AGR Dues Dispute: Supreme Court Rejects Modification Plea

The recent Supreme Court judgment in the case of Union of India v. Association of Unified Telecom Service Providers of India revolves around the contentious issue of Adjusted Gross Revenue (AGR) dues owed by telecom operators to the government. The judgment was delivered on 23rd July 2021 by a bench comprising L. Nageswara Rao, S. Abdul Nazeer, and M. R. Shah. The case highlights the Supreme Court’s firm stance on the finality of its previous ruling on AGR dues and its rejection of any further recalculations.

The dispute primarily concerns the interpretation of the definition of ‘gross revenue’ in telecom license agreements. In a previous ruling on 24th October 2019, the Supreme Court had upheld the Department of Telecommunications’ (DoT) definition of AGR, which included non-core revenues of telecom companies, significantly increasing their payable dues. Following this, on 1st September 2020, the court had categorically ruled that no telecom operator could dispute the assessed AGR dues.

Background of the Case

The Union of India filed Miscellaneous Applications (M.A. No. 83 of 2021, M.A. No. 115 of 2021, and M.A. No. 116 of 2021) seeking clarification and modification of paragraph 38(i) of the judgment dated 1st September 2020. The government sought permission to rectify clerical and arithmetical errors in the computation of AGR dues. The applications argued that the DoT had made inadvertent calculation errors, including instances of double counting of revenues, non-accounting of payments already made, and failure to apply valid deductions.

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Arguments by the Petitioners

The applicants, represented by senior advocates including Mukul Rohatgi, Dr. Abhishek Singhvi, Arvind P. Datar, and Ramji Srinivasan, contended that the intention was not to reopen the AGR dispute but merely to correct genuine mistakes. The key arguments presented were:

• Errors in Calculation: Some payments already made by telecom operators were not deducted while computing outstanding dues.
• Double Counting of Revenue: Certain revenue items were counted twice, inflating the payable amount.
• Rectification Not Prohibited: The lawyers argued that while reassessment was barred, the Supreme Court judgment did not explicitly prohibit rectifying inadvertent errors.

Dr. Abhishek Singhvi stated: “Errors committed in computation of AGR dues arose due to double counting of revenue items, payments made but not accounted for, and accrued deductions not being given effect to. The applicant should not be made to suffer for certain calculation errors made by the Union of India.”

Respondent’s Arguments

The Department of Telecommunications, opposing the plea, argued that any modifications to the AGR dues would reopen a settled issue and create room for prolonged litigation. The government emphasized that the Supreme Court’s previous orders clearly prohibited any reassessment or recalculation.

Supreme Court’s Verdict

The Supreme Court bench rejected the modification plea, holding that allowing rectification of errors would, in effect, lead to a recalculation of AGR dues. The key observations made by the court were:

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• The dispute over AGR dues had persisted in courts for years, and the judgment aimed to bring finality to the matter.
• The order dated 20th July 2020 had already emphasized that there was no room for any reassessment of AGR dues.
• Allowing any rectifications would indirectly enable telecom operators to challenge the assessed dues, contrary to the intent of the previous judgment.

The court held: “The AGR dues payable by TSPs cannot be the subject matter of any future litigation. The order dated 20.07.2020 makes it clear that there is no scope for any recalculation/re-computation of AGR dues.”

In conclusion, the Supreme Court dismissed the applications as misconceived, reaffirming its previous ruling that no further dispute regarding AGR dues could be entertained. The judgment underscores the court’s commitment to upholding its final decisions and preventing unnecessary litigation.

Petitioner Name: Union of India.
Respondent Name: Association of Unified Telecom Service Providers of India and Ors..
Judgment By: Justice L. Nageswara Rao, Justice S. Abdul Nazeer, Justice M. R. Shah.
Place Of Incident: India.
Judgment Date: 23-07-2021.

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