SC:  Don’t  encash  Airtel guarantees  for 3 weeks

The Supreme Court on Tuesday directed the government not to encash bank guarantees of Bharti Airtel Ltd for three weeks over the payment of adjusted gross revenue (AGR) dues to allow the company to approach a telecom appeals tribunal.

The department of telecommunications (DoT), in a 17 August letter to Bharti Airtel, demanded payment of ₹1,376 crore as AGR dues within a week, failing which DoT threatened to invoke the bank guarantees furnished by the telecom operator.

Airtel then approached the Supreme Court, claiming that the dues were to be paid by the now-defunct Videocon Telecommunications Ltd. Airtel said it agreed to buy the spectrum held by Videocon in March 2016, and according to the agreement, all dues prior to this period were to be settled by the seller.

Allowing Airtel to withdraw its application and approach the Telecom Disputes Settlement and Appellate Tribunal, the bench of Justices L. Nageswara Rao, S. Abdul Nazeer and M.R. Shah said: “The department of telecommunications shall not invoke the financial bank guarantees of respondent No.53 (Bharti Airtel) for a period of three weeks from today.”

Appearing for Airtel, senior advocate Shyam Divan said DoT had wrongfully fastened the liability of ₹1,376 crore on it, and the fresh demand was based on the 1 September 2020 judgement by the top court.

The September 2020 order refused any further reassessment of AGR dues and directed telecom service providers to pay 10% of their dues by 31 March and thereafter pay the rest in 10 yearly installments by March 2031. The existing bank guarantees submitted by telcos regarding the spectrum were to be kept alive until any default in payment.

Divan submitted that under the spectrum trading agreement, Airtel will be liable to pay only such dues that were incurred after the date of agreement which came into operation on 16 May 2016. The AGR dues, according to him, pertained to the period prior to the agreement, liable to be paid by Videocon.

The company claimed to have fully complied with the September 2020 order by depositing ₹18,004 crore by 31 March 2021, which was far more than the 10% due payable out of the total AGR dues of ₹43,980 crore calculated by DoT.

“The demand notice disrupts my working, and I seek a stay of such precipitative order passed by DoT,” Divan argued. With the bench not keen on entertaining his request, Divan submitted that he should be allowed to raise this dispute before TDSAT, and his bank guarantees should not be invoked till then. On this condition, Divan agreed to withdraw his application. The bench said, “We are not going to revisit our judgement.”

Solicitor general Tushar Mehta, appearing for DoT, opposed the application saying, “The demand is consistent with the Supreme Court judgement.” The bench wanted to know if the government could hold on for a brief period to enable the company to approach to TDSAT. Mehta said it was up to the company to approach a forum of its choice, but it should be left open to the Centre to raise all contentions, including jurisdiction, as, in its opinion, no forum except the Supreme Court had jurisdiction to pass orders on this aspect.

The bench allowed Airtel to approach the appropriate forum for redressal of its grievances and directed that the DoT will also be at liberty to raise all contentions before the said forum.

In July, the top court refused to entertain the plea by telecom companies complaining about arithmetical errors committed by DoT in calculating dues.

In October 2019, the Supreme Court directed the telecom companies—Vodafone Idea, Bharti Airtel, Tata Teleservices, among others—to pay up AGR dues. Currently, the balance of AGR dues payable by private telecom firms, state-owned telecom providers—MTNL and BSNL—and telecom companies under liquidation adds up to more than ₹1.43 trillion.