Supreme Court Rejects Telecom Companies’ Curative Petitions on AGR Dues

What’s in today’s article?

• Why in News?
• What is Adjusted Gross Revenue (AGR)?
• Recent SC Judgement in Telecom AGR dues case
• Key highlights of the judgement

Why in News?

Recently, the Supreme Court of India dismissed curative petitions filed by major telecom companies, including Vodafone Idea and Bharti Airtel, regarding their Adjusted Gross Revenue (AGR) dues. 

These companies sought a review of the Court's October 2019 judgment (Vodafone Idea Limited v. Union of India), which held them liable to pay AGR dues.

What is Adjusted Gross Revenue (AGR)?

• About
  • Telecom operators are required to pay licence fee and spectrum charges in the form of revenue share to the Centre. 
  • The revenue amount used to calculate this revenue share is termed as the AGR.
  •  Calculation of AGR and Controversy
  • As per Dept of Telecom, the revenue calculations should incorporate all revenues earned by a telecom company.
    • This also includes revenues from non-telecom sources such as deposit interests and sale of assets.
  • The companies, however, are of the view that AGR should comprise the revenues generated from telecom services only.
    • Non-telecom revenues should be kept out of it.
• Legal battle over definition of AGR
  • The telcos and the government were involved in the legal battle over the definition of AGR to include the source of revenues. 
  • In October 2019, the top court widened the definition of AGR to include the government's view.
  • The court ordered to include all revenues, except for termination fee and roaming charges, as a part of the AGR.
• Final Ruling on AGR issue
  • On September 1, 2020, the Supreme Court gave its final ruling on the AGR issue.
  • It had directed telecom companies to pay AGR, interest and penalty on non-payment on AGR dues.
  • Telecom service providers were asked by the SC to make payments in yearly instalments between April 1, 2021 and March 31, 2031.
    • In case of default on payment, interest and penalty on interest would automatically be payable, and that non-payment would be punishable for contempt of court.
• Steps taken by Government after SC Judgement of 2020
  • In September 2021, the Union Cabinet had cleared the telecom reforms package aimed at improving liquidity and ease of doing business.
  • Telecom companies were provided with the option of four-year moratorium on spectrum and AGR dues. 
    • In other words, telecom companies could opt to pay the principal, the interest, and all other penalties, after four years, instead of paying it then.
  • The government had also given all the telcos a one-time opportunity to convert the interest on this deferred payment into equity at the end of the four-year period.

Recent SC Judgement in Telecom AGR dues case

• About the news
  • The Supreme Court has dismissed curative petitions filed by telecom service providers against the court’s October 2019 judgment.
    • 2019 Judgement upheld the Department of Telecom’s (DoT) move to recover AGR of about ₹92,000 crore from them.
• Background of the present case
  • The apex Court in October 2019 allowed the Centre's plea to recover AGR of about Rs. 92,000 crores from them. 
    • A three-judge bench upheld the definition of AGR formulated by the Department of Telecom (DoT).
  • In January, 2020, the Court rejected the pleas by Vodafone Idea, Bharti Airtel and Tata Teleservices seeking review of the 2019 verdict that widened the definition of AGR.
  • In September 2020, the SC passed an order requiring telecom companies to pay their AGR dues over a period of 10 years. 
    • This was after the DoT moved to the SC proposing staggered payment over 20 years for telecom firms to discharge their AGR dues.
  • In 2021, the apex court dismissed the pleas by telecom companies seeking correction of errors in calculation of AGR dues payable by them as per the October 2019 judgment.
  • In 2023, telecom companies filed curative petitions against the Court's January 2020 decision (dismissing the review petitions).
  • Thereafter, the curative petitions were considered by three senior-most judges of the Court and dismissed recently.

Key highlights of the judgement

• No ground to exercise curative jurisdiction
  • The SC Held that no ground was made out to exercise curative jurisdiction in terms of the Court's decision in Rupa Ashok Hurra v. Ashok Hurra.
    • The Supreme Court had evolved the idea of curative petitions in the landmark judgment of Rupa Ashok Hurra vs. Ashok Hurra.
    • The five-judge bench observed that Article 142 of the Constitution empowers the Supreme Court to act in whatever manner they may deem fit to establish complete justice.
    • Therefore, to protect the substantive rights of the litigant, the Constitution Bench came up with the theory of a curative petition.
    • Curative petition will be entertained on strong grounds only e.g.
      • Violation of principles of natural justice.
      • Where the judge has a bias
• This sector has benefitted immensely
  • The apex court observed that this sector has benefited immensely under the scheme as apparent from the gross revenue trend from 2004 to 2015.
    • The telecom sector had long reaped the fruits of the Centre’s liberalised mode of payment by revenue sharing regime with the government.
  • The telecom service providers in spite of the financial benefits of the package started to ensure that they do not pay the licence fee to the public exchequer based on an agreed AGR.

Q.1. Why did telecom companies file curative petitions?

Telecom companies, including Vodafone Idea, filed curative petitions to challenge the Supreme Court’s 2019 ruling that widened the scope of AGR dues, seeking to reduce their liabilities.

Q.2. What was the outcome of the telecom curative petitions?

The Supreme Court dismissed the curative petitions, reaffirming its decision that telecom companies must pay AGR dues as per the Department of Telecom’s expanded definition.

Source: Telecom AGR dues: Supreme Court dismisses curative pleas on computation ‘errors’ | Live Law | Indian Kanoon | PIB | The Hindu