May cancel spectrum licenses if telcos are not ready to pay AGR dues: Supreme Court

The Supreme Court Monday said it may order cancellation of spectrum allocation if telecom companies are not ready to pay the AGR-related dues owed to the government.

It observed that the Department of Telecom (DoT) should cancel the spectrum licence if the dues are at a risk of being wiped out.

A bench comprising Justices Arun Mishra, S Abdul Nazeer and M R Shah reserved the verdict on the point as to whether spectrum can be sold by the telecom companies facing proceedings under the Insolvency and Bankruptcy Code (IBC) and how the Adjusted Gross Revenue (AGR)-related dues are to be recovered from them. The bench will also give its finding on payment of dues, if any, on Jio and Airtel which have spectrum sharing pacts with RCom, Aircel and Videocon respectively.

During the hearing, the bench observed that it may order cancellation of allocation of spectrum, if the companies are not ready to pay the AGR related dues. Telecom companies cannot wipe out AGR-related dues by taking someone else’s property free of any liability, it said.

It said that spectrum trading guidelines mandate clearing of pending dues by seller before entering any kind of sale agreement and if the sellers do not clear their liabilities then according to the guidelines the dues are transferred to the buyer.

The bench observed that if spectrum license is cancelled, it needs to be surrendered to the DoT and later auctioned for higher realization. Solicitor General Tushar Mehta, appearing for the DOT said all liabilities including AGR-related dues should be cleared by telecom firms prior to spectrum trading as per the guidelines. He told the top court that the DOT can seek to recover dues from sellers and buyers of spectrum, jointly or individually.

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