheap data onslaught of Reliance Jio Infocomm Ltd. Asia’s richest man Mukesh Ambani’s carrier, which had liabilities worth Rs 165 crore, paid the dues, while incumbent peers moved the Supreme Court seeking a review of definition of AGR. The apex court, however, dismissed the review petitions, saying there won’t be any change in dues that the telecom operators were liable to pay.

Several non-telecom companies such as GAIL India Ltd. and Power Grid Corporation of India Ltd. are also impacted by the Supreme Court AGR judgment.

Shares of Vodafone Idea fell as much as 9 percent on Friday after rising 21 percent in the opening trade on the back of earnings, while Bharti Airtel remained volatile.

Also read: Vodafone Idea Q3 Results: Greater-Than-Expected Loss, Margin Contracts

Watch the video here...

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.