Govt Directs Telcos To Pay Rs 1.5 Tn After SC Rebuke

The government on February 14 set a minute to-midnight deadline for telecom companies, including Vodafone Idea and Bharti Airtel, to pay the Rs 1.47 trillion they owe towards spectrum charges and licence fees, after a livid Supreme Court took the Department of Telecommunications (DoT) and cellular operators to task over the non-enforcement of an October ruling by the top court. The orders were sent from DoT offices at each of India’s 22 telecom circles.

The twin moves came in response to the Supreme Court warning of contempt action against the chiefs of defaulting telecom companies as well as the DoT desk officer responsible for the June 23 order that was issued in the backdrop of extreme stress in the telecom sector. Bharti Airtel responded immediately, offering to pay Rs 100 billion by February 20 and the rest of its dues before the next date of hearing, March 17. “… in compliance with the judgement of the Hon’ble Supreme Court and their direction today, we shall deposit a sum of Rs 100 billion (on account) by 20th February 2020, on behalf of the Bharti Group companies,” Airtel said in a letter to member (finance) at DoT. Airtel, which owes nearly Rs 355.86 billion by way of licence fees and spectrum usage charges, said it was in the process of completing a self-assessment exercise.

 “You will appreciate this is a complicated process, covering 22 circles, multiple licenses and a substantial period of time and hence, is time consuming,” the letter said. There was no immediate statement from Vodafone Idea. On October 24, the Supreme Court allowed the central government to recover Rs 926.41 billion in adjusted gross revenue (AGR) from telecom companies in a verdict that hit Bharti Airtel and Vodafone Idea the hardest. The court accepted the government’s definition of AGR — that it includes their income from revenue lines that are not central to their main business. Income from sales of handsets, termination and roaming charges, rent and dividends should count as part of AGR, which determines what telecom companies pay as licence fee and spectrum usage fee, the court ruled in a verdict that came at a time when debt-laden service providers were already under intense pressure because of adverse regulatory orders, hefty levies and intense competition amid a price war set off by the entry in 2016 of Mukesh Ambani’s Reliance Jio Info COMM. Vodafone Idea and Bharti Airtel both posted record losses in the September quarter. The court order came in a 16-year-old case stemming from DoT claims that telecom companies had under-reported their revenue and thus paid less for spectrum and in the form of other levies.

 On February 14, a Supreme Court bench of justices Arun Mishra, S Abdul Nazeer and MR asked telecom companies to explain why contempt proceedings should not be initiated against them and took to task the DoT desk order who issued the January 23 order that had effectively put the Supreme Court ruling in abeyance. The officer has to file his reply by March 17. “We draw contempt proceedings against the Desk Officer for passing the order and violating the order passed by this Court. The Managing Directors/ Directors of the companies also to show cause why we should not initiate contempt proceedings against them for violating the order passed by this Court by not depositing the amount, on the next date of hearing. Let the concerned Officer, sitting over the order passed by this Court, also file a reply,” the order said.

The court also directed that if its order is not complied with, the managing directors and directors of the defaulting telecom companies should be present in court on March 17, the next date of hearing. A total of 15 companies owe DoT money on account of AGR. February 14th observations by the Supreme Court came during a hearing on applications by telecom companies seeking extension of the time for paying their dues. When the matter was taken up for hearing on February 14th, justice Mishra observed that no payment had been made by the telecom companies. “Not even a penny has been deposited so far by the companies and a stay by a desk officer (ensued).

 The judicial system of this country has been taken away,” he said. The scenario was disturbing because it reflected scant respect for the directions of the top court, the bench said. “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,” the order passed by the court said.

The apex court said that the office direction by DoT issued on January 23 (seeking no “coercive action” against the companies for non-payment) was a device to scuttle the order of the top court and such a direction should not have been passed at all. “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,” the order stated. The notification of January 23, Mishra said, should be withdrawn immediately or the concerned DoT officer will have to face penal action. “If he does not withdraw it within an hour, he will go to jail today itself,” the judge said. According to an official from the telecom ministry the January 23 order was issued without the secretary or the minister being aware of it. “We are now looking into why that order was issued,” said the official.

By:

Babita Sharma