SC AGR Hearing HIGHLIGHTS: The Supreme Court continued hearing the case on adjusted gross revenue (AGR) dues of insolvent telecom companies including Reliance Communications, which amounts to Rs 45,000 crore. Senior advocate Harish Salve, appearing for Reliance Jio, said that it is nobody’s case that spectrum is owned by anyone else other than the government. Salve added that spectrum is recorded as an asset, by virtue of having been purchased in an auction. Telecom companies own the right to use the spectrum which is an extremely valuable right of the telcos. The Supreme Court asked that if telecom companies don’t own the spectrum then how can they sell it. “Telcos only have a right to use spectrum,” SC said. Salve also said that it’s premature for the SC to decide if the spectrum can be sold. The apex court should not trouble itself. A bench comprising Justices Arun Mishra, S Abdul Nazeer and MR Shah heard the matter. The SC has adjourned the case till 2 PM tomorrow.
AGR Hearing HIGHLIGHTS: Jio counsel explains spectrum ownership, rights; SC asks how can telcos sell it
SC AGR Hearing HIGHLIGHTS: Reliance Jio counsel Harish Salve said that telecom companies own the right to use the spectrum. The Supreme Court asked that if telecom companies don't own the spectrum then how can they sell it.
Updated:
The Supreme Court adjourned the hearing till 2 PM tomorrow.
The Supreme Court didn't agree on the MCA filing a separate affidavit. It said that its stand is clear now.
Ranjit Kumar informed Solicitor General has said the MCA has a different view from DoT. Let them file an affidavit. We don't have their affidavit. MCA should also file its stand.
Who will argue tomorrow? Supreme Court asked. Senior counsel Ranjit Kumar informed that Ravi Kadam for RP in Aircel will start. He could place all the documents. And then I can answer on behalf of CoC of Aircel.
The Supreme Court allowed senior advocate Harish Salve to file a short note with citations.
"The Department of Telecommunications' consent doesn't mean everything. DoT also bound to certain guidelines," said Justice Mishra.
"Without the Department of Telecommunications' consent, nothing can be done. DoT and MCA will have to sort out the differences somewhere else," said Harish Salve.
Justice Mishra said the government won't get anything. "You have put them in operational creditors category. How can they be put in this? Trading may be permissible, but there are certain riders," Justice Arun Mishra said.
Senior advocate Harish Salve referred to a principle which bars anyone getting exclusive rights over any natural resource.
Justice Arun Mishra said that the production sharing contract is different.
"Even the government holds it in public trust. The government had no right to fritter away anything. It's taxpayers money," said the Supreme Court.
Senior advocate Harish Salve was talking about Justice GS Singvi's judgment in 2G matter which talked about auctioning of natural resources.
"If you enlighten us, it will be better," said Justice Arun Mishra when Harish Salve asked the bench if he has to address the Court on natural resources issue.
"In May 30th order, when Tribunal passed the order, they said this Ericsson settlement will be subject to the outcome of the appeal," Senior advocate Harish Salve said.
The Supreme Court asked about the settlement with Ericsson during AGR hearing
Senior advocate Harish Salve began discussing Ericsson's case
Even resolution applicant says the plan involves the sale of the right to use spectrum only subject to DoT approval, says Harish Salve.
SC says guidelines provide that dues need to be taken care of before sale of the spectrum being allowed. But IBC has relegated govt dues to only operational creditors, behind banks/financial creditors. In such a scenario, how will prior dues be paid, as required by guidelines.
Shares of Vodafone Idea slipped 1.58 per cent to trade at Rs 8.71 apiece on BSE, as compared to a gain of 0.22 per cent in S&P BSE Sensex.
Check price: Vodafone Idea
Senior advocate Harish Salve also argued that if sale of spectrum is not allowed, then Reliance Communication will go into liquidation and it won't help anyone.
"Right to use, ownership, other rights of an insolvent company will be transferred to RP," Supreme Court said.
"Spectrum sale allowed under trading guidelines, but how will it be sold under IBC? RP under the IBC is empowered to take possession of assets," Supreme Court observed.
The Supreme Court said that all resolution transactions, including spectrum sale, must be as per Insolvency and Bankruptcy code (IBC).
Senior advocate Harish Salve added saying that right to use spectrum is with the telecom company and ownership can't be absolute. Even UVARC may back out if DoT decides against spectrum sale citing IBC.
"The right to use spectrum is its asset. We are not seeking to sell spectrum but only to transfer the right to use," said Harish Salve
Senior advocate Harish Salve said that telecom companies have a right to use spectrum and it is a valuable right.
"Can the right to use be construed as ownership? All resolution transactions, including spectrum sale, must be as per IBC. Right to use, ownership, other rights to be transferred to IRP," Supreme Court said.
The Supreme Court said that spectrum sale is allowed under trading guidelines, but how can it be sold under IBC?
RCom share price hit a 5% upper circuit in intraday today at Rs 2.75 apiece on BSE today. At close, Reliance Communications shares ended at Rs 2.70 apiece, up 3.05 per cent.
Check live prices: Reliance Communications
Bharti Airtel shares ended 1.79 per cent higher at Rs 536.25 apiece on BSE. The stock quoted day's high of Rs 539.80 apiece.
Check live prices: Bharti Airtel
"Spectrum recorded as an asset by virtue of being purchased in an auction. Telecom companies own an extremely valuable right to use spectrum," Harish Salve said.
If the resolution plan succeeds, the Department of Telecommunications (DoT) will decide on the sale of the spectrum at that stage. Let the government only decide.
It is premature for the Supreme Court to decide if the spectrum can be sold. The apex court should not trouble itself now.
Harish Salve said that spectrum can not be sold without the Department of Telecommunications (DoT) nod.
The Supreme Court observed that telecom companies are recorded as an owner to spectrum. How can telcos sell spectrum when they don't own? Telcos only have a right to use spectrum.
Senior advocate Harish Salve said that no one can take possession of a spectrum, like a river. Right to use is very different from possession.
Senior advocate Harish Salve that license merely transfers the right to use, that right involves payments.
"It is nobody's case that spectrum belongs to anyone but the government," Harish Salve said. Salve added that they have the right to use it only.
Justice Arun Mishra said, "We are examining a different issue". "I am answering whether bankruptcy laws apply to spectrum. Moratorium law says yes," Harish Salve said
Default or shortfall is there, but no termination or suspension of license was allowed. This is where RCom is today, says Harish Salve