NEW DELHI: Jolted by the tongue lashing from the Supreme Court, the department of telecommunications set Friday midnight as the deadline for private telecom majors as well as some big PSUs to cough up Rs 4 lakh crore they had been directed to pay to the government as part of the licensing agreement.
Noting that telecom companies had not paid “even a penny” in the last four months, the court issued contempt notice to them along with their directors and posted the hearing for March 17. “Ensure the amount is deposited by that time, otherwise we will show you how harsh we can be,” the bench said.
DoT, rebuked by the apex court for not complying with its order to recover money the telcos and PSUs owed the government as adjusted gross revenue (AGR), shot off letters saying failure to pay up would result in revocation of bank guarantees as well as, in extreme cases, cancellation of telecom licences.
Airtel to pay Rs 10k cr by Feb 20, Tatas likely to deposit Rs 14k cr by March 17
The threat worked within hours. Private telecom companies, which had first disputed the demand and then after having been turned down by the SC asked for the payment to be staggered, rushed to put the money on the table.
Airtel, which faces dues of over Rs 35,000 crore on the AGR order, said it would pay Rs 10,000 crore by February 20, and the rest on March 17 when the next hearing in scheduled in the SC. Tatas, which have sold their telecom business to Airtel, are also likely to deposit their dues of around Rs 14,000 crore before the court’s next hearing.
There are serious concerns around the ability of Vodafone Idea — the most troubled of the private telcos — to pay the Rs 53,000 crore that it owes. Sources had said that Kumar Mangalam Birla, who group owns Vodafone Idea, had raised the issue with IT minister Ravi Shankar Prasad. There are doubts whether government will like to intervene after the rebuke its officers received from a bench of Justices Arun Mishra, S Abdul Nazeer and M R Shah.
During the hearing, the judges expressed anguish that instead of enforcing its order for recovery of the amount, the government authority tried to oblige the telecom companies by not taking action against them. The court said such behaviour on the part of government officials could not be tolerated and directed the Centre to immediately withdraw the order passed by a desk officer for not taking action against the companies for default in payment. It also initiated contempt proceedings against the officer.
“Is this the respect you have for Supreme Court? How can a desk officer say that no action be taken despite our order? It is better to wind up the SC if you have such respect for the court’s order… No rule of law is there in the country. It is better to leave the country. There is so much money power here, I am very anguished. I feel I should not work in this court and in this system. I am saying this with full sense of responsibility,” Justice Mishra said. “He (DoT officer) says no coercive action to be taken till further order. He has annulled our order. Have you asked him to withdraw that order? It cannot be permitted and we cannot function like this,” the bench told solicitor general Tushar Mehta who was appearing for the Centre.
Mehta apologised to the court and assured that the order would be withdrawn forthwith and further action would be taken to enforce the SC verdict. On Mehta’s persuasion, the court refrained from passing any order against the officer but sought an explanation from him.
By evening, DoT had issued show cause notices to two officials for the communication to the telcos and PSUs.
The order represents a mixed bag for the government. While compliance by telecom companies will bring thousands of crores into the public coffers at a time when the revenue situation does not look too good, the directive means a blow to the telcos which have struggled with diminishing profit margins and a congested market. Vodafone has looked particularly fragile. That is the reason the government had appeared sympathetic to the telecom sector’s plea to be allowed to clear the AGR dues in instalments after having prevailed over them in the top court over the definition and estimate of AGR. Moreover, the PSUs concerned — Gas Authority of India Limited, Oil India, Powergrid Corporation and Delhi Metro — will also be required to shell out huge sums of money.
The court , however, took a stern view of the reluctance of the companies to pay. “This case projects a very disturbing scenario. The companies have violated the order passed by this court in pith and substance. In spite of the dismissal of the review application, they have not deposited any amount so far. It appears the way in which things are happening that they have scant respect to the directions issued by this court. A desk officer of DoT has the temerity to pass the order to the effect of issuing a direction to the accountant general, another constitutional authority, not to insist for any payment pursuant to the order passed by this court and not to take any coercive step till further orders. This is nothing but a device to scuttle the order of this court,” the bench said in its order.
On October 24, the SC had allowed the Centre to recover around Rs 1.47 lakh crore as licence fee and penalty along with interest based on the revenue sharing model from 2004 to 2015 from telecom operators. It had dismissed the companies’ plea that AGR, on the basis of which fee is paid by them to the Centre, should include only core telecom services and revenue from other sources should be excluded. It had accepted the Centre’s contention that AGR should include dividends, handset sales, rent and profit from the sale of scrap, apart from revenue from services. Initially, 15% AGR was fixed as licence fee under revenue sharing, which was reduced to 13% and later to 8% in 2013. Telecom companies sought review of the verdict but their plea was dismissed on January 16. After the SC verdict, DoT passed an order saying no coercive action should be taken against the companies for not depositing the amount.
Vodafone Idea management went into a huddle after the order and it remains to be seen what action is taken against the company if payments are delayed, or if its petition for further time to make payment is rejected.
Airtel said it was in the process of completing the self-assessment exercise. “This is a complicated process, covering 22 circles, multiple licences and a substantial period of time and hence, is time consuming. We are confident we will complete the self-assessment exercise shortly and make the balance payment, well before the next date of hearing fixed by the SC,” Vidyut Gulati, director (legal), of the company said in a communication to the telecom ministry. Tata group is also expected to make provisions for the payment. The loss-making Tata Teleservices will have to depend on parent Tata Sons to finance the Rs13,823 crore AGR dues. As on March 31, 2019, Tata Sons had cash of Rs 1,166 crore. Holding company of the Tata Group, in recent years, has been increasingly depending on TCS to meet its financial obligations. On Friday, TCS had a market capitalisation of Rs 8.19 lakh crore.