How To Recover Dues From Firms Facing Insolvency

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How To Recover Dues From Firms Facing Insolvency? Top Court To Telecom Department

Court asked about the plan to recover dues from telecoms facing insolvency.

New Delhi:

The Supreme Court on Monday asked Department of Telecom (DoT) to apprise it as how it plans to recover Adjusted Gross Revenue (AGR) related dues from telecom companies facing insolvency proceedings and whether spectrum given to these companies can be sold.

The DoT told the top court that their stand is that the spectrum cannot be sold by the telecom companies facing insolvency proceedings as it is not their property.

A bench of Justices Arun Mishra, S Abdul Nazeer and M R Shah asked Solicitor General Tushar Mehta, appearing for the DoT, to apprise it as to how it plans to recover the AGR related dues from these companies.

“Please tell us what will happen to the DoT’s AGR related dues, if the companies like RCOM, Aircel and Videocon go into insolvency then what would happen to the said amount. Tell us how you will recover Rs 31,000 from RCOM and Rs 12,000 crore from Aircel. You have to do something. This is public money,” the bench told Mr Mehta.

It said the court needs to ascertain the bonafides of the telecom companies who have gone under proceedings under Insolvency and Bankruptcy Code (IBC).

Mr Mehta said that he will be filing an affidavit in this regard. He said telecom companies are at varying stages of insolvency proceedings.

The law officer said that their appeal against the National Company Law Appellate Tribunal (NCLAT) order has been pending before the top court on the question whether the spectrum given to the companies can be sold or not.

The bench asked Mr Mehta as to why did NCLAT dismiss their petition against sale of spectrum to which he replied that due to delay in filing of appeal against the order.

“Why was the delay in filing the appeal? What would happen if the spectrum is sold out by then?” the bench said.

It said that the court wants to go into cause of initiation of insolvency for these telecom companies and wants to know about their liabilities and what was the urgency for pushing for insolvency.

The bench said it wanted to know as how insolvency proceedings were initiated against Reliance Communication (RCOM) even after the operational creditor the Swedish telecom equipment maker Ericsson was paid its dues.

“How were the proceedings under IBC, revived when the Supreme Court had in its 2019 order directed for settlement of dues of Ericsson?” the bench said.

Senior advocate Shyam Divan, appearing for Resolution Professional for RCOM, narrated the sequence of events to the bench.

The bench said, “our order is binding for all courts and tribunals. How can NCLAT revive insolvency proceedings despite payment to Ericsson?”

The bench asked the companies to file the affidavit giving each and every detail by the next date of hearing.

Senior advocate Ravi Kadam, appearing for Aircel, said as per the company the spectrum can be sold as it was mentioned in the terms and condition that it is transferable and the company has made an upfront payment for it.

“Since the spectrum is transferable therefore, it can be sold”, he said.

He said this stand of the company has been upheld by the National Company Law Tribunal (NCLT).

Mr Kadam said that Aircel was not going into liquidation as a resolution plan has been approved by the NCLT.

The bench then asked the SG to come prepared on the next date of hearing as how the spectrum can be sold.

On July 20, the top court made it clear it will not hear “even for a second” the arguments on reassessment or re-calculation of the AGR related dues of telecom companies which run into about Rs 1.6 lakh crore.

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