SC directs DoT not to invoke Airtel bank guarantees for non-payment of Videocon’s AGR dues, BFSI News, ET BFSI
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A three-judge bench led by Justice L Nageswara Rao allowed Bharti Airtel to go to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) for relief over the issue.
“We’ve made it clear we will not review the (main AGR) judgement. He (Airtel) wants to file an application. We will allow. He (Airtel) says after dues are added now, so you hold your hands for some time till he goes before TDSAT,” the bench also comprising Justice SA Nazeer and Justice MR Shah told Solicitor General Tushar Mehta.
Mehta was arguing that the recovery notice served by the Department of Telecommunications (DoT) on Airtel was as per the court’s AGR dues order. He added that he would contest the jurisdiction of the TDSAT to decide the issue.
The DoT had issued a demand notice on August 17, 2020, asking Bharti Airtel to pay AGR dues assessed at Rs 1376 crore within a week or have the bank guarantees invoked. The dues were of Videocon Telecommunications, whose spectrum was acquired by the Sunil Mittal-led carrier in 2016. Videocon had sold rights to use spectrum in the 1,800 MHz band in six circles to Airtel in 2016 for Rs 4,428 crore.
The Sunil Mittal-led telco said that it had so far paid the government Rs 18004 crore by way of AGR dues, which was more than 10 percent of dues to have been paid by March 31, 2021, as per the top court’s order. DoT has demanded Rs43,980 crore from Airtel towards AGR dues.
Senior advocate Shyam Divan, representing Airtel, said that Airtel was not responsible for Videocon’s dues on account of the spectrum trading deal as the law states that the ‘seller shall clear all dues prior to concluding any agreement for spectrum trading’.
“Our agreement date is 16th March 2016. I am the buyer and the effective date is 18th May 2016. If there was a liability not known to parties at the time, the government has discretion to recover jointly or severely. In our case, it’s common ground between us that it was known liability, so we are not in the realm of unknown liability,” argued Diwan. “The liability is of Videocon, full liability is of the seller.”
The bench intervened, saying “We know where you are heading, but we are not going to review this judgement.”
To this, Divan responded: “We don’t want to review the judgement.”
He added that Rs1376 crore were Videocon’s dues and must be paid by that company. “In fact, DoT has claimed this from Videocon in insolvency proceedings,” said Divan.
Divan said that DoT’s “precipitate action,” “totally affects our working” and sought a stay on the government’s demand notice.
The DoT had filed an affidavit in the SC in April, 2021, saying that Airtel had refused to pay the AGR-related dues of Videocon, despite its demand.
In its response, Airtel, through letters dated 16.10.2020 and 4.3.2021, said that DoT’s demand has “no basis in law” and that Airtel cannot be held responsible for Videocon’s past dues given that the buyer of spectrum is not responsible for dues which were ‘known’ at the time of trade.
As per the DoT affidavit, Airtel added that contrary to its current stance, DoT had never raised such demand from Airtel in the past and maintained its position that these dues were solely recoverable from Videocon.
“…given the clear and categorical findings of the Hon’ble Supreme Court, the trading guidelines issued by DoT and DoT’s own understanding, along with the fact that such demand was never raised on Airtel, is ample testimony to the fact that Airtel is not liable for any outstanding dues of Videocon pertaining to the outstanding AGR dues. i.e. License Fees and Spectrum Usage Charges of M/S Videocon,” Airtel said, as per the DoT affidavit.
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