AGR Hearing Updates: SC says AGR dues will be wiped out in IBC deals; nobody can use spectrum unless dues paid

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Updated: August 20, 2020 5:13:12 pm

SC AGR Hearing HIGHLIGHTS: The Supreme Court continued hearing the case on adjusted gross revenue (AGR) dues of telecom companies and past dues of insolvent firms for the fourth straight day.

sc agr, rcom, reliance jio, liquidation, insolvent telcosTelecom companies such as Airtel, Voda-Idea still await the verdict on the AGR payment timeline

SC AGR Hearing HIGHLIGHTS: The Supreme Court continued hearing the case on adjusted gross revenue (AGR) dues of telecom companies and past dues of insolvent firms for the fourth straight day today. A bench comprising Justices Arun Mishra, S Abdul Nazeer and MR Shah heard the matter. The Supreme Court has adjourned the hearing till tomorrow at 2 PM. During the hearing, Justice Arun Mishra said that almost the entire AGR dues will be wiped out in the IBC process. And after the sale of spectrum, the new user will have extinguished any pending demand against the spectrum in question. “A person is not paying but riding the horse. You must pay the price. Until one pays, you can’t use it,” Justice Arun Mishra said. Senior counsel Ravi Kadam, appearing for the monitoring committee of Aircel, said that Trai consultation paper states that spectrum is an intangible asset, which should be shown in the balance sheet. Ranjit Kumar, appearing for CoC of Aircel, said that the government dues are being taken care of under IBC. There is a regime in place. SBI is the lead banker. “If my exposure is the same as AGR, then I should not get any money. All the money will go for satisfying the government dues when IBC says my dues are important,” said Ranjit Kumar.

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Highlights

    16:50 (IST)20 Aug 2020
    SC adjourned hearing for tomorrow

    Ritin Rai appearing for Etisalat to argue tomorrow. Hearing over. SC adjourned hearing till tomorrow at 2 PM.

    16:48 (IST)20 Aug 2020
    Once plan is approved, it is binding on all including central, state govt: Srinivasan

    "Once the plan is approved, it is binding on all including central and state governments," Ramji Srinivasan, appearing for Tata, said.

    16:47 (IST)20 Aug 2020
    Has Bharti Airtel undertaken to pay spectrum liability: SC to SG

    SC asks SG to reply if Bharti Airtel has undertaken to pay spectrum liability. However, senior lawyer Kapil Sibal denied.

    16:43 (IST)20 Aug 2020
    DoT put AGR dues of Videocon at Rs 1,512 crore: NK Kaul

    NK Kaul appearing for Videocon Telecom's resolution professional. "DoT put AGR dues of Videocon at Rs 1,512 crore," according to Kaul.

    16:42 (IST)20 Aug 2020
    Kaul responded to a question who will pay AGR dues as spectrum is transferred to Airtel

    NK Kaul has to come back on the question who will pay AGR dues as spectrum is transferred to Bharti Airtel.

    16:39 (IST)20 Aug 2020
    NK Kaul starts for RP of Videocon

    "Business is nil at the moment. Spectrum has been transferred to Bharti Airtel in 2016 and DoT has verified that," said NK Kaul.

    16:38 (IST)20 Aug 2020
    Section 238 of IBC says it prevails over any other law, TRAI, Telegraph Act

    Ranjit Kumar concluded his argument saying, "Section 238 of IBC says it prevails over any other law, TRAI, Telegraph Act".

    16:37 (IST)20 Aug 2020
    Teleco will go into liquidation: Ranjit Kumar

    "If the raw material is taken away to fulfil government dues and a liquidation vale is attached, PSBs will get nothing. Teleco will go into liquidation," Ranjit Kumar said.

    16:36 (IST)20 Aug 2020
    IBC is complete code in itself: Ranjit Kumar

    "IBC is complete code in itself and resolution plan should be given effect to," Ranjit Kumar said.

    16:24 (IST)20 Aug 2020
    Kumar discusses fair, liquidation values

    Ranjit Kumar was discussing fair and liquidation values. 

    16:24 (IST)20 Aug 2020
    How important spectrum is for a teleco to be sold as a going concern: Kumar explains

    Ranjit Kumar, appearing for CoC of Aircel, is repeating Harish Salve's argument of how spectrum is important for a teleco to be sold as a going concern. 

    16:22 (IST)20 Aug 2020
    Kumar explains how funds are to be distributed

    Ranjit Kumar is telling the Supreme Court that how the funds are to be distributed.

    16:21 (IST)20 Aug 2020
    Ranjit Kumar taking the Court through IBC

    Ranjit Kumar, appearing for CoC of Aircel, taking the Supreme Court through Insolvency and Bankruptcy Code (IBC).

    15:58 (IST)20 Aug 2020
    Bank will spend on economic purposes: Kumar

    "Why should a bank not able to make a profit? Bank will spend on economic purposes. Both have to coexist. It is a case of coexistence," said Ranjit Kumar.

    15:58 (IST)20 Aug 2020
    SC asks what's more profitable for govt

    The Supreme Court asked what is more profitable for the government? 

    15:56 (IST)20 Aug 2020
    If it's contractual then why one contract should not get anything: Kumar

    "If it is contractual then why one contract should not get anything. If spectrum should go to the government, then basic raw material of a teleco goes and it will go into liquidation," Kumar told SC.

    15:55 (IST)20 Aug 2020
    Spectrum was kept as a security interest: Ranjit Kumar

    "Should they not be treated equitably? I am also the government. Why did I expose myself to give a loan? It lent because the spectrum was kept as a security interest. The government allowed this. If it allowed, it becomes some sort of a government guarantee," says Kumar.

    15:54 (IST)20 Aug 2020
    If my exposure is the same as AGR, then I should not get any money: Kumar

    "If my exposure is the same as AGR, then I should not get any money and all the money will go for satisfying the government dues when IBC says my dues are important," Senior counsel Ranjit Kumar, on behalf of CoC of Aircel, said.

    15:53 (IST)20 Aug 2020
    Govt dues are being taken care of under IBC: Kumar

    "The government dues are being taken care of under IBC. There is a regime in place. SBI is the lead banker," says Ranjit Kumar

    15:46 (IST)20 Aug 2020
    Spectrum a raw material for telco: Kumar

    Senior counsel Ranjit Kumar, on behalf of CoC of Aircel, said that the spectrum is a raw material for a telecom company.

    15:44 (IST)20 Aug 2020
    It's a business transaction between govt, telecom service provider, banks: Kumar

    "AGR judgment says rights are contractual in nature. Therefore, it is a business transaction between government, telecom service provider and banks," said Kumar.

    15:43 (IST)20 Aug 2020
    SC laid down the law that it is purely contractual: Kumar

    "The Supreme Court has laid down the law that it is purely contractual. This very licence allows trading. It allows Tripartite agreement with the President of India. This agreement becomes part of the licence," said Ranjit Kumar, appearing for CoC of Aircel.

    15:42 (IST)20 Aug 2020
    For the purpose of companies, there were insolvency laws in India since 1919: Kumar

    "For the purpose of companies, there were insolvency laws in India since 1919. Then companies act, BiFr, DRT, then securitisation Act. And not we have IBC. There is a regime. Law has been evolving," said Ranjit Kumar.

    15:40 (IST)20 Aug 2020
    In business you gain some you lose some: Kumar

    "We are doing our respective businesses. In businesses, as is know there can be profits and losses. You gain some you lose some," said Ranjit Kumar.

    15:40 (IST)20 Aug 2020
    Govt itself is trading in spectrum: Ranjit Kumar

    "The government itself is trading in the spectrum. It is a business proposition. It is auctioning the right to use. The banks are in the business of lending money," said Ranjit Kumar.

    15:36 (IST)20 Aug 2020
    Ranjit Kumar begins argument

    Senior lawyer Ravi Kadam concludes. Senior counsel Ranjit Kumar, on behalf of CoC of Aircel, starts arguments.

    15:32 (IST)20 Aug 2020
    Licence, spectrum fees to be treated as an intangible asset: Kadam

    "Licence fee and spectrum fee to be treated as an intangible asset, Trai has said," says Ravi Kadam.

    15:31 (IST)20 Aug 2020
    Trai consultation paper also states that spectrum is an intangible asset: Kadam

    Ravi Kadam, appearing for monitoring committee of Aircel while concluding his arguments said that Trai consultation paper also states that spectrum is an intangible asset, which should be shown in the balance sheet

    15:27 (IST)20 Aug 2020
    bridge will be crossed when DoT's permission is sought: Salve

    Senior lawyer, appearing for Reliance Jio, Harish Salve said the bridge will be crossed when DoT's permission is sought

    15:25 (IST)20 Aug 2020
    After spectrum sale, new user will deny pending demands: Justice Mishra

    "After spectrum sale, the new user will deny pending demands against the said spectrum," Justice Arun Mishra said.

    15:23 (IST)20 Aug 2020
    A person is not paying but is riding the horse: Justice Mishra

    "A person is not paying but is riding the horse. You must pay the price. Until one pays, you can't use it," Justice Arun Mishra said

    15:23 (IST)20 Aug 2020
    In case dues are not paid then spectrum must be surrendered: Justice Mishra

    "What bothers us is if remain unpaid. In case dues are not paid then the spectrum must be surrendered," Justice Arun Mishra said.

    15:22 (IST)20 Aug 2020
    We are examining jurisdiction of IRP, IBC: SC

    "We are examining jurisdiction of IRP and Insolvency and Bankruptcy Code (IBC)," said the Supreme Court.

    15:20 (IST)20 Aug 2020
    You don't have an unfettered right: Justice Mishra

    "You can use it for 30 years, but payment has to be made. You don't have an unfettered right. But that is not the law," said Justice Arun Mishra.

    15:19 (IST)20 Aug 2020
    Worried that entire AGR dues will be wiped out in IBC process: Justice Arun Mishra

    "We are extremely worried that almost entire AGR dues will be wiped out in the IBC process. And after the sale of spectrum, the new user will have extinguished any pending demand against the spectrum in question," said Justice Arun Mishra.

    15:14 (IST)20 Aug 2020
    Read the explanation to section 18: SC to Kadam

    The Supreme Court asked senior lawyer Ravi Kadam to read the explanation to section 18.

    15:13 (IST)20 Aug 2020
    Right to use is an intangible asset falling under Section 18F: Kadam to SC

    "Right to use is an intangible asset falling under Section 18F of the act. Therefore, the right to use will not remain with the company. It is an asset," Kadam said to SC. 

    15:11 (IST)20 Aug 2020
    Won't read so much as note is in two volumes: SC

    The Supreme Court said, "We assure you that we won't read so much as the note is in two volumes".

    15:10 (IST)20 Aug 2020
    DoT never treated them as current dues: Ravi Kadam

    "DoT never treated them as current dues. They never raised any demand," said Ravi Kadam.

    15:10 (IST)20 Aug 2020
    Correct answer is that liability arose on the date of sale: Kadam

    "Correct answer is that liability arose on the date of sale. These are deferred as the companies chose to trade on different dates. It doesn't mean it is subsequent or current dues, as claimed by DoT," said Kadam

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