Aircel moves Supreme Court to quash Madras HC’s order on AGR

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New Delhi | Published: September 10, 2016 6:16:51 AM

Aircel on Friday moved the Supreme Court for quashing of the Madras High Court decision that asked it to pay a share of its Adjusted Gross Revenue (AGR) on the non-telecom activities like sale from scrap, foreign exchange gains and rental income to the government.

Aircel on Friday moved the Supreme Court for quashing of the Madras High Court decision that asked it to pay a share of its Adjusted Gross Revenue (AGR) on the non-telecom activities like sale from scrap, foreign exchange gains and rental income to the government.Aircel on Friday moved the Supreme Court for quashing of the Madras High Court decision that asked it to pay a share of its Adjusted Gross Revenue (AGR) on the non-telecom activities like sale from scrap, foreign exchange gains and rental income to the government.

Aircel on Friday moved the Supreme Court for quashing of the Madras High Court decision that asked it to pay a share of its Adjusted Gross Revenue (AGR) on the non-telecom activities like sale from scrap, foreign exchange gains and rental income to the government.

A bench headed by Justice A K Sikri issued notice to the DoT and posted the matter along with other similar cases after Additional Solicitor General PS Narsimhan told the court that the issue relating to AGR is pending before it and will be heard on September 19.

Aircel has challenged the August 11 order of the HC that held that the government has unbridled power under Section 4 (1) of the Indian Telegraph Act, 1885 to claim a share of revenue generated by the service provider from non-telecom/non-licensed activities like sale from scrap, foreign exchange gains, rental income etc, in addition to revenue generated from telecom/licensed activities. It said that the HC has held that the definition of AGR contained in Clause 2 of the Second Amendment to the License Agreement is wide enough to include revenue from non-telecom/non-licensed activities.

The HC had also last month asked the DoT to quantify the share of AGR on non-telecom activities and raise a fresh demand on Aircel within a month. It had also asked Aircel to pay the amount demanded by DoT within a month from the date of receipt of the demand notice.

Alleging that the impugned judgment was “erroneous” and liable to be set aside, Aircel in its appeal stated that the Central government has the right to part with its ‘exclusive privilege’ of establishing, maintaining and working telegraphs, by way of license ‘on such conditions’ and ‘consideration’ of such payments as may be specified in the licenses.

“Hence once privilege is parted on the the basis of concluded conditions and consideration, it is governed as per the provisions of the Indian Contract Act. The licensing terms, introduced by the government, have to fall within the four corners of the statute, and the license fees must bear a nexus with the activities carried out under the License,” it said.

According to the teleco, after parting with the privilege, the government “cannot claim unguided or unbridled power to claim revenue share from non-telecom activities of a company and be its partner in business and seek a share out of other activities. “Once privilege is parted, and a license/contract is entered into, the DoT cannot seek to exercise its privilege to amend the license unilaterally imposing arbitrary conditions seeking revenue share on the non-telecom revenue. Once a License is signed, then it is a contract and the provisions of Contract Act would be attracted,” the petition stated.

The revenue generation is not the primary objective of the policy but it is to increase rural teledensity and coverage/connectivity which in turn would boost the GDP growth of the country.

Therefore, the government cannot charge any price, irrespective of whether it is generated from the licence or not. “This will defeat the object of the public purpose sought to be achieved by privatisation of telecommunication, encompassed in government policy,” the service provider stated.

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