On August 14, the counsel for Jio told the court that the company has cleared the AGR dues of RCom for the traded spectrum post 2016.
The department of telecommunications (DoT) can charge Reliance Jio around Rs 13,000 crore as dues for adjusted gross revenues, if its wants, as the company had acquired 47.50 Mhz spectrum in the 800 Mhz band from Reliance Communications (RCom) through a trading pact between January-March, 2016. The spectrum was acquired across 13 circles and is currently being used by Jio to provide 4G services. In addition, Jio is sharing spectrum with RCom in 15 circles. As such, a total of 58.75 Mhz spectrum from RCom in the 800 Mhz band is currently being used by Jio.
RCom’s total AGR dues are around Rs 25,194.58 crore and the Supreme Court had, on August 14, asked the parties — RCom, Jio, and DoT — why the dues should not be paid by Jio if it is using the spectrum. The SC asked the parties to present all related documents on Monday when the case is due to be heard again.
It remains to be seen whether the DoT submits, before the apex court, its letter dated May 20, 2016 granting approval to the spectrum trading between the two companies. The letter is crucial to the case as clause 6 of it reads: “The licensor reserves the right to recover the dues which were not known to the parties at the time of the effective date of trade, from the buyer or seller, jointly or severally at its discretion as per para 11 of the trading guidelines, dated 12 October, 2015.
Jio and RCom, on their part, gave an undertaking to the DoT on January 20, 2016. The undertaking read, “We are in compliance with all the terms and conditions of the guidelines for spectrum trading and the licence conditions and agree that in the event, it is established at any stage in future that either of the licensee was not in conformance with the terms and conditions of the guidelines for spectrum trading or/and of the licence at the time of giving intimation for trading of right to use the spectrum, the government will have the right to take appropriate action which inter-alia may include annulment of trading arrangement”.
Clause 11 of the spectrum trading guidelines states: “The seller shall clear all its dues prior to concluding any agreement for spectrum trading. Thereafter, any dues recoverable up to the effective date of trade shall be the liability of the buyer. The government shall, at its discretion, be entitled to recover the amount, if any, found, recoverable subsequent to the effective date of the trade, which was not known to the parties at the time of the effective date of trade, from the buyer or seller, jointly or severally. The demands, if any, relating to licences of seller, stayed by the court of law, shall be subject to outcome of decision of such litigation”.
Jio had entered into a trading pact with RCom for the remaining 15 circles also for spectrum in the same band. However, in 2018 that pact got annulled over the dispute between the two companies over giving an undertaking for any past dues which may arise in future. Jio refused to give any such undertaking and even RCom did not provide any such undertaking as a result of which the DoT did not approve the deal and subsequently RCom went into insolvency.
On August 14, the counsel for Jio told the court that the company has cleared the AGR dues of RCom for the traded spectrum post 2016, thus maintaining that it is not liable for past dues. For the shared spectrum the company said that only spectrum usage charge needs to be paid which it is paying. However, if one goes by spectrum sharing guidelines also, the moment RCom shut shop in November, 2017, DoT should have terminated the sharing deal and taken back the spectrum. Under sharing guidelines, both operators should have spectrum in the given band and both should be in operation.
Jio sources have maintained that a February 2019 order of the Telecom Disputes Settlement and Appellate Tribunal, in a separate case, had ruled that Jio would not be liable for any past dues of RCom. According to them, even the Supreme Court had upheld this order of the TDSAT. However, the TDSAT order was with regard to the second Jio-RCom spectrum trading deal where Jio had specifically refused to give any undertaking to pay for any past dues of RCom at any stage. As a result of this, only the DoT did not give assent to the trading pact and RCom had to eventually file for bankruptcy.
Whatever be the merits of the case, it remains to be seen whether the DoT comes out clean and places all records before the SC today.