AGR dues: Telcos proceeded with spectrum sale as DoT delayed filing appeals

By: |
August 12, 2020 6:50 AM

On November 27, 2019 the NCLT ruled that Aircel can go ahead and sell spectrum as part of its resolution plan.

The SC bench on August 10 pulled up the DoT for filing the appeal late and asked it to inform by Friday how it plans to recover the AGR dues of Aircel and Rcom.The SC bench on August 10 pulled up the DoT for filing the appeal late and asked it to inform by Friday how it plans to recover the AGR dues of Aircel and Rcom.

The Department of Telecommunications (DoT) has only itself to blame for the mess it has created with regard to the adjusted gross revenue dues of the insolvent companies like Aircel and Reliance Communications. First, it did not file an appeal on time in the appellate tribunal when in November 2019 the National Company Law Tribunal (NCLT) dismissed its petition that bankrupt Aircel cannot put spectrum given by the government, up for sale as part of its resolution plan. Second, it once again delayed filing an appeal in the Supreme Court against the NCLAT order dismissing its appeal as time-barred.

Interestingly, the Department of Telecommunications filed its appeal against the March 4 order of NCLAT only on July 24, that is four days after the SC asked it to place all records regarding the AGR dues of the insolvent companies before it by August 10 to find out who pays on their behalf.

The SC bench on August 10 pulled up the DoT for filing the appeal late and asked it to inform by Friday how it plans to recover the AGR dues of Aircel and Rcom.

The DoT’s counsel, the solicitor-general, told the court that spectrum belongs to the government and is given to the telecom operators on lease and it cannot be put up for sale as part of the resolution plan. The bench replied, that’s fine but if you delay in filing appeal how can you prevent spectrum from being sold off?

The issue has arisen because government is an operational creditor and the payment of its dues will come after the dues of the financial creditors like banks are paid off and therefore the chances of the government recovering its AGR dues through the insolvency process is near negligible.

On November 27, 2019 the NCLT ruled that Aircel can go ahead and sell spectrum as part of its resolution plan. Though the tribunal accepted DoT’s contention that Aircel does not have ownership over spectrum but said that under insolvency and bankruptcy code (IBC) continuity of service needs to be maintained and for that spectrum and licences of the company cannot be terminated by the DoT. The tribunal said that since its remit is limited till the IBC, the DoT is free to move to Telecom Disputes Settlement and Appellate Tribunal or the Telecom Regulatory Authority of India (Trai) on the issue.

The DoT filed its appeal against the order in the NCLAT on February 20, 2020 which was dismissed on March 4, 2020 as appeals are time-barred. A three-member bench of the NCLAT held that the petition filed by the DoT was time barred under the provisions of Section 61 of the Insolvency & Bankruptcy Code, 2016. Under the IBC, any appeal against order passed by the NCLT could be filed before the appellate tribunal within 30 days and the delay which can be condoned for reasonable cause in the NCLAT is only 15 days.

“This appeal was presented on February 20, 2020. Even giving the longest rope, if calculate the period from December 20, 2019, the appeal is presented consuming 61 days. This being so, the appeal is time barred and for want of jurisdiction, we cannot entertain the appeal,” the NCLAT said, adding, “The appeal is dismissed as time barred”.

This is with regard to Aircel. With regard to Rcom, when the company filed for insolvency, it sought status quo on spectrum and licence from NCLAT citing the Aircel order and the DoT never appealed.

While Reliance Communications has AGR dues worth Rs 25,000 crore, Aircel’s is around Rs 12,389 crore.

The SC has raised the issue at a time when the NCLT has approved the resolution plan of asset reconstruction firm, UVARCL for Aircel, which includes it assets and spectrum and is in the final stages of taking a call on the assets and spectrum of Rcomm.

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