The Supreme Court on Monday asked the government to explain why Reliance Jio, which is earning revenue by sharing Reliance Communication’s (RCom) spectrum, be not asked to pay the Adjusted Gross Revenue (AGR) related dues to the government.
The government told the top court there is a difference of opinion between two ministries (Department of Telecommunication and Corporate Affairs) on the issue of sale of spectrum during insolvency proceedings.
Solicitor General Tushar Mehta, appearing for government and telecom ministry, said the government would support any view taken by the top court resulting in recovery of the AGR related dues.
Solicitor General Tushar Mehta said that spectrum sharing is different from trading and the user must pay the AGR related dues.
A bench of Justices Arun Mishra, S Abdul Nazeer and M R Shah asked the Department of Telecom (DoT) to give year-wise dues of RCom by Tuesday, saying that will be crucial for its verdict on the issue and posted the matter for further hearing for August 18.
On the divergent view between the two ministries, Mehta said the DoT has constantly maintained a stand that spectrum cannot be sold during insolvency proceedings while the Ministry of Corporate Affairs (MCA) had sought to allow spectrum sale for maximization of value.
The law officer pointed out that the spectrum is allowed to be used by the telecom companies under a contract but the ownership of it does not get transferred.
He said that 4G spectrum can never be subject matter of the IBC proceedings and it is a natural resource which is owned by the people and held by the government in trusteeship.
Senior advocate Harish Salve, appearing for Jio, said that the company was not involved in any proceedings under Insolvency and Bankruptcy Code (IBC) and had not acquired RCom’s spectrum.
This has been the consistent position of the DoT and it has been upheld by the top court, he said, adding that in 2019, the government has issued show cause notice to RCom as to why the spectrum should not be revoked due to non-payment of dues.
The bench said it wants to know since when RCom has not paid its dues and DoT should give the year-wise details of demand raised against the company.
It also sought to know the details of the resolution plan approved by the committee of creditors for the RCom under the IBC.
Senior advocate Shyam Divan, representing Resolution Professional for RCom, said the plan of UV Asset Reconstruction Company (UV ARC) has been approved and according to it RCom will be acquired, its enterprise business will be rebuilt and assets monetized.
He said that after RCom sale to UV ARC, banks (financial creditors) will be issued zero coupon bonds worth Rs 15,140 crores rupees redeemable in three to five years.
The bench referred to the earlier proposed deal of RJio and RCom (which did not materialize) and said RCom claimed its assets valued at Rs 35,000 crore.
Legal experts observing the arguments state that Government stand augments Mukesh Jio even well know that fact that Mukesh’s Jio uses Anil’s 4G spectrum by not paying anything to government and now Solicitor General today stand expose and thus emerge of a new rotten scam on the cards ..