On Monday, the Apex Court said that the Govt must state its position on whether adjusted gross revenue-related dues of bankrupt Reliance Communications Ltd (RCom) should be recovered from Reliance Jio Infocomm Ltd since it has been using RCom’s spectrum since 2016.

The 3-Judge bench, headed by Justice Arun Mishra, asked the Govt if Reliance Jio can be held liable for AGR & other dues as it has been generating revenue by using RCom’s airwaves through an asset-sharing agreement. The Court has adjourned the case to 19 Aug.

“We want the government’s position on Jio sharing RCom’s spectrum & on Jio discharging RCom’s spectrum dues,” said Justice Mishra. In response, solicitor general Tushar Mehta said the Govt will support any decision the Court takes to recover the dues.

However, Reliance Jio, in a written submission on Monday, told the Top Court that there is no legal basis for transferring bankrupt RCom’s dues, AGR or otherwise, to Jio as the 2 telecom operators are in a spectrum-sharing agreement & do not share liabilities. Senior Advocate Harish Salve, representing Reliance Jio, said the company is neither involved in the Insolvency & Bankruptcy Code (IBC) proceedings of RCom nor is it acquiring the telco’s spectrum.

Interestingly, the Govt told the Court that the department of telecommunications (DoT) & the ministry of corporate affairs (MCA) have different views on whether the spectrum with a bankrupt telecom firm can be sold under insolvency proceedings. “People of the country are owners of spectrum held by the Govt in trust… This cannot be sold under IBC,” said Mehta. The DoT also said radio airwaves cannot be a part of the IBC proceedings as “telcos do not own spectrum, contract allows only its use,” said Mehta.

Mehta also informed the bench that DoT has had a consistent position on spectrum in terms of the IBC. “The ministry of corporate affairs had sought to allow spectrum sale for maximization of value,” added Mehta.

RCom owes DoT ₹25,199 crore, including spectrum usage charges (SUC) & licence fees, as per Govt estimates. This is nearly half of ₹49,054 crore in dues calculated under the company’s insolvency proceedings. Jio cleared its relatively minuscule AGR dues of ₹195.18 crore in Jan, complying with the court’s Oct 2019 order.

According to legal experts, transfer of spectrum to a new buyer is not allowed unless past dues are cleared. 

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