The court notes that telecom companies have not paid a ‘penny’ in the last four months and, together with their directors, have given them contempt and posted the hearing before 17 March. “Make sure the amount is deposited by that time, otherwise show how hard we can be,” the bank said.
DoT, reprimanded by the apex court for not complying with its order to recover money owed by the telcos and PSUs to the government as corrected gross income (AGR), fired letters saying non-payment would result in cancellation of bank guarantees and, in extreme cases, cancellation of telecom licenses.
Airtel pays Rs 10k cr by February 20, Tatas will probably deposit Rs 14k cr on March 17
The threat worked within a few hours. Private telecom companies, who had first contested the question and then, after being rejected by the SC, asked to spread the payment, rushed to put the money on the table.
Airtel, who is entitled to more than Rs 35,000 crore on the AGR order, said it would pay Rs 10,000 crore by February 20, and the remainder on March 17 when the next hearing is scheduled in the SC. Tatas, who have sold their telecom company to Airtel, will probably also deposit their contribution of approximately Rs 14,000 crore for the next court session.
There are serious concerns about the ability of Vodafone Idea – the most difficult of private telcos – to pay the Rs 53,000 crore it owes. Sources said that Kumar Mangalam Birla, who owns the Vodafone Idea group, had raised the issue with IT minister Ravi Shankar Prasad. There are doubts as to whether the government will intervene following the reprimand received from its officers from a bank of Justices Arun Mishra, S Abdul Nazeer and MR Shah.
During the hearing, the judges expressed the fear that the government, instead of enforcing its recovery order, tried to oblige the telecom companies by not taking action against them. The court said that such behavior by government officials could not be tolerated and instructed the Center to immediately withdraw the order of an office officer because he had not taken action against the companies for non-payment. It also initiated contempt against the officer.
“Is this the respect you have for the Supreme Court? How can a counter employee say that despite our order no action has been taken? It is better to close the SC if you have so much respect for the order of the court … There is no rule of law in the country. It is better to leave the country. There is so much money here, I am very scared. I don’t think I should work on this court and in this system. I say this with complete responsibility, “Justice Mishra said. “He (DoT officer) says that no coercive measures must be taken until further notice. He has canceled our order. Did you ask him to withdraw that order? It can’t be allowed and we can’t function like that, “the bank told Advocate General Tushar Mehta who appeared before the Center.
Mehta apologized to the court and assured that the order would be withdrawn immediately and that further action would be taken to implement the SC’s decision. At Mehta’s insistence, the court refrained from issuing an order against the officer, but asked for an explanation.
In the evening, DoT had issued two officials about the cause of the show for 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 treasury at a time when revenues don’t seem too good, the directive is a blow to telcos struggling with declining profit margins and an overburdened market. Vodafone looked particularly fragile. That is why the government seemed sympathetic to the telecom sector’s plea to approve the AGR rights in installments after they had overcome them in the highest court over the definition and estimation of AGR. In addition, the PSUs involved – Gas Authority of India Limited, Oil India, Powergrid Corporation and Delhi Metro – will also have to pay huge amounts.
However, the court took a strict stand on the reluctance of companies to pay. “This case projects a very disturbing scenario. The companies have violated the court’s order in substance and substance. Despite the rejection of the request for revision, they have not paid any amount to date. It seems that the things that happen have little respect for the directions of this court. A counter clerk at DoT has the urge to pass on the order to the accountant-general, another constitutional authority, not to demand payment under the order of this court and not to take any mandatory steps to place further orders. This is nothing but a device to destroy the order of this court, “the bank said in his order.
On October 24, the SC allowed the center to recuperate approximately 1.47 lakh crore as a license fee and fine together with interest based on the revenue sharing model from 2004 to 2015 of telecom companies. It had rejected the companies’ argument that AGR, on the basis of which they pay the Center a fee, should only include core telecom services and exclude revenues from other sources. It had accepted the Centre’s assertion that AGR should include dividends, handset sales, rent and profit from the sale of scrap metal, excluding income from services. Initially, 15% AGR was set as a revenue sharing license fee, which was reduced to 13% and later to 8% in 2013. Telecom companies asked for the judgment to be reviewed, but their plea was rejected on January 16. DoT accepted an order stating that no coercive measures must be taken against the companies for not depositing the amount.
The Vodafone Idea management got into trouble after the order and it remains to be seen what action will be taken against the company if payments are delayed or if the request for further payment is rejected.
Airtel said it was completing the self-evaluation. “This is a complicated process, consisting of 22 circles, multiple licenses and a considerable period of time and is therefore time-consuming. We are convinced that we will soon complete the self-evaluation exercise and make the final payment well in advance of the next date of the hearing established by the SC, ”said Vidyut Gulati, director (legal) of the company in a statement to the Ministry of telecommunications. The Tata group is also expected to make provisions for payment. The loss-making Tata teleservices will have to depend on parent company Tata Sons to finance the AGR rights of Rs13,823. On March 31, 2019, Tata Sons had cash of Rs 1,166 crore. The holding company of the Tata Group has become increasingly dependent on TCS in recent years to meet its financial obligations. On Friday, TCS had a market capitalization of Rs 8.19 lakh crore.