AGR Issue: Jio May Have To Pay RCom’s Rs 13,000 Crore Dues

Reliance Jio may have to shoulder the burden of around Rs 13,000 crore of past dues relating to licence fee and spectrum usage charge owed by Reliance Communications (RCom) as a fallout of the Supreme Court verdict in the adjusted gross revenue (AGR) matter.

RCom, owned by Anil Ambani, owes past dues of around Rs 20,000 crore (Rs 16,456 crore licence fee and Rs 3,533 crore SUC) to the Department of Telecom (DoT). But since the company has filed for bankruptcy, DoT will have to claim the amount in the insolvency court as an operational creditor and may have to take a huge haircut, if at all any payment eventually materialises.

However, officials said they may look at claiming around Rs 13,000 crore of the total dues of the company from RJio which bought around 47.50 MHz spectrum in the 800 MHz band from RCom through trading in January 2016. The spectrum was acquired across 13 circles and is currently being used by Jio to provide 4G services.

If this amount of around Rs 13,000 crore due from RCom is not charged to Jio, the AGR and SUC dues of Jio arising from the SC order is only to the tune of Rs 41 crore. In fact, Jio has been at war with the Cellular Operators Association of India (COAI), which has urged DoT to provide some relief from payment of the dues, which for the ,industry totals to Rs 1.33 lakh crore. Of this, around Rs 80,000 crore is due from the two incumbent operators — Bharti Airtel and Vodafone Idea.

Jio has written letters to telecom minister Ravi Shankar Prasad, stating that the government should not waive of any part of the dues amount from the operators and that they are financially capable of paying them. Documents accessed by FE show that while Rcom paid all dues up to the date for effecting the spectrum trading as per the guidelines, if any future liabilities arose Jio would have to take the burden.

A DoT letter dated May 20, 2016, written to both RCom and Jio, giving approval for the spectrum trading, stated, “The licensor reserves its right to recover the dues which were not known to the parties at the time of the effective date of trade, from the buyer or seller, jointly or severally at its discretion as per para 11 of the trading guidelines, dated 12, October, 2015.”

Jio and Rcom, on their part, gave an undertaking to DoT on January, 20, 2016, which read, “We are in compliance with all the terms and conditions of the guidelines for spectrum trading and the licence conditions and agree that in the event, it is established at any stage in future that either of the licensee was not in conformance with the terms and conditions of the guidelines for spectrum trading or/and of the licence at the time of giving intimation for trading of right to use the spectrum, the government will have the right to take appropriate action which inter-alia may include annulment of trading arrangement”.

Clause 11 of the spectrum trading guidelines states: “The seller shall clear all its dues prior to concluding any agreement for spectrum trading. Thereafter, any dues recoverable up to the effective date of trade shall be the liability of the buyer. The government shall, at its discretion, be entitled to recover the amount, if any, found, recoverable subsequent to the effective date of the trade, which was not known to the parties at the time of the effective date of trade, from the buyer or seller, jointly or severally. The demands, if any, relating to licences of seller, stayed by the court of law, shall be subject to outcome of decision of such litigation.”

While Jio did not reply to an e-mail query on the subject till the time of going to the press, sources close to the company said a February 2019 order of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT), in a separate case, had ruled that Jio would not be liable for any past dues of RCom. They said even the SC had upheld the TDSAT order.

However, government officials said the TDSAT order was with regard to a subsequent Jio-RCom spectrum trading deal where Jio had specifically refused to give any undertaking to pay for any past dues of RCom at any stage. As a result, DoT did not give assent to the trading pact and RCom had to eventually file for bankruptcy,―Financial Express