ASSOCIATION OF UNIFIED TELECOM SERVICE PROVIDERS OF INDIA ETC.ETC. =In the Suo Motu Contempt Petition, in view of the reply filed and compliance reported, and an unconditional apology tendered, which we accept, we discharge notice issued to Shri Mandar Deshpande and drop the proceedings.

1
REPORTABLE
SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
M.A. (D) No. 9887 OF 2020 IN
CIVIL APPEAL NOS.6328­6399 OF 2015
UNION OF INDIA ..APPELLANT(S)
VERSUS
ASSOCIATION OF UNIFIED TELECOM
SERVICE PROVIDERS OF INDIA ETC.ETC. ..RESPONDENT(S)
WITH
SUO MOTU CONTEMPT PETITION [C] NO. 1 OF 2020
DIARY NO(S). 2450/2020
DIARY NO(S). 2458/2020
DIARY NO(S). 2461/2020
DIARY NO(S). 2476/2020
DIARY NO(S). 2578/2020
W.P.(C) NO. 238/2020
MA 725­796/2020 IN C.A. NO. 6328­6399/2015
M.A. NO.1464 OF 2020
J U D G M E N T
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1. This Court passed judgment and order in C.A. Nos.6328­6399 of
2015   –  Union   of   India   v.   Association   of   Unified   Telecom   Service
Providers   of   India  and   other   civil   appeals   decided   by   a   common
judgment and order dated 24.10.2019. The Court decided regarding
the definition of the 'AGR' and dues to be paid thereunder.
2. The concept of AGR arose in the light of the provisions contained
in the policy framed by the Government of India and the provisions of
the Indian Telegraph Act. Under section 4(1) of the Telegraph Act, the
Central   Government   has   the   exclusive   privilege   of   establishing,
maintaining, and working telegraphs. Section 4 of the Telegraph Act
enables the Central Government to part with the exclusive privilege in
favour of any other person by granting a licence on such conditions
and considering such terms as it thinks fit. The licence issued under
section 4(1) becomes a contract between a licensor and a licensee.
This Court considered the provisions of the Telegraph Act in AUSPI (I)
matter – (2011) 10 SCC 543 in this very case, thus:
“37.  A bare perusal  of sub­section (1) of Section 4 of the
Telegraph Act shows that the Central Government has the
exclusive privilege of establishing, maintaining and working
telegraphs.   This   would   mean   that   only   the   Central
Government, and no other person, has the right to carry on
telecommunication activities.
 x x x
39. The proviso to sub­section (1) of Section 4 of the Telegraph
Act, however, enables the Central Government to part with
this   exclusive   privilege   in   favour   of   any   other   person   by
granting a licence in his favour on such conditions and in
consideration of such payments as it thinks fit. As the Central
3
Government   owns   the   exclusive   privilege   of   carrying   on
telecommunication activities and as the Central Government
alone has the right to part with this privilege in favour of any
person by granting a licence in his favour on such conditions
and in consideration of such terms as it thinks fit, a licence
granted under the proviso to sub­section (1) of Section 4 of
the Telegraph Act is in the nature of a contract between
the Central Government and the licensee.
40.  A Constitution Bench of this Court in  State of Punjab  v.
Devans Modern Breweries Ltd.,  (2004) 11 SCC 26, relying on
Har Shankar case, (1975) 1 SCC 737 and Panna Lal v. State of
Rajasthan, (1975) 2 SCC 633, has held in para 121 at p. 106
that issuance of liquor licence constitutes a contract between
the parties. Thus, once a licence is issued under the proviso to
sub­section (1) of Section 4 of the Telegraph Act, the licence
becomes  a  contract   between  the   licensor  and   the  licensee.
Consequently,   the   terms   and   conditions   of   the   licence
including   the   definition   of   adjusted   gross   revenue   in   the
licence agreement are part of a contract between the licensor
and the licensee. We have to, however, consider whether the
enactment of the TRAI Act in 1997 has in any way affected the
exclusive privilege of the Central Government in respect of the
telecommunication   activities   and   altered   the   contractual
nature of the licence granted to the licensee under the proviso
to sub­section (1) of Section 4 of the Telegraph Act.
41. Section 2(e) of the TRAI Act quoted above defines “licensee”
to mean any person licensed under sub­section (1) of Section 4
of   the   Telegraph   Act   for   providing   specified   public
telecommunication   services   and   Section   2(ea)   defines
“licensor” to mean the Central Government or the telegraph
authority   who   grants   a   licence   under   Section   4   of   the
Telegraph   Act.   Sub­section   2(k)   defines   “telecommunication
service”   very   widely   so   as   to   include   all   kinds   of
telecommunication activities. These provisions under the TRAI
Act   do   not   affect   the   exclusive   privilege   of   the   Central
Government to carry on telecommunication activities nor do
they alter the contractual nature of the licence granted under
the proviso to sub­section (1) of Section 4 of the Telegraph
Act.”
(emphasis supplied)
3. During consideration of the matter, concerning the M.A. filed by
the Union of India for extension of time to make the payment, it was
pointed   out   that   several   telecom   service   providers   were   under
4
insolvency proceedings under The Insolvency and Bankruptcy Code,
2016 (for short “the Code”). This Court passed an order on 20.7.2020,
and the same is extracted hereunder:
“We have heard the learned counsel appearing for the parties
at   length   with   respect   to   the   prayer   made   by   the   Central
Government and the time frame for making the payment as
per the order passed by this Court.  During course of hearing,
again an attempt was made to wriggle out of our judgment and
orders, which were passed by this Court under the guise of
reassessment and recalculation.  That is not at all permissible.
In view of decision, there is no scope of raising any further
dispute with respect to any item or to raise fresh dispute.  No
dispute can be raised with respect to dues and they have to be
paid.   New round of litigation is prohibited.     In the second
inning,  we have heard the same after remand of the issues to
the TDSAT.   Thereafter, there is no question of entertaining
any kind of dispute with respect to the payment and dues
worked out.  No dispute shall be entertained.  The calculations
which have been given and the amount to be recovered at
pages 180­181 of M.A.D. No. 9887 of 2020 (application for
modification) in C.A. No. 6328­6399 of 2015 are taken to be as
final amount and there can be no dispute raised about it.  No
recalculation and self­assessment can be undertaken.   The
calculations are as under :­
“AMOUNTS RECOVERABLE FROM MAJOR TSPs AS PER
PRILIMINARY ASSESSMENTS
S.
No.
Name of the
Company
Total
Demand of
DoT
incorporating
C&AG and
Special Audit
as on October
2019 (Rs. Cr.)
(LF+SUC)
Self Assessment
by Licensee
pursuant to the
Hon’ble SC
Judgment (Rs.
Cr.)
Payment Received
till 06.03.2020 (Rs.
Cr.)
Balance Due
(Rs. Cr.)
A B C D
Operational TSPs party to the litigation
1. BHARTI AIRTEL
GROUP
43980.00
13004.00 18,004.00 25976.00
2. TELENOR INDIA
PRIVATE
LIMITED
5
BHARTI GROUP 43980.00 13004.00 18004.00
3. IDEA CELLULAR
LTD. 58254.00 21533 (LF 14453
+ SUC7080)
3,500.00 4. VODAFONE  54,754.00
GROUP OF
COMPANIES
VODAFONE IDEA 58254.00 21533.00 3500.00 54754.00
5. TATA GROUP OF
COMPANIES 16798.00 2197 (LF 1720 +
SUC 477) 4,197.00 12,601.00
6. QUADRANT
TELEVENTURES
LIMITED
189.91 25.28 0.69 189.22
7. RELIANCE JIO
INFOCOMM LTD.
70.53 194.79 (LF
148.03+SUC
46.76)
195.18 ­
Sub­total (1­7) 119292.44 36954.07 25,896.87 93520.22
TSPs under Insolvency
8. AIRCEL GROUP
OF COMPANIES
12389.00 ­ 12389.00
9. RELIANCE
COMMUNICATIO
N/
RELIANCE
TELECOM
LIMITED
25199.27
3.96
25194.58
10. SISTEMA SHYAM
TELESERVICES
LTD.
222.1 (LF
166.1+SUC 56)
0.73
11. VIDEOCON
TELECOMMUNIC
ATIONS LTD.
1376.00 ­ 1376.00
Sub­total (8­10) 38964.27 ­ 4.69 38959.58
TSPs which were not party to the litigation
12. LOOP TELECOM
PVT. LTD.
604.00 ­ 604.00
13. ETISALAT DB
TELECOM
PRIVATE
LIMITED
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14. S TEL PVT. LTD.
15. BHARAT
SANCHAR
NIGAM LIMITED
5835.85 ­ ­ 5835.85
16. MAHANAGAR
TELEPHONE
NIGAM LIMITED
4352.09 ­ 4352.09
Sub­total (11­16) 10791.94 222.1 0.00 10791.94
TOTAL 169048.65 37176.17 25901.56 143271.74
Note :
1. Total Demands are inclusive of Principal, Interest, Penalty
and Interest on Penalty.
2. Total   Demands   have   been   calculated   generally   up   to   FY
2016­17.   On   these   outstanding   amounts,
Interest/Penalty/Interest on Penalty is calculated up to October,
2019.
3. All dues are subject to further revisions due to departmental
assessments, CAG audits, Special Audits, Court Cases etc.”
However, when we consider the dues of Telecom Service
Providers   under   insolvency,   we   find   that   there   are   several
companies which have dues to the extent of Rs. 38,964.27
crores, which have gone under liquidation.  Since the dues are
huge, we propose to examine the bonafides of the initiation of
the proceedings under the IBC.  Let all the documents of the
companies   viz.   Aircel   Group   of   Companies,   Reliance
Communication/Reliance   Telecom   Limited,   Sistema   Shyam
Teleservices   Ltd.   and   Videocon   Telecommunications   Ltd.
relating to liquidation and orders passed in proceedings be
placed on record within 10 days from today.
We have closed the matter with respect to the prayer made
for making the payment in installments and the offer made by
the Government, the time frame thereto and how to secure the
amount.  The order is reserved on that aspect. 
However, we will hear the matter separately with respect to
the   companies   under  liquidation   and   test   the   bonafides   of
their action and how to ensure that the amount is recovered.
Let all the documents be placed on record within 10 days from
today   and   the   matter   be   listed   for   hearing   about   these
companies on the above aspect on 10.08.2020. 
Written submissions and the reply, if any, be filed on or
before 07.08.2020.”
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This Court wanted to examine the bona fides of the telecom
service   providers   who   have   resorted   to   the   process   of   insolvency,
hence,  invited  them  to  file  their response.  Before  the   initiation  of
insolvency proceedings, most of the telecom service providers who are
under the insolvency proceedings had applied to the Department of
Telecommunications to grant permission for trading of licence. The
Central   Government  objected  on  the  ground  that it  would  not be
possible for it to grant permission. It declined the permission. There
were   huge   arrears   concerning   the   spectrum   licence,   which   were
required to be paid, as a pre­condition to such permission. Various
sharing arrangements made  inter se  telecom service providers with
respect to the spectrum also came to the fore.
4. The Union of India, Department of Telecommunications’ stand is
that the spectrum cannot be the subject­matter of the IBC proceedings
in view of the provisions in sections 14 and 18. The dues under the
licence towards the spectrum's use cannot be put in the category of
operational dues. In contrast, the Department of Commerce holds the
opinion that the dues under the licence are operational dues, and the
provisions   of   the   IBC   are   applicable.   The   Department   of
Telecommunications also pointed out that as per guideline Nos.10, 11,
and 12 of the Guidelines relating to the trading of 2015, it is a pre­
8
condition of trading licence that the seller pays dues of licence arrears.
After that, the purchaser has to pay arrears as provided in paras 10,
11, and 12 of the guidelines.
5. The telecom service providers' stand is that the proceedings of
insolvency under the Code have been triggered bona fide. This Court
can examine the limited question in these proceedings whether the
proceedings are resorted to as a subterfuge to avoid payment of AGR
dues, and it is for the NCLT to decide whether the licence/spectrum
can be transferred and be a part of the resolution process initiated
under the provisions of the Code. Whether spectrum/licence can be
subjected to resolution process as an asset belonging to the telecom
service providers, and whether the AGR dues are operational dues and
have to be dealt with under the provisions of the IBC by NCLT. With
respect   to   the   trading   and   sharing   arrangement   to   the   extent   of
spectrum traded or shared by different service providers under the
sharing arrangement, the liability as per the guidelines, has to be
borne by the respective telecom service providers.
6. As per the statutory guidelines issued by the Department of
Telecommunications in 2015, spectrum sharing allows the operators
to pool their respective spectrum for usage in a specific geographical
area. The Central Government framed spectrum sharing guidelines on
24.9.2015.
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7. The details of sharing arrangement between different telecom
service providers have been given.
8. The “spectrum trading” allows parties to transfer their rights and
obligations to another party. In the case of “spectrum sharing”, the
right to use spectrum remains with the respective telecom service
providers, whereas in the case of spectrum trading, the right to use
gets transferred from the buyer to the seller. Under spectrum trading
guidelines, details of transactions which have taken place, are given.
9. Another aspect is that how much time is to be provided to the
telecom service providers to pay AGR dues. The Union of India on the
representation   made   by   the   telecom   service   providers   and   Indian
Banks'   Association,   has   decided   to   provide   the   facility   of   making
payment in instalments within 20 years.
10. The following three questions arise for consideration:
(1) Whether spectrum can be subjected to proceedings under
the Code?
(2) In the case of sharing, how the payment is to be made by
the Telecom Service Provider (for short, ‘TSP’)? and
(3) In the case of trading, how the liability of the seller and
buyer is to be determined?
In Re. Whether spectrum can be subjected to proceedings under
the Code?
10
11. Shri Tushar Mehta, learned Solicitor General of India on behalf
of Government of India, argued as under:
(i) Section 4 of the Indian Telegraph Act, 1885, provides that the
Central   Government   has   the   exclusive   privilege   of   establishing,
maintaining, and working telegraphs.  The DoT grants licences which
are in the form of contractual arrangements.  The TSPs are bound by
the terms and conditions contained therein.   As per the contractual
terms, the licence is strictly contingent upon fulfilment of the terms
and conditions, the payment being first and foremost.  On failure of
payment, the licensor is entitled to take action under the Licence
Agreement, including revocation and termination.
(ii) The spectrum is a scarce recognised natural resource, and this
Court in 2G judgment [C.A.No.423 of 2010] held that the natural
resources belong to the people and cannot be subjected to proceedings
under the Code.   The State acts as a guardian and trustee of the
natural resources.
(iii) The licensee does not own the spectrum and has merely been
granted a right to use, which is based on fulfilment of the conditions
of   the   contract   in   the   form   of   a   Licence   Agreement.     Thus,   the
spectrum cannot be subjected to transfer in proceedings under the
Code as the licensee is not the owner. Section 18(f), along with its
11
Explanation (a), mandates that only the corporate debtor's assets can
be taken into control and custody by the resolution professionals,
which is in the ownership of the corporate debtor.   Explanation  to
Section 18 provides that assets owned by a third party in possession
of the corporate debtor or held under contractual arrangements are
not included in the term ‘assets’ for the purpose of Section 18.  It is
not an asset for Section 18.  The spectrum held under a contractual
arrangement is not an asset of the corporate debtor.   The spectrum
cannot   be   a   subject   matter   of   proceedings   under   the   Code.   The
resolution professional has no jurisdiction to prepare a resolution plan
as per Guidelines for Trading of Access Spectrum by Access Services
Providers (for short, ‘the Guidelines of 2015’) issued on 12.10.2015.
(iv) Guideline No.10 provides that for trading of right to use the
spectrum, both the licensees shall give an undertaking that they are in
compliance   with   the   terms   and   conditions   of   the   Guidelines   for
spectrum trading that is seller and buyer both.   In case terms and
conditions for spectrum trading are not fulfilled, the Government will
have   the   right   to   take   appropriate   action   including   annulment   of
trading arrangement.
(v) As per Guideline Nos. 11 and 12 of the Guidelines of 2015, the
seller has to clear the dues.  After the trading date, the Government
12
has the discretion to recover the amount from the seller or buyer,
jointly or severally.
(vi) The permission was sought to trade the licence; however, the
Government of India, DoT, declined it because arrears have to be paid,
and   other   conditions   were   not   fulfilled.     After   that,   insolvency
proceedings were initiated, which were not permissible concerning the
spectrum given provisions contained in Section 18 of the Code.
(vii) National Company Law Tribunal (for short, 'the NCLT'), Mumbai
vide order dated 27.11.2019, held that licence is an asset of State over
which the corporate debtor has no right of ownership.   The above
argument of the State Government was accepted; however, in view of
the provisions contained in Section 14 on moratorium being created,
the licence could not be revoked.   An appeal was filed before the
National  Company  Law  Appellate  Tribunal  (for  short,   'the  NCLAT')
against   the   order   mentioned   above,   which   was   dismissed   on   the
ground of limitation.   An appeal has been filed in relation to the
revocation of licence, which is pending in this Court registered as
Diary No.15564 of 2020.
(viii) The licence under Section 4 of the Indian Telegraph Act, 1885,
was granted on certain terms and conditions.  The spectrum did not
construe property as defined in Section 3(27) of the Code.
13
(ix) Concerning public trust doctrine, reliance has been placed on
Centre for Public Interest Litigation and Ors. v. Union of India and Ors.
(2012) 3 SCC 1, in which it was held that natural resources must
always be used in the country's interests, not private interests.  The
corporate debtor can never be said to be in occupation of either the
licence or spectrum as per Section 14(1)(d) of the Code.  Any dispute is
to be settled under the provisions of Telecom Regulatory Authority of
India Act, 1997 by the Telecom Disputes Settlement and Appellant
Tribunal.
(x) Reliance   has   been   placed   on  M/s.   Embassy   Property
Development Pvt. Ltd. v. State of Karnataka [C.A.No.9170 of 2019], in
which this Court held that the Code would not apply to right to mine
as exclusive possession had not been granted to the corporate debtor
and grant was limited to right to mine, excavate and recover iron ore
and red oxide for a specified period.  It was further held that the right
not to be dispossessed found in Section 14(1)(d) of the Code would
have   nothing   to   do   with   the   rights   conferred   by   a   mining   lease,
especially on a Government land.
(xi) In  Ram Dass v. Davinder,  (2004) 3 SCC 684, it was held that
possession amounts to holding property as an owner, while occupy is
to keep possession by being present in it. Spectrum is not capable of
14
being in possession of licensee neither in the eye of law they can be
said to be in possession.
(xii) As per Regulation 32 of the Insolvency and Bankruptcy Board of
India   (Insolvency   Resolution   Process   for   Corporate   Persons)
Regulations,   2016,   the   spectrum   agreement   cannot   be   held   to   be
essential goods or services under Section 14(2) of the Code.  Similarly,
it cannot be subjected to proceedings under Section 18 of the Code.
In the resolution plan, selling the right to use the spectrum to some
other company could not have been made.  A corporate debtor cannot
create any third party right in any manner whatsoever.  Against the
order dated 9.6.2020 passed by the NCLT approving the resolution
plan of UVARC, DoT has filed a petition before the NCLAT relating to
Aircel Group.  Guidelines are statutory and binding.   Aircel Licensee
has defaulted in making payment of Deferred Spectrum Auction.
(xiii) In the case of RCOM, W.P. (C) No.845 of 2018 was filed under
Article 32 of the Constitution of India for closure/quashing of the CIRP
initiated against it.  After that, payment was made to M/s. Ericsson
India Pvt. Ltd, who initiated the proceedings under the Code.  RCOM
has sought NOC to trade Reliance Jio Infocomm Limited (for short,
'RJIL').  DoT informed it on 14.12.2018 that the Government couldn't
give the NOC for trading.   This Court decided the proceedings on
15
24.4.2019.   Thereafter, the Board of Directors of RCOM decided to
continue   with   the   proceeding   under   the   Code   and,   decided   to
withdraw the appeal from NCLAT.  RCL/RTL defaulted in payment of
various deferred spectrum auction instalments.
(xiv) The matters of AGR being C.A. Nos.6328­6399 of 2015 were sub
judice before the commencement of CIRP.   A demand was raised to
RCL/RTL.  AGR dues amount of RCL/RTL is Rs.25,199.27 crores.
(xv) In the case of Videocon, DoT was not the party.  DoT was not
invited to the Committee of Creditors' meetings, in complete violation
of the provisions of the Code.   The resolution professional applied
before NCLT to restrain DoT from encashing certain bank guarantees
submitted by Videocon, in which interim injunction has been granted.
12. Shri Harish Salve, learned senior counsel argued as under:
(i) The NCLT should decide the question of whether the spectrum
can be sold or not.  After that, there is a provision for an appeal to
NCLAT, and then this Court can look into the matter.
(ii) Under Section 18, the spectrum can be subjected to insolvency
proceedings.   This Court examined the question of recoverability of
AGR dues in preference to the dues of secured creditors on the basis
that the use of spectrum would rank in priority higher than that of
16
secured creditors.  Leasing of the spectrum is not permissible as per
the Guidelines.  The RJIL is also not proposing to buy any spectrum
from the resolution applicant of RCOM or any other company.  Only
sharing and trading is permissible subject to the conditions specified
in the Guidelines.  The assets of RCOM are comprised primarily of the
spectrum, real estate, and active assets.  Even if this Court permitted
the sale of such a spectrum, RJIL is not intending to acquire the
same.
(iii) RJIL has paid Rs.195 crores on a self­assessment basis and
shall pay a further sum demanded by DoT.
13. Shri Shyam Divan and Shri Ravi Kadam, learned senior counsel
on behalf of Committee of Creditors of  RCOM,  Aircel Limited, and
Dishnet Wireless Limited, argued:
(i) the spectrum and telecom licences are assets of the telecom
company.     Section   18(f)   of   the   Code   mandates   that   resolution
professional would take control and custody of any asset over which
the corporate debtor has ownership rights as recorded in the balance
sheet   of   the   corporate   debtor.     Section18(f)(iv)   includes   intangible
assets.  The telecom licence and right to use the spectrum form a part
of the intangible assets.  The right to use is a valuable right.  In the
financial statement, telecom licence and the right to use the spectrum
17
had been shown as an intangible asset.  Without telecom licences and
spectrum, there would be no hope of reviving Aircel entities.
(ii) Clause 6 of the Licence Agreement deals with the restrictions of
transfer of licence by either directly or indirectly without the prior
written consent of the licensor.  It can be transferred on fulfilment of
certain conditions.
(iii) Reliance has been placed on Consultation Paper dated 7.3.2012.
Its licence/spectrum is considered an intangible asset, and in the
Guidelines   for   the   Reporting   System   on   Accounting   Separation
Regulations, 2016, the right to use spectrum is again shown as an
intangible asset.  The Indian Accounting Standards­38 has also been
referred to indicate that an asset is a resource controlled by the entity
for further economic benefits.  The spectrum and licence being assets
of the telecom company are not assets owned by a third party under a
trust.
(iv) The licence and spectrum of Aircel Entities are held in security
by the lenders in terms of the TPAs to which the DoT is also a party.
In the resolution plans, DoT acted as an operational creditor.   The
NCLT   asked   to   take   the   approval   of   the   DoT   for   the   transacting
spectrum.   Thus, it is for the DoT to give permission.   Dot has to
approve the implementation of the resolution plan.
18
(v) The Code provides that the resolution plan is to be approved by
the Committee of Creditors, and the adjudicating authority of the
NCLT in terms of Section 31 of the Code and liquidation is to be made
in terms of the priority set out in Section 53 of the Code.  Section 5(20)
defines 'operational creditor'.  Section 5(21) defines 'operational debt'
to include dues payable to the Government.  Thus, claims of DoT for
unpaid dues are operational debts, and DoT is an operational creditor.
(vi) Reliance has been placed upon Section 31 of the Code.   The
resolution plan shall be binding on the corporate debtors, including
the Central Government, any State Government to whom a debt in
respect of the payment of dues arising under any law for the time
being   in   force.   Reliance   has   also   been   placed   on  Committee   of
Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Ors.,
(2019) SCC OnLine SC 1478. 
(vii) The proceedings under the Code cannot be nullified to realise
AGR and other dues of DoT.
14. Shri   Ranjit   Kumar,   learned   senior   counsel,   on   behalf   of
Committee of Creditors of Aircel Limited, Aircel Cellular Limited and
Dishnet Wireless Limited argued that:
19
(i) under the Code, UV Asset Reconstruction Company Limited has
submitted a resolution plan, which has been approved by the NCLT on
9.6.2020.  Aircel Entities are holders of telecom licences.  The licences
issued by DoT contain the format for the execution of the Tripartite
Agreement between the licensor, licensee, and the lenders.   He has
relied upon the following paragraph:
“With a view to help and facilitate the financing of the Project
to   be   set   up   by  the   LICENSEE   pursuant   to   the   LICENCE
referred to above, the parties hereto are desirous of recording
the terms and conditions to provide transfer/assignment of
LICENCE   as   hereinafter   provided   in   this   AGREEMENT   to
protect and secure the Lender’s interest arising out of grant of
financial assistance to the LICENSEE.”
(ii) Aircel   Entities   have   offered   lenders   spectrum   as   a   security
against the loans advanced by the lenders to Aircel Entities.  Thus, the
DoT claim over the spectrum will be subservient to the claims of the
lenders as per the Code, and DoT has to be treated as an operational
creditor.
(iii) The   Banks   are   in   the   business   of   lending   money   for   the
betterment   of   the   national   economy,   in   the   same   manner,   the
Government is in the business of spectrum.  As per Clause 6.3 of the
Licence Agreement, licence can be transferred subject to fulfilment of
the conditions agreed between the licensor, licensee, and the lenders.
(iv) The right to use spectrum is an asset of the corporate debtor.
Paras 8.4 and 8.5 of the Insolvency Law Committee Report have been
20
referred to.  Revocation of Licences, permission­based on past dues, is
prohibited under Section 14 after the moratorium is created.  Current
dues have to be paid during the moratorium period.  He has referred
to Sections 3(27) and 14(1).
(v) The provisions of the Code have to prevail.  The Government has
entered into a pure business transaction by granting a licence and
taking fees against the grant.   The spectrum is a raw material for
telecom   companies.     If   the   spectrum's   licence   is   terminated,   the
resolution professional will find it difficult to run the company as a
going   concern.     DoT   is   an   operational   creditor.     AGR   dues   are
contractual   dues   and   cannot   have   precedence   over   the   dues   of
secured creditors.  He has referred to Section 53 to contend that the
operational creditor is protected in a manner provided in the Code.
Section 238 of the Code contains a non­obstante  clause to the effect
that anything inconsistent therewith contained in any other law for
the time being in force, the Code shall prevail. As such, the Code
overrides the provisions of the Indian Telegraph Act, 1885, Indian
Wireless Telegraphy Act, 1933, and Telecom Regulatory Authority of
India Act, 1997.
15. In   the   case   of   RCOM,   the   resolution   plan   is   pending
consideration of the adjudicating authority under Section 31 of the
Code.
21
16. Whether spectrum can be subjected to proceedings under the
Code is a significant question and is required to be gone into.  It is a
natural resource, and under Section 4 of the Indian Telegraph Act,
1885, the Government has the sovereign right.  Section 4 of the Indian
Telegraph Act, 1885 is extracted hereunder:
“4. Exclusive privilege in respect of telegraphs, and power
to grant licences.— (1) Within India, the Central Government
shall have the exclusive privilege of establishing, maintaining
and working telegraphs:
Provided that the Central Government may grant a license,
on such conditions and in consideration of such payments as
it thinks fit, to any person to establish, maintain, or work a
telegraph within any part of India:
Provided further that the Central Government may, by rules
made under this Act and published in the Official Gazette,
permit, subject to such restrictions and conditions as it thinks
fit, the establishment, maintenance and working—
(a)   of  wireless   telegraphs   on  ships   within  Indian  territorial
waters and   on   aircrafts   within   or   above India,   or   Indian
territorial waters, and
(b) of telegraphs other than wireless telegraphs within any part
of India.
Explanation.—The payments made for the grant of a licence
under this sub­section shall include such sum attributable to
the Universal Service Obligation as may be determined by the
Central   Government   after   considering   the   recommendation
made in this behalf by the Telecom Regulatory Authority of
India established under sub­section (1) of Section 3 of the
Telecom Regulatory Authority of India Act, 1997 (24 of 1997).
(2) The Central Government may, by notification in the Official
Gazette, delegate to the telegraph authority all or any of its
powers under the first proviso to sub­section (1).
The exercise by the telegraph authority of any power so
delegated shall be subject to such restrictions and conditions
as the Central Government may, by the notification, think fit
to impose.
22
(3) Any person who is granted a license under the first proviso
to sub­section (1) to establish, maintain or work a telegraph
within any part of India, shall identify any person to whom it
provides its services by—
(a)   authentication   under   the   Aadhaar   (Targeted   Delivery   of
Financial   and   Other   Subsidies,   Benefits   and   Services)   Act,
2016 (18 of 2016); or
(b) offline verification under the Aadhaar (Targeted Delivery of
Financial   and   Other   Subsidies,   Benefits   and   Services)   Act,
2016 (18 of 2016); or
(c) use of passport issued under Section 4 of the Passports Act,
1967 (15 of 1967); or
(d)   use   of   any   other  officially   valid   document   or  modes   of
identification as may be notified by the Central Government in
this behalf.
(4)   If  any person   who  is  granted   a  license  under the  first
proviso to sub­section (1) to establish, maintain or work a
telegraph   within   any   part   of   India   is   using   authentication
under clause (a) of sub­section (3) to identify any person to
whom it provides its services, it shall make the other modes of
identification under clauses (b) to (d) of sub­section (3) also
available to such person.
(5) The use of modes of identification under sub­section (3)
shall be a voluntary choice of the person who is sought to be
identified and no person shall be denied any service for not
having an Aadhaar number.
(6)   If,   for   identification   of   a   person,   authentication   under
clause (a) of sub­section (3) is used, neither his core biometric
information nor the Aadhaar number of the person shall be
stored.
(7)  Nothing contained  in  sub­sections  (3),  (4) and  (5) shall
prevent   the   Central   Government   from   specifying   further
safeguards and conditions for compliance by any person who
is granted a license under the first proviso to sub­section (1) in
respect   of   identification   of   person   to   whom   it   provides   its
services.
Explanation.—The   expressions   “Aadhaar   number”   and   “core
biometric information” shall have the same meanings as are
respectively assigned to them in clauses (a) and (j) of Section 2
of   the   Aadhaar   (Targeted   Delivery   of   Financial   and   Other
Subsidies, Benefits and Services) Act, 2016 (18 of 2016).”
23
17. Section 3(10) defines ‘creditor’.   The term ‘debt is defined in
Section 3(11).   The expression ‘property’ is defined in Section 3(27).
‘Operational creditor’ is defined in Section 5(20) in Part II under the
head Insolvency Resolution and Liquidation for Corporate Persons.
Section 5(21) defines ‘operational debt’.
18. A question  has been  raised concerning ownership.   Whether
TSPs can be said to be the owner based on the right to use the
spectrum under licence granted to them?   Whether a licence is a
contractual   arrangement?     Whether   ownership   belongs   to   the
Government of India?  Whether spectrum being under contract can be
subjected to proceedings under Section 18 of the Code?  The question
also arises whether the spectrum can be said to be in possession,
which   arises   from   ownership.     What   is   the   distinction   between
possession and occupation?  Whether possession correlates with the
ownership right?   A question also arises concerning the difference
between trading and insolvency proceedings.  Whether a licence can
be transferred under the insolvency proceedings, particularly when
the trading is subjected to clearance of dues by seller or buyer, as the
case may be, as provided in   Guideline Nos.10 and 11; whereas in
insolvency proceedings dues are wiped off.   Guideline No.12 is also
24
assumed   to   be   of   significance   in   case   spectrum   is   subjected   to
insolvency proceedings, which must be considered.
19. It is also required to be examined that when Government has
declined the permission to trade and has not issued NOC for trading
on the ground of non­fulfilment of the conditions as stipulated in the
Licence   Agreement,   the   spectrum   can   be   subjected   to   resolution
proceedings which will have the effect of wiping off the dues of the
Government, which are more than Rs.40,000 crores.   Whereas the
dues   of   the   Banks   are   much   less.   Whether   obtaining   the   DoT's
permission   and   its   approval   to   the   resolution   plan   would   be   a
substitute for Trading Guideline Nos.10, 11, and 12 ?
20. A question also arises of bona fide nature of the proceedings
under the Code.   In the backdrop facts of the cases, question also
arises whether spectrum licence subjected to proceedings under the
Code,   and   it   overrides   the   provisions   contained   in   the   Indian
Telegraph   Act,   1885,   Indian   Wireless   Telegraphy   Act,   1933,   and
Telecom Regulatory Authority of India Act, 1997.
21. In   view  of   the   fact   that   the   licence   contained   an   agreement
between the licensor, licensee, and the lenders, whether on the basis
of that, spectrum can be treated as a security interest and what is the
mode of its enforcement. Whether the Banks can enforce it in the
25
proceedings under the Code or by the procedure as per the law of
enforcement   of   security   interest   under   the Securitisation   and
Reconstruction   of   Financial   Assets   and   Enforcement   of   Securities
Interest Act, 2002 (SARFAESI Act) or under any other law.
22. A   question   of   seminal   significance   also   arises   whether   the
spectrum is a natural resource, the Government is holding the same
as  cestui que trust. In view of the nature of the resource, it can be
subjected to insolvency/liquidation proceedings. Earlier licence was
obtained on the payment of fees in advance that was not beneficial to
the TSPs, as such a new revenue sharing regime was devised in 1999,
and the Central Government has an exclusive right under section 4 of
the Telegraph Act, 1885 in use of spectrum, it can part with on certain
statutory guidelines, its use is not permissible without the payment of
requisite fee. 
Whether dues under the licence can be said to be operational
dues? It is also to be examined whether deferred/default payment
instalment/s   of   spectrum   acquisition   cost   can   be   termed   to   be
operational   dues   besides   AGR   dues.   Whether   as   per   the   revenue
sharing regime and the provisions of the Indian Telegraph Act, 1885,
the   dues   can   be   said   to   be   operational   dues?     Whether   natural
resource would be available to use without payment of requisite dues,
26
whether such dues can be wiped off by resorting to the proceedings
under the Code and comparative dues of Government, and secured
creditors and bona fides of proceedings are also the questions to be
considered.
23. We consider it appropriate that the aforesaid various questions
should first be considered by the NCLT. Let the NCLT consider the
aforesaid aspects and pass a reasoned order after hearing all the
parties. We make it clear that it being a jurisdictional question, it
requires to be gone into at this stage itself. Let the question be decided
within the outer limits of two months. We also make it clear that we
have not observed on the merits of the case, and we have kept all the
questions open to be examined by the NCLT.
In Re. Sharing
24. Coming to the question as to the liability of sharing operator,
who is sharing the spectrum of the original licensee of the past AGR
dues of the original licensee is concerned, that spectrum sharing is
permitted and approved by the Sharing Guidelines dated 24.09.2015.
The Parliament has approved spectrum sharing as part of "National
Telecom Policy, 2012".  However, DOT issued and approved the final
guidelines in the year 2015.  Spectrum sharing is a policy that permits
the sharing of radio access network equipment of operators. Single
27
radio network equipment is used to provide services by two operators
using   both   the   entities'   spectrum.     As   per   Spectrum   Sharing
Guidelines of DoT, (i) it is a prerequisite that both operators sharing
spectrum need to have spectrum in the same band and the same
licenced   area;   (ii)   it   is   also   necessary  that  both   operators   have   a
network   in   the   same   geographical   area;   and   (iii)   leasing   of   the
spectrum is not permitted under the policy.   By sharing the radio
network equipment, two operators use their spectrum and create their
respective businesses' capacity.   Liability to pay necessary AGR and
licence fee remains with the respective companies.  Even the DoT in its
affidavit and compliance of the order dated 14.08.2020, stated as
under so far as the spectrum sharing is concerned:
“4.It   is   respectfully   submitted   that   as   per   the   Guidelines
issued by DoT in 2015, “Spectrum sharing” allows operators to
pool   their   respective   spectrum   for   usage   in   a   specific
geographical   area   (LSA)   thus   complementing   each   other’s
spectrum needs and facilitating more efficient utilization of the
spectrum.     The   rationale   is   to   facilitate   optimization   of
resources and to create a conducive environment for telecom
growth.   During the past period of 20 years or more, some
operators have been able to acquire subscribers and grow at a
faster rate as compared to other operators.  This results in the
spectrum lying unutilized with some of the players while other
operators   face   spectrum   crunch   as   spectrum   is   a   scare
resource.
Thus, on the one hand spectrum, which is a limited natural
resource,   may   remain   unutilized   for   some   Telecom   Service
Providers (TSPs), while on the other hand, consumers suffer
due to poor quality of services on account of spectrum crunch
with other TSPs.  Moreover, spectrum is allocated to a service
provider for a service area which is a large geographical area,
normally co­terminus with the state boundaries.  In different
cities and rural areas, the TSPs may have varying spectrum
needs depending upon their customer profile.
28
Spectrum sharing allows operators to pool their respective
spectrum for usage in a specific geographical area within an
LSA.   The pooling of the spectrum increases the capacity of
Telecom Service Providers to carry telecom traffic and may
help in enhancing the quality of service.
5. It is submitted that the objective of spectrum sharing was to
provide an opportunity to the Telecom Service Providers to pool
their   spectrum   holdings   and   thereby   improve   spectral
efficiency.     It   is   submitted   that   sharing   can   also   provide
additional network capacities in places where there is network
congestion due to shortage of spectrum.  It is submitted that
these   aspects   were   considered   by   the   Central   Government
while approving the Guidelines for Spectrum Sharing.   It is
submitted that Telecom Regulatory Authority of India (TRAI)
made recommendations on ‘Guidelines on Spectrum Sharing’
on July 21, 2014, which was considered and approved by the
Telecom Commission (TC) in its meeting held on 11.06.1025
and subsequently approved by the Central Government.     A
copy   of   Spectrum   Sharing   Guidelines   dated   24.09.2015   is
attached herewith and marked as ANNEXURE – T2.
6. In case of sharing of spectrum both the service providers
[sharers] must be in the same band and in the same service
area. To illustrate “ it may be pointed out that if there are two
service providers holding 100 units of spectrum each in the
same   band   and   in   the   same   service   area   they   can   share
spectrum   of   each   other   mutually.     The   Spectrum   Usage
Charges [SUC] will be considered for 100 units for each of the
TSPs and both will have to pay SUC for their entire spectrum
holding (100 units each) in that band and in that service area.
7. With regard to AGR dues for two TSPs sharing spectrum,
the following scenario emerges:
i. In case of sharing, the Spectrum does not change hands.
Both   TSPs   simultaneously   use   and   have   access   to   the
spectrum held by each.
ii. As   per   the   sharing   arrangement,   each   of   the   TSPs   will
continue   to   make   payment   of   AGR   dues   arising   for   the
spectrum that each holds.
iii. However, due to the additional spectrum which each TSP
gets to use, the AGR based dues (SUC) are assessed at a
higher rate for each of the TSPs.  There is an addition/increase
by   0.5%   in   the   Spectrum   Usage   Charge   rate,   applied
separately on both TSPs.  Thus if SUC rate of each TSP prior to
sharing was 3%, then this will increase to 3.5% for both of
them.
iv. The   use   of   each   others   spectrum   by   means   of   sharing
should normally lead to increase in AGR for both TSPs. This
would   lead   to   increased   licensed   fee   and   SUC   to   the
Government as these are based on share of AGR.
29
v. TSPs who share spectrum, continue to pay and are duty
bound to pay, their AGR based dues arising from the use of
spectrum.
8. So far as the present case is concerned, in accordance with
the   spectrum   sharing   guidelines   dated   24.09.2015,   the
requests of the following TSPs for sharing of access spectrum
have been taken on record:
i. For   Reliance   Jio   Infocomm   Limited   (RJIL)   and   Reliance
Communications Limited (RCL), spectrum in 800 MHz band in
21   LSAs   (all   except   Jammu  and  Kashmir  LSA)   as  per  the
quantum mentioned in the annexure
ii. For Bharti Airtel Limited and Tata Teleservices Limited/Tata
Teleservices   (Maharashtra)   Limited,   spectrum   in   1800   MHz
band in 3 LSAs (Andhra Pradesh, Maharashtra and Mumbai
LSAs) as per the quantum mentioned in the annexure.
iii. For,   Bharti   Airtel   Limited   and   Tata   Teleservices
Limited/Tata Teleservices (Maharashtra) Limited, spectrum in
2100   MHz   band   in   2   LSAs   (Gujarat,   Haryana,   Karnataka,
Kerala,   Madhya   Pradesh,   Maharashtra   and   Uttar   Pradesh
(West) LSAs) as per the quantum mentioned in the annexure.
iv. For Bharti Hexacom Limited and Tata Teleservices Limited,
spectrum in Rajasthan LSA as per the quantum mentioned in
the annexure.
12.   It is respectfully submitted that the difference between
Spectrum  Sharing  and Spectrum Trading,  can therefore be
culled out as under:
i. Spectrum sharing allows operators to pool their respective
spectrum for usage in a specific geographical area and thus
complementing each other’s needs for more efficient utilization
of the spectrum.   This facilitates optimization of resources as
also creates conducive environment for the telecom growth.
ii. Spectrum trading allows parties to transfer their spectrum
rights and obligations to another party.   This allows better
spectrum usages as the idle spectrum from the hands of one
service provider gets transferred to the other service provider
who may be facing spectrum crunch.
iii. In the case of spectrum sharing, the right to use spectrum
as   granted   by   the   DoT   remains   with   the   respective   TSPs,
whereas in the case of spectrum trading, the right to use gets
transferred from the buyer to the seller.”
On going through the entire  Sharing Guidelines, it does not
stipulate anything about the past dues of the sharing operators.  In
the case of sharing spectrum usage charges, the rate of each of the
30
licensees   post   sharing   shall   increase   by   0.5%   of   adjusted   gross
revenue.  Sharing Guidelines dated 24.09.2015 read as under:
“No. L­14006/04/2015­NTG
Government of India
Ministry of Communications & IT
Department of Telecommunications
WPC Wing, 6th floor, Sanchar Bhawan, New Delhi
Dated: the 24th September, 2015
Subject: Guidelines   for   sharing   of   Access   Spectrum   by
Access Service Providers.
National   Telecom   Policy,   2012   envisage   to   move   at   the
earliest towards liberalization of spectrum to enable use of
spectrum in any band to provide any service in any technology
as   well   as   to   permit   spectrum   pooling,   sharing   and   later,
trading   to   enable   optimal   utilization   of   spectrum   through
appropriate   regulatory   framework.     After   considering   the
recommendations   of   TRAI   on   spectrum   sharing,   the
Government has decided to allow sharing of access spectrum
as per guidelines given below:
(1). Spectrum  sharing shall be allowed only for the access
service   providers   holding  Cellular  Mobile   Telephone  Service
(CMTS)/Unified Access Service License (UASL)/Unified License
(Access   Services)(UL(AS)/Unified   License   (UL)   with
authorization   of   Access   Service   in   a   Licensed   Service   Area
(LSA), where both the licensees are having spectrum in the
same band.
(2).     Spectrum   sharing   is   permitted   between   two   Telecom
Service Providers utilizing the spectrum in the same band.
(3).     Spectrum   sharing   is   not   permitted   when   both   the
licensees are having spectrum in different bands. Leasing of
spectrum is not permitted.
(4). All access spectrum including traded spectrum shall be
shareable   provided   that   both   the   licensees   are   having
spectrum in the same band.  Further, if more bands such as
700   MHz   are   added   for   allocation   of   spectrum   to   Access
Service   Providers   through   auction   process,   the   sharing   of
spectrum shall also be permitted in that band.
(5). The right to share the spectrum shall be subject to the
fulfillment of the relevant license conditions and nay other
31
conditions that may be specified by the licensor/Government
from time to time. 
(6) Both the licensees shall ensure that they fulfil the specified
roll­out obligations and specified QoS norms.
(7) A licensee shall not be eligible to share its spectrum if it
has   been   established   that   it   is   in   breach   of   terms   and
conditions   of   the   licence   and   the   licensor   has   ordered   for
revocation/termination of its licence.
(8) Sharing is permitted in the following scenarios:
(i). For the spectrum where both the Licensees who plan to
share, possess the spectrum for which market price has been
paid.   Further, in respect of spectrum in 800 MHz acquired in
the auction held in March 2013, sharing of spectrum shall be
permitted only if the differential of the latest auction price and
the March 2013 auction price on pro­rate basis on the balance
period of right to use the spectrum is paid.
(ii) In case both the Licensees who plan to share spectrum are
having the administratively allotted spectrum in that band, the
sharing of spectrum is permitted only when both the licensees
have   paid   One   time   Spectrum   Charges   (OTSC)   for   their
respective spectrum holdings, above 4.4 MHz (GSM) / 2.5 MHz
(CDMA)   based   on   reserve   price/auction   determined   price.
However   if   the   said   amount   is   not   paid   due   to   judicial
intervention in judicial forums barring any coercive action, in
the interim, sharing of spectrum in such cases will also be
permitted subject to submission of a bank guarantee for an
amount equal to the demand raised by the department for one
time spectrum charge pending final outcome of the court case.
(iii) In case of proposed sharing where one Licensee has
spectrum   acquired   through   auction/trading   or   liberalized
spectrum   and   the   other   has   spectrum   allotted
administratively, sharing is permitted only after the spectrum
charges for liberalizing the administratively allocated spectrum
are paid.   Further, in case of spectrum acquired in auction
held in March 2013, differential amount as indicated in para
7(i) above shall be payable in respect of 800 MHz band. 
(9) The use of technology shall be governed by the terms and
conditions   of   respective   Notice   Inviting   Application
(NIA)/license.
32
(10). Both the licensees will be individually and collectively
responsible   for   complying   with   the   sharing   guidelines,
including interference norms.
(11). Spectrum   sharing  will   be   restricted   to   sharing   by
only two licensees subject to the condition that there will be at
least two independent networks provided in the same band.
(12). For the purpose of charging Spectrum Usage Charges
(SUC), it shall be considered that the licensees are sharing
their entire spectrum holding in the particular band in the
entire LSA.
(13). Spectrum Usage Charges (SUC) rate of each of the
licensees post­sharing shall increase 0.5% of Adjusted Gross
Revenue (AGR).  The sharing of spectrum for part of a month,
full one month period shall be counted for the purpose of
levying SUC.
(14). The   prescribed   limits   for   spectrum   cap   shall   be
applicable for both the licensees individually.   Further, the
spectrum   holding   of   any   licensee   post­sharing   shall   be
counted after adding 50% of the spectrum held by the other
licensee   in   the   band   being   shared   being   added   as   the
additional   spectrum   to   the   original   spectrum   held   by   the
licensee in the band.
(15). Spectrum   sharing   shall   be   available   for   upto   the
balance period of the licence or upto the period of right to use
spectrum, whichever is earlier.
(16). Both the licensees sharing the spectrum shall jointly
give   a   prior   intimation   for   sharing   the   right   to   use   the
spectrum at least 45 days before the proposed effective date of
the sharing.   Application format is attached along with these
guidelines as Annexure­I.
(17). Both the   licensees shall also give an undertaking
that they are in compliance with all the terms and conditions
of guidelines for spectrum sharing and the licence conditions
and will 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
sharing or/and of the licence at the time of giving intimation
for sharing of right to use the spectrum, the Government will
have the right to take appropriate action which inter­alia may
include   annulment   of   sharing   arrangement.     Appropriate
modifications will be made in their respective Service License
and   Wireless   Operating   License   (WOL)   to   facilitate   the
spectrum sharing.
33
(18). A non refundable processing fee, as prescribed from
time to time, shall be payable individually by each licensee for
each service area at the time of intimation to WPC Wing.  At
present,  processing  fee   of  Rs.50,000/­  is   to  be   paid.    The
payment is to be made by draft in favor of Pay & Accounts
Officer (HQ), DOT payable at New Delhi.
(19). Licensor/Government   reserves   the   right   to   modify
the guidelines from time to time as it may deem fit.
Sd/­
(P S M Tripathi)
Assistant Wireless Adviser
for and on behalf of President of India.”
25. According to the DoT and so stated in the affidavit in compliance
of order/directions dated 21.08.2020, AGR is not calculated bandwise,
but   from   the   total   revenue   earned   by   the   TSP   using   the   entire
spectrum (both shared and not shared).  According to DoT, in case of
sharing of spectrum, there is an increment of 0.5% in SUC rate, and
both TSPs pay this incremental SUC on their respective AGRs if they
are sharing spectrum.   Both the TSPs (sharers) are required to pay
this SUC on their  respective AGRs.   Even in the case of sharing
spectrum, the liability of the said operator would be to the extent of
using the said spectrum only, and the liability of the sharing operator
would   be   to   the   extent   of   the   remaining   spectrum   used   by   it.
Therefore, there shall not be any liability of the said operator with
respect to payment of the past dues (post shared) of the sharing
operator   –   licensee.     Even   according   to   DoT   also,   both   the   TSPs
(sharers)   are   required   to   pay   the   SUC   on   their   respective   AGRs.
Learned   counsel   appearing   on   behalf   of   the   Reliance   Jio   (shared
34
operator), which has entered into the sharing between RCom/RTL has
stated at the Bar that Reliance Jio has paid the AGR post sharing
including the difference of AGR as per the decision of this Court on
their own and based on self­assessment.  It is stated at the Bar that
still anything is further held to be due and payable and AGR for the
period post sharing of the said spectrum originally allotted to RCom
on  the  assessment being done,  they will  make  the  said payment.
Similar   is   the   ground   of   counsel   for   other   TSPs.   as   to   sharing
arrangement.
26.   That in the present case, only part of the spectrum of the
licensee  has been shared with the case of some of TSPs., which has
been approved by the DoT under the Sharing Guidelines, 2015, and
there is no provision for the liability of the past dues on the shared
operator.  Even otherwise, the past dues of sharing operator/licensee
covers AGR for the spectrum used by holder of licence, certain TSPs.
such   as   Reliance   came   into   existence   later   on,   and   as   observed
hereinabove, the liability of  such operator of the AGR, would only be
to the extent it has used the said spectrum. Shared operator TSPs.
cannot be saddled with the liability to pay the past dues of AGR of
licensee, that have shared the spectrum with the original licensees.
In Re. Trading:
35
27. Coming to the question of liability of the telecom companies
which are using spectrum under the Trading Guidelines with respect
to   the   AGR   dues   of   the   telecom   company,   Spectrum   trading   is
governed by the Spectrum Trading Guidelines dated 12.10.2015 and
under the said Trading Guidelines, part of the spectrum of the telecom
company   facing   insolvency   –   the   other   telecom   company   is   using
original licensee. The purchaser and buyer's liability shall be as per
para 11 of the Spectrum Trading Guidelines dated 12.10.2015, which
reads as under:
“(10).  Both the licensees shall also give an undertaking that
they are in compliance with all the terms and conditions of the
guidelines for spectrum trading and the license conditions and
will 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 license 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 inter­alia may
include annulment of trading arrangement.
(11).  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 licenses of seller, stayed by the Court of Law,
shall be subject to outcome of decision of such litigation.
(12).  Where an issue, pertaining to the spectrum proposed to
be transferred is pending adjudication before any court of law,
the   seller   shall   ensure   that   its   rights   and   liabilities   are
transferred to the buyer as per the procedure prescribed under
the law and any such transfer of spectrum will be permitted
only after the interest of the Licensor has been secured.”
36
 Para 11 of the Spectrum Trading Guidelines was further clarified
vide O.M. dated 12.05.2016.  Certain telecom operators raised specific
questions on the Trading Guidelines dated 12.10.2015.  Question No.2
in respect of para 11, seeks a clarification as to whether the transfer of
spectrum is for a specific area and reference to the dues relate to only
the   spectrum   being   traded   in   the   concerned   area,   and   seeks
clarification whether the buyer will be jointly or severally liable for only
those dues  if  found  recoverable  after the  effective  date of trading,
which were not known to the seller at the time of the effective trade
date.
28. To the aforesaid questions, vide O.M. dated 12.05.2016, there
was a clarification or the answer relating to para 11 of the Guidelines,
which reads as under:
“The Clarification or the answer relating to para 11 of the
Guidelines states as follows:
“As per para 11 of the Guidelines, the seller must clear all its
dues pertaining to the LSA where trading is intended including
OTSC dues for that band.   In case where entire spectrum
holding of the TSP in all LSAs is intended to be traded, the
seller will have to clear all its pending dues including past
dues.  DoT will indicate status of Dues.  However, the Buyer
may perform due diligence.  Further, the Government shall, as
its own 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.”
Thus, as per para 11 of the Spectrum Trading Guidelines dated
12.10.2015, read with the clarification vide O.M. dated 12.05.2016, in
37
case   of   a   part   of   the   spectrum   is   under   sale,   the   liability   of   the
purchaser/buyer with respect to past dues of the seller shall not arise.
In a case where the entire spectrum is under sale, in that case, the
past dues of the seller shall be the liability of the buyer except the
amount/dues, if any, found recoverable after the effective date of the
trade, which was not known to the parties at the time of the effective
date of trade and in such a situation the liability of such dues of the
buyer and seller would be jointly or severally and the government at its
discretion is entitled to recover such amount.  In the present case, it is
not in dispute that in some cases only part spectrum was traded, and
the remaining spectrum continued with the seller.   At the time of
agreement for spectrum trading, the AGR dues of the seller were also
known.   Therefore, on a joint reading of para 11 of the Spectrum
Trading   Guidelines   dated   12.10.2015   read   with   O.M.   dated
12.05.2016,   the   seller's   dues   prior   to   the   concluding   of   the
agreement/spectrum trading shall not be upon the buyer.
29. It is clear that in the case, which was decided by this Court
relating to AGR dues, respondents were the parties, and they were
litigating with respect to the definition of AGR in the second round of
appeal filed in 215 before this Court.  Each of them was aware that
the dispute as to the definition of AGR was pending in this Court.
Thus, it is apparent that it was known to the parties that AGR dues to
38
be finalised as per the decision of this Court in a pending matter, and
lis was pending for the last 20 years.  The liability cannot be escaped
as specified in the Trading Guidelines to the extent that the seller or
buyer is liable.   They  have to pay the  AGR as per the judgment
rendered by this Court.  The purchasers who are not seller or buyer,
shall have to pay the dues to the extent they are liable under the
Guidelines, as discussed above. It was stated that they have paid dues
as per the self­assessment or, in some cases, demands have not been
raised.  We direct DoT to complete the assessment in such cases of
trade and raise demand if it has not been raised and to examine the
correctness of self­assessment and raise demand, if necessary, after
due verification.  In  case demand notice has not been issued, let DoT
raise the demand within six weeks from today.
Payment of dues of AGR :
30. The   Union   of   India   has   filed   an   application   through   the
Department of Telecommunications (DoT) to modify the order dated
24.10.2019 passed in C.A. Nos.6328­6399/2015 and a separate order
of even date passed in the abovesaid civil appeals. M.A. No.266/2020
was filed by the TSPs./licensees in which order dated 14.2.2020 was
passed, and the contempt proceedings against the Desk Officer were
drawn.   In   view   of   the   communication   dated   23.1.2020,   it   was
withdrawn on 14.2.2020.
39
31. It is averred in the application that the sector of TSPs. has its
varied features. The TSPs. who are required to make payment, are
catering to the services of crores of consumers throughout India, and
India's Government has examined the issue in great detail.   It has
shown prompt alacrity to the sector's market economy. The definition
of 'AGR' has been settled after about 20 years, as such, there are huge
arrears. In the event, it is found that any major service provider is
impacted resulting into drastic consequences of such service providers
facing   proceedings   under   the   Code.   The   following   would   be   the
inevitable adverse impact:
(a) Impact on telecom services for a large proportion of customers.
(i)   Mobile   Number   Portability   (MNP)   process   has   capacity
limitations; this may lead to delays in porting numbers from
non­operational to operational TSP, and consequent disruption
of services for customers.
(ii) TSPs. porting in customers from TSPs not able to provide
services   will   also   need   additional   access   (and   backhaul)
spectrum to maintain Quality of Service (QoS), Access spectrum
is acquired through auction.
(b) Adverse impact on competition in the Telecom Sector with adverse
consequences for the consumers;
40
(c) Adverse impact on Quality of Service in the telecom sector. The
closure of one or more TSPs and the gap being filled in by other
remaining TSPs will not be seamless.
(d) Implications for the banking sector:
­ A letter dated 15.2.2020 was received from the Indian Banks
Association on the subject of distress in the Telecom Sector and
Ease of Business. The letter highlighted the issues affecting the
Telecom Sector and resultant implications on the banks lending
to the Telecom Sector along with suggestions for consideration.
(e) Disruption of tax and non­tax revenue on account of licence fee
(LF), spectrum usage charges (SUC) and Goods and Services Tax (GST)
and loss of revenue on account of spectrum deferred instalments;
(f) Locking up of valuable spectrum in Corporate Insolvency Resolution
Process (CIRP);
(g) Major loss of direct and indirect employment;
(h) Cascading negative impact on other sectors of the economy;
(i) Foreign Direct Investment (FDI) sentiment will be adversely affected;
(j) The closure of one or more TSPs also adversely impacts the digital
connectivity in the country. E­commerce, e­banking, e­health, etc., all
part of e­governance are affected;
41
(k)   This   will   have   an   adverse   impact   in   rural   areas,   particularly
Aspirational   Districts,   and   the   spread   of   digitization   in   backward
regions of India.   
32. In this regard, a letter dated 15.2.2020 had been written by the
Indian Banks Association, adumbrating the aforesaid aspects of the
distressed telecom sector. The issues affecting the telecom industry
and companies and the resultant stress on bank lending in this sector
were pointed out, culminating into a high incidence of tax and heavy
burden,   subdued   operating   matrix   due   to   a   steep   fall   in   average
revenue per customer. The telecom services remained subdued due to
the price war triggered by a new entrant. There was a decline in
revenue. The drastic cut in data tariffs has led to a spike in data usage
for the last one year, primarily on the 4G network. The vicious circle
would adversely affect the capex spending of the service providers and,
in turn, impact the revenue earning capabilities. Banks’ approach to
5G   financing   was   also   mentioned   for   which   significant   additional
investment is required for 5G related infrastructure with the current
leveraged financial position. The total outstanding exposure to the
telecom industry from the Indian Banks is huge. The modification in
the bank guarantee mechanism pertaining to onerous clauses was
also pointed out. Various other difficulties of the telecom sector were
also highlighted.
42
33. The Union of India, after envisaging the larger interest, economic
consequences on the nation and to ensure that the order of this Court
is complied with in its letter and spirit, has taken a conscious decision
and sought approval of this Court to a formula for recovery of past
dues from the telecom service providers. The formula is placed for
approval of this Court, which is arrived at after detailed and long
drawn deliberations at various levels in the administrative hierarchy,
including the Cabinet, and keeping in view the vital issues related to
financial health and viability of the telecom sector, need for ensuring
competition and a level­playing field in the interest of consumers. The
following   decision   has   been   taken   with   respect   to   the   mode   of
recovery:
‘THE MODE OF RECOVERY FOR CONSIDERATION OF
THIS HON’BLE COURT
“1.1   All licensees impacted by the judgment of the Hon’ble
Supreme Court be allowed to pay the unpaid or remaining to
be   paid   amount   of   past   DoT   assessed/calculated   dues   in
annual instalments over 20 years (or less if they so opt), duly
protecting  the   net   present   value   of   the   said   dues   using  a
discount  rate   of  8%  (based   on  One   Year  Marginal  Cost   of
Lending Rate of SBI which is currently 7.75%). Interest on the
unpaid amount, penalty, and interest on penalty in relation to
the past dues as on the date of the judgment of the Hon’ble
Supreme   Court   (arising   due   to   the   said   judgment   of   the
Supreme Court) will not be levied beyond the date of the said
judgment, and the NPV will be protected using the discount
rate. However, the TSPs shall continue to be liable for interest,
penalty, and interest on penalty for unpaid dues of LF and
SUC which arise prospectively after the date of judgment of the
Hon’ble Supreme Court (24.10.2019).
1.2 Change in amount of past dues arising from the AGR
judgment (24.10.2019), if any, determined after reconciliation
between   TSPs’   self­assessment   and   DoT’s
43
assessment/calculation,   be   added   to/adjusted   against   the
payable instalment amounts of the TSP on the same basis as
given in paragraph 1.1 above.”     
34. A prayer has also been made to pay the remaining dues through
annual   installments   spanning   over   20   years.   For   any   lapse,   a
provision has been made to protect the net present value as per the
order passed by this Court up to the date of judgment and the dues
thereafter, to be realised using the discounted rate of 8%, which is
based on one marginal MCLR rate of SBI which is currently at 7.75%.
The interest, penalty, and interest on penalty on the arrears as per
agreement not to be levied beyond the date of judgment, and the NPV
will be protected. However, for prospective arrears, if any, the TSPs.
shall be liable to interest, penalty, and interest on penalty for unpaid
dues as per agreement after the date of judgment of this Court.
35. Considering   the   various   factors   taken   into   account   and   the
letters written by the Indian Banks Association, we are of the opinion
that the decision of the Cabinet is based on the various factors, and in
the interest of the economy and the consumers. The decision is taken
after extensive deliberations and consultations, and till the date of
judgment,   the   dues   have   been   worked   out   as   per   the   decision
rendered   by   this   Court.   Only   for   the   subsequent   period,   some
relaxation has  been  given  as to  the  rate  of  interest, penalty,  and
44
interest   on   penalty,   which   is   permissible.   The   arrears   have
accumulated for the last 20 years. It is also to be noted that some of
the companies are under insolvency proceedings, validity of which is
to be examined, and they were having huge arrears of AGR dues
against them.  For protecting the telecom sector, a decision has been
taken on various considerations mentioned above, which cannot be
objected to.
36. However,   we   consider   that   the   period   of   20   years   fixed   for
payment is excessive. We feel that it is a revenue sharing regime, and
it is grant of sovereign right to the TSPs. under the Telecom Policy. We
feel   that   some   reasonable   time   is   to   be   granted,   considering   the
financial stress and the banking sector's involvement.   We deem it
appropriate to grant facility of time to make payment of dues in equal
yearly instalments. Rest of the decision quoted above, taken by the
Cabinet,  shall   stand  except  the   modifications  concerning the   time
schedule for making payment of arrears. But, at the same time, it is to
be ensured that the dues are paid in toto. The concession is granted
only on the condition that the dues shall be paid punctually within the
time stipulated by this Court. Even a single default will attract the
dues along with interest, penalty and interest on penalty at the rate
specified in the agreement.
45
37. We also place on record that the demand of AGR was raised as
against non­telecom PSUs. on the strength of the judgment passed by
this Court. Pursuant to the Court's directions, the matter has been reexamined and considering the representations filed by PSUs. It is
stated in the affidavit dated 18.6.2020 that non­ telecom public sector
undertakings are non­telecom entities involved in providing services
such as power transmission, oil and gas exploration, and refining,
Metrorail service, etc., and that they are not into the business of
providing mobile services to the general public. They are not holding
Access Service Licence (ASL). The revenue received by non­telecom
public sector undertakings under the head of ‘telecom services’ forms
a very negligible and a small portion and does not form part of the
total   revenue,   e.g.,   0.0002%   for   GAIL,   0.00028%   for   DMRC   and
0.001% for Oil India, etc. DoT has decided to withdraw the demands
raised for licence fee based on non­telecom revenue from the nontelecom public sector undertakings, which are M/s. Powergrid, GAIL,
Oil India Ltd., DMRC, which constitutes about 96% of the demand
regarding non­telecom PSUs.   In this regard orders have been issued
on 13.7.2020 and 14.7.2020.
38. Resultantly, we issue following directions:
(i) That for the demand raised by the Department of Telecom in
respect of the AGR dues based on the judgment of this Court, there
46
shall not be any dispute raised by any of the Telecom Operators and
that there shall not be any re­assessment.
(ii) That,   at  the   first   instance,   the   respective   Telecom  Operators
shall make the payment of 10% of the total dues as demanded by DoT
by 31.3.2021.
(iii) TSPs. have to make payment in yearly instalments commencing
from   1.4.2021   up   to   31.3.2031   payable   by   31st  March   of   every
succeeding financial year.
(iv) Various   companies   through   Managing   Director/Chairman   or
other authorised officer, to furnish an undertaking within four weeks,
to make payment of arrears as per the order.
(v) The   existing   bank   guarantees   that   have   been   submitted
regarding the spectrum shall be kept alive by TSPs. until the payment
is made.
(vi) In   the   event   of   any   default   in   making   payment   of   annual
instalments,   interest  would   become   payable   as   per  the   agreement
along   with   penalty   and   interest   on   penalty   automatically   without
reference to Court.  Besides, it would be punishable for contempt of
Court. 
(vii) Let compliance of order be reported by all TSPs. and DoT every
year by 7th April of each succeeding year.
47
In the Suo Motu Contempt Petition, in view of the reply filed and
compliance reported, and an unconditional apology tendered, which
we accept, we discharge notice issued to Shri Mandar Deshpande and
drop the proceedings.
Before parting with  the proceedings, we place on record our
appreciation for the fair and able assistance provided by Shri Tushar
Mehta, Solicitor General, and the respective senior counsel appearing
on behalf of respective parties.
Accordingly, the pending interlocutory applications are disposed
of in terms of the aforesaid order/directions.
 All the previous orders stand modified accordingly.
...………………….J.
                 (Arun Mishra)
…….……………….J.
(S. Abdul Nazeer)
…….……………….J.
(M.R. Shah)
New Delhi;
September 1, 2020.