Summary
The Court fixed a ten-year instalment schedule for payment of adjudicated telecom AGR dues, with an initial ten-percent payment, undertakings and continuing bank guarantees. Reassessment of the settled demand was prohibited. Spectrum sharing did not transfer a licensee’s historical AGR liability to the other operator; trading liability depended on the applicable guidelines. Questions whether spectrum rights could enter insolvency proceedings and the status of government dues were left open for NCLT to decide.
Issues
- Whether spectrum rights and AGR dues could be subjected to insolvency resolution.
- How historical AGR liability differs between spectrum sharing and trading.
- What payment schedule and safeguards should govern the adjudicated dues.
Provisions considered
- Clauses 12 and 13, Guidelines for sharing of Access Spectrum by Access Service Providers dated 24 September 2015Required each sharing operator to meet its own AGR-based liability with the prescribed increase in spectrum usage charge, without transferring the other operator’s past dues. (¶¶ 24, 25, 26)
- Clauses 10, 11 and 12; clarification dated 12 May 2016, Guidelines for Trading of Access Spectrum dated 12 October 2015Applied the distinction between partial and entire-spectrum trading and the rule for dues unknown at the effective trading date. (¶¶ 27, 28, 29)
Held
- Questions concerning spectrum ownership, transfer in insolvency, security interests, the character of government dues and the bona fides of the proceedings were to be considered first by NCLT. It was directed to decide these jurisdictional matters by reasoned order after hearing the parties within two months; all merits were expressly left open. (¶¶ 16, 17, 18, 19, 20, 21, 22, 23)
- Spectrum sharing leaves each operator responsible for its own AGR-based dues, with the prescribed additional spectrum usage charge. The sharing guidelines contain no provision imposing the original licensee’s historical AGR dues on the other operator merely because it shares spectrum. (¶¶ 24, 25, 26)
- Trading liability follows the trading guidelines and their clarification. On the facts involving partial trading and known AGR litigation, the seller’s pre-agreement dues did not fall on the buyer. Entire-spectrum transfers and subsequently discovered unknown dues attract the distinct liabilities described in the guidelines. DoT was to verify assessments and raise any unissued demand within six weeks. (¶¶ 27, 28, 29)
- The settled AGR demand could not be disputed or reassessed. Operators were to pay ten percent of the total demand by 31 March 2021 and the balance in yearly instalments over the period 1 April 2021 to 31 March 2031, payable by 31 March of each succeeding financial year. (¶¶ 3, 35, 36, 38)
- Companies were to provide authorised undertakings within four weeks and maintain existing spectrum bank guarantees until payment. Default would automatically attract contractual interest, penalty and interest on penalty, besides contempt consequences. Operators and DoT were to report compliance annually by 7 April. (¶¶ 36, 38)
- The notice to Mandar Deshpande in the suo motu contempt proceeding was discharged and the proceeding dropped upon compliance and acceptance of an unconditional apology. (¶ 38)
Result
Pending interlocutory applications disposed of with directions governing AGR payment, sharing and trading liabilities, and NCLT consideration of the open insolvency issues. Previous orders modified accordingly; specified contempt proceedings dropped.