On Friday, Supreme Court while hearing the AGR case made an observation that might lead to Bharti Airtel paying Rs. 1,400 crore in AGR dues owed by Videocon which is now bankrupt.
Why is Airtel supposed to pay for Videocon?
The three-judge bench that has been hearing the case stated that according to the spectrum trading guidelines, the dues are supposed to be paid before the transfer of spectrum. In case the company holding the spectrum earlier (Videocon) is not able to pay the dues then the company (Airtel) currently using it is bound to do so.
The rights for usage of a 2×5 MHz spectrum in the 1,800 MHz bands in six circles were sold by Videocon to Airtel for an amount of Rs. 4,428 crore. The circles included were of Gujrat, Bihar, Haryana, Madhya Pradesh, and Uttar Pradesh. Airtel also took a step forward to acquire the bankrupt’s Aircel spectrum that owes Rs. 12,289 crore.
How is the Supreme Court dealing with the issue of Airtel?
The Supreme Court has been ‘extremely worried’ about the insolvencies and that all the AGR dues would be wiped out in the IBC (Insolvency and Bankruptcy Code) process. The court further added, “Without paying for the horse, telcos are taking a ride. Unless dues are paid, nobody can start using the spectrum. Can a liability like AGR be wound up, under the guise of selling spectrum under the IBC?”
Kapil Sibal, the senior advocate representing Airtel mentioned that the company has paid all relevant dues concerning spectrum trading and has paid ₹ 18,004 crores towards AGR dues.
The solicitor of Airtel highlighted the point that no demand from the government had been received and also added that the spectrum was an asset of telcos and could be used as collateral without which the banks would not sanction any loan.
The bench had asked for details from DoT (Department of Telecommunications) about spectrum usage and owning. The secretary of DoT is been demanded to file a specific affidavit apprising the court about who was using the spectrum from the date of grant of license and from which date the respective sharing of the spectrum has taken place.
“The DoT is required to file an affidavit, specifically by tomorrow i.e. by August 22, 2020, pointing out on the basis of sharing arrangement, how much is the liability of the sharers from the date of sharing and how much they have paid and as per our Judgment, what are the arrears, which are required to be paid on the basis of sharing arrangement by respective sharers.”affirmed the bench earlier
Earlier the bench had ordered Reliance Jio to pay for the AGR dues of Reliance Communication, as Jio has been using the spectrum while Reliance Communication has filed insolvency.