The Supreme Court on Friday questioned why Reliance Jio Infocomm (Jio) should not be held liable to pay adjusted gross revenue (AGR) dues related to Reliance Communications’ (Rcom) spectrum that it has been using since 2016.
“Jio must pay Rcom’s AGR dues if Jio is actual user of spectrum….Spectrum is government’s,” said Justice Arun Mishra, leading the three-judge bench on the AGR case on Friday.
Emphasising that spectrum belongs to the government and revenue must be shared, the bench asked for spectrum usage details of all insolvent telcos.
“Revenue has to be shared. Person using it must pay AGR dues…Spectrum involves public property. Government revenue regime allows sharing,” said the apex court.
The top court asked the agreement between two parties to be placed on record.
“We have directed them to place on record the information relating to Agreement entered into with respect to using of spectrum by the respective parties. In the case of RCOM, its spectrum of 800 MHz is being used by Reliance Jio from 2016,” said the court order.
The telecom department was also given instructions to detail out spectrum agreements and payment modalities between telcos.
“The Department of Telecommunications (DoT) to make it clear in whose name and from which date the spectrum is being used and how much fees/dues of AGR year-wise and amount deposited with it for using of the same by the respective companies under some inter se arrangements of the companies and the dates thereof,” ordered SC.
The court in its order directed that all details of the bankrupt telcos should be “made clear by the CoC and the Resolution Professional as well as by the counsel appearing for the respective companies”.
Friday’s development will come as a rude shock to the Mukesh Ambani-led telco which appeared to have been least affected by the SC verdict widening the definition of AGR to include non-core items
Jio has cleared its own AGR dues of Rs 195 crore while Rcom now owes the government Rs 25,194.58 crore in statutory dues, including those of Sistema Shyam Teleservices (Rs 222.1 crore), which was merged with it.
The case has been adjourned for next Monday-August 17.
The once Anil Ambani led telco entered into an agreement with Jio in 2016 for trading spectrum in 8 circles and sharing airwaves in 17 circles. Jio has been paying spectrum usage charges for RCom’s airwaves used.
The two telcos had also tried to ink an asset monetsiation plan for RCom but the telecom department’s refusal to give its nod without dues getting cleared led to the deal falling apart.
Since then the telecom sector has changed drastically and while Jio is the leading telco today, Rcom is awaiting regulatory nods for its resolution plan (RP).
The top court also wanted to know about companies vying for RCom’s assets.
“Who’s buying RCom? Want to know individual behind purchaser? Not everything is being told to us clearly ,” remarked the bench.
RCom and its unit Reliance Telecom which houses spectrum, fibre , data centre is expected to be sold to asset reconstruction firm UV Asset Reconstruction Company (UVARCL), while Reliance Infratel-the tower unit, is likely to go to Jio. The dedicated insolvency court is yet to give its nod to these resolution plans.
Interestingly UVARCL has received the National Company Law Tribunal’s (NCLT) approval for buying Aircel’s assets as well. Aircel’s case mirrors RCom , since spectrum remains a crucial asset here as well.
Friday’s hearing was part of a larger AGR case where SC had wanted to ensure that the bankrupt telcos like Rcom , Aircel etc were not evading statutory dues.
“Similar direction is issued to other companies which are under insolvency, including Aircel Limited, Aircel Cellular Limited and Dishnet Wireless Limited and Videocon Telecommunications Ltd. to specify who is using the spectrum an arrangement along with documents be placed on record,” stated SC’s order.
While Rcom collapsed in 2019 under a debt of Rs 46,000 crore, Aircel went bust under a debt of Rs 26,000 crore.
There have been multiple battles over usage, transfer and ownership rights of airwaves that the bankrupt telcos have and were most important asset in their resolution plans.