AGR case: Telecom companies can use spectrum but not own it, says SC

The apex court had sought spectrum sharing details of all the bankrupt entities and observed that Jio had been using RCom spectrum for the past four years and was liable to pay the AGR dues
The Supreme Court (SC) said on Wednesday telecom firms only have a right to use spectrum and it is not an asset they own. This observation was made by the apex court in the adjusted gross revenue (AGR) case.

Advocate Harish Salve, who represented Reliance Jio, said spectrum is recorded as an asset by virtue of being purchased in an auction and sale of airwaves can only take place with nod of the department of telecommunications (DoT) when the resolution is approved. “There is no other right that can be claimed on spectrum beyond this. Spectrum is not something one can claim possession over. Spectrum is just there. The government holds this in trust but a telecom company does not become a trustee when it is given licence. As a natural resource, spectrum will always vest with the people,” he said.

Salve argued that the principle held was that the government cannot sell exclusive rights to natural resources like rivers and beaches, among others, as they are all held by the government in trust. He added, even the taxpayers’ money is held by the government in a trust. In fact, the whole concept of governance is “trust.”

A Bench comprising Justices Arun Mishra, S Abdul Nazeer, and M R Shah heard the matter and the next hearing of the case is on August 20.

On August 18, Salve had submitted before the apex court that the right to use licence for spectrum usage can be a subject matter of Insolvency and Bankruptcy Code proceedings.

Salve said that the company (Reliance Jio) had cleared all its dues towards AGR, including the charges incurred for using Reliance Communications’ (RCom’s) spectrum under the spectrum-sharing agreement.
The SC said spectrum dues cannot be treated as operational dues by companies as airwaves are the very basis of operations. 

Under the revenue-sharing regime currently in place, spectrum dues cannot be dealt as operational dues.

Jio said the company has paid AGR dues, including those derived from revenue earned by use of shared spectrum of RCom. In addition, it has paid 0.5 per cent extra as spectrum usage charges for sharing spectrum, according to DoT’s guidelines. Salve also said Jio paid Rs 195 crore, based on the apex court’s judgment in the AGR case.

On August 14, the SC sought details of operators using airwaves allotted to bankrupt companies, including Aircel and Rcom. It directed the Centre, Jio’s, and RCom’s resolution professionals to produce documents to ascertain the AGR liabilities of RCom. 

According to DoT, Airtel owes the exchequer Rs 43,780 crore, of which it has paid Rs 18,004 crore. Vodafone Idea paid Rs 7,854 crore of its Rs 50,399-crore dues. Tata Teleservices has paid about Rs 4,197 crore and the balance is Rs 12,601 crore. In an affidavit filed with the SC, Sistema Shyam Teleservices had said RCom was liable to pay its AGR dues. DoT has evaluated a liability of Rs 25,194.58 crore for RCom as of March 6.

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