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Legal

Supreme Court AGR Case Highlights: Justice Arun Mishra bench strikes down Rs 4 lakh crore demand against PSUs, seeks payment pledge from telcos

Updated : June 11, 2020 03:43 PM IST

Here are the major highlights from the AGR hearing from the Supreme Court today

The Supreme Court Thursday termed as “totally impermissible” the demand by Department of Telecom (DoT) for dues of Rs 4 lakh crore in Adjusted Gross Revenue (AGR) from the public sector undertakings (PSUs) and said DoT must consider withdrawing it. A bench of Justices Arun Mishra, S Abdul Nazeer and M R Shah raised questions on the demand raised by the government from the PSUs and said that its verdict in the case was misinterpreted as the issue of their dues based on AGR was not dealt with by the apex court.

Solicitor General Tushar Mehta, appearing for DoT, told the bench that it would file an affidavit explaining as to why the AGR demands were raised against the PSUs. The bench also asked private telecom operators such as Bharti Airtel, Vodafone Idea, et al to file affidavits giving details as to how they will pay the AGR dues.

Here are the major highlights from the AGR hearing from the Supreme Court today:

Supreme Court to next hear the AGR case on June 18. Meanwhile, Bharti Airtel gaining in the trade now.

#BREAKING in the #AGR Case | Supreme Court directs @DoT_India to reconsider demands raised against PSUs pic.twitter.com/zCkDEsAvCI
— CNBC-TV18 (@CNBCTV18Live) June 11, 2020

Telecom companies are directed to file a reply on the roadmap of payment, time to be allowed & securities.
Govt admits to differences in licences of PSUs & Telcos. Our judgment could not have been made the basis of launching demand against PSUs. DoT is directed to clarify the raising of demands within 3 days of the order.
The Supreme Court starts pronouncing its order in the AGR case. Here is the first point: Have questioned the DoT on how demand against PSUs had been raised, when our judgment never even dealt with PSUs.
Bharti Airtel's counsel Dr Singhvi says that the company alone has made a contribution of Rs 100 crore to the PM Cares Fund.
The Supreme Court says telecom companies making profits during the lockdown, but none of them contributed anything towards COVID-19.
Vodafone Idea counsel tells the apex court, can't secure a bank guarantee of Rs 50,000 crore at this point.
Supreme Court: Are telecom companies prepared to issue a Bank guarantee? Are directors prepared to issue a personal guarantee? Undertakings will have to be there, we can't allow such staggered payout without securing govt dues.

ALSO READ | AGR case in SC: Vodafone Idea, Bharti Airtel share price recovers marginally after hearing concludes

Vodafone Idea tells Supreme Court that the best reassurance is that licence, the spectrum can be cancelled if we don’t pay. The total balance demand is Rs 50,000 crore, we don’t have enough money to issue Bank guarantee of Rs 50,000 crore.
Meanwhile, shares of Vodafone Idea take a knock after some comments by Supreme Court in the AGR hearing underway currently. The stock is down 7 percent.
Bharti Airtel tells Supreme Court, it’s already paid Rs 18,000 crore, 70 percent of the Rs 25,600 crore received by DoT from all companies. The biggest reassurance is that our licence can be cancelled if don't pay over the agree time period.

#AGR Case | Various considerations on the mind of the cabinet, it has proposed 20 years for repayment of dues by telcos, Solicitor General tells SC pic.twitter.com/J4N6jxfvXK
— CNBC-TV18 (@CNBCTV18Live) June 11, 2020

Supreme Court observes that nobody has seen the next 20 years, can't allow extension based on a "gentleman's promise". How can 20 years be said to be reasonable. Solicitor General says various considerations are on the mind of the cabinet, it has proposed 20 years.
Solicitor General tells Supreme Court, PSUs were licence holders is our justification. We will file the necessary affidavits to explain our position. The SG's stance came after the SC observes: DEMAND OF AGR PAYMENT AGAINST PSUs IS IMPERMISSIBLE.
Supreme Court observes, demands to the tune of Rs 4 lakh crore being raised with ulterior motives.

Is the govt trying to overwhelm us by raising surcharge demands? - Supreme Court questions Govt over the #AGR matter & PSUs pic.twitter.com/7Cgpn3XYmj
— CNBC-TV18 (@CNBCTV18Live) June 11, 2020

The Solicitor General is now taking the Bench through the differences of licences in PSU telco firms and commercial sector firms. The SG tells Supreme Court, most PSUs hold licences which are different from telecom service providers. Bills that we have raised come up to Rs 4.28 lakh crore.
Amongst PSUs, Oil India dues stand at Rs 48,489 crore, Power Grid at Rs 22,062.65 crore and GAIL at Rs 1.72 lakh crore. Meanwhile, GAIL shares are nearly 10 percent off lows after SC observes demand against PSUs must be withdrawn.

#AGR Case | What nonsense is being done in the name of our judgment? Demand against PSUs must be withdrawn, Supreme Court observes pic.twitter.com/wUp8sVyV5R
— CNBC-TV18 (@CNBCTV18Live) June 11, 2020

The Supreme Court observes that the demand against PSUs must be withdrawn.
Supreme Court observes, our judgment was silent on PSUs. There was never an issue. Who authorised demands to be raised against PSUs?

#AGR Case | Justice Arun Mishra-led bench raises an important question - Are telcos willing to submit personal guarantees by directors? pic.twitter.com/YIYn86ZVHM
— CNBC-TV18 (@CNBCTV18Live) June 11, 2020

Solicitor General tells Supreme Court, telecom companies must provide some security to satisfy the court.
Justice Arun Mishra to SG: “There are two issues: What is the time within which they are to pay? What is the guarantee they will pay within the time fixed? You had argued about the impact on the Telecom sector earlier as well.”
Solicitor General to SC—The Central govt has examined the AGR issue and its impact across sectors if the amount is collected at one go. Some telecom companies may close operations. And with the limited porting capacities, it will hurt crores of customers, the SG said. it will impact the quality of service, migration of crores of customers will not be seamless.
Justice Arun Mishra-led bench assembles and the hearing in the most anticipated AGR case begins. Senior Advocate Dr Abhishek Manu Singhvi is appearing for Bharti Airtel; Sr Adv Arvind P Datar for Tata Group and Sr Adv Kapil Sibal for Hughes Communications.
CNBC-TV18's Ashmit Kumar reports from the Supreme Court that the AGR hearing is likely to get delayed. At present, there are some tech issues being ironed out for the virtual hearing. And there is one more case to be heard before the AGR case. The hearing was scheduled to begin at 12.30 pm.

((Live thread))

AGR hearing in Supreme Court -
Hearing likely to get delayed. Was initially scheduled for 12.30pm.
Tech issues being ironed out. pic.twitter.com/7Fvl2g9gCJ
— Ashmit Kumar (@AshmitTejKumar) June 11, 2020

Telecom infrastructure company Bharti Infratel said its board meeting, which was slated to be held on Thursday to take a final call on merger with Indus Towers, has been rescheduled. "Certain inputs that would have been required by the board for it to deliberate and take a final decision have been delayed given the current environment," the company said in a regulatory filing. The board of the company was slated to meet on Thursday to take a final decision on the scheme of arrangement between Indus Towers and Bharti Infratel.
In March, before the commencement of the ongoing coronavirus-forced lockdown, the Department of Telecom (DoT) had moved the Supreme Court proposing staggered payment over 20 years for telecom firms to discharge their AGR dues.
The DoT had said that immediate payment would result in possible bankruptcies and could potentially hurt crores of customers. It proposed the 20-year formula on the back of license fee and spectrum usage charges dues worth 1.43 lakh crore that was upheld by the apex court in its October 2019 judgment.
However, the Supreme Court on March 18 come down heavily on the DoT for allowing telcos the facility of self-assessing their dues payable. The Supreme Court had lashed out at the DoT, calling it fraudulent and contemptuous of the court for the DoT to allow telecom firms to rework the amounts payable in contravention of the court’s order.

ALSO READ | AGR dues: What telcos owe, what they have paid so far

Vodafone Idea has paid 6,854 crore of its dues, while the DoT’s demand of the firm stands at Rs 58,254 crore. The company’s self-assessment pegged its dues at Rs 21,533 crore.
Bharti Airtel has paid Rs 18,004 crore so far against the DoT’s demands of Rs 43,980 crore. The company estimates its dues at Rs 13,004 crore.

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