February 23, 2020

Supreme Court Lashes Out at Govt for Shielding Private Telecom Companies

P Abhimanyu

ON February 14, 2020, the Supreme Court has lashed out at the government, for shielding the private telecom companies, which are dodging the payment of their licence fee dues. The private telecom companies, viz, Vodafone Idea, Airtel and Tata Teleservices have also come under fire, for not complying with the order of the Apex Court.

On October 24, 2019, a Supreme Court Bench, consisting of justices Arun Mishra, S Abdul Nazeer and M R Shah, ordered that the private telecom companies should pay an amount of Rs 1.47 crore as licence fee dues and that the amount should be paid within three weeks. According to the order, Vodafone Idea has to pay Rs 53,038 crore, Airtel has to pay Rs 35,586 crore and Tata Teleservices has to pay Rs 13,823 crore. However, even after nearly four months, these private companies have not paid even a penny.

What angered the court most was that, the department of telecommunications, which should have taken stringent steps to collect the dues from the private telecom companies, had not only failed in its duty, but had also facilitated the private companies to dodge the payment. The court became furious to know that on January 23, 2020, the department of telecommunications had issued a direction to the accountant general, not to insist for any payment pursuant to the order passed by the Supreme Court and also not to take any coercive step till further orders. Referring to the direction given to the accountant general, Justice Arun Mishra remarked, “There is so much money power here, I am very anguished. I feel I should not work in this Court in this system.”

The genesis of this litigation dates back to the year 1999. In 1995, licences were issued to the private companies to provide telecom services. As per the licensing condition, the private telecom companies should pay a fixed amount, as licence fee. However, from 1995 to 1999 the private telecom companies did not pay their licence fee. The accumulated licence fee arrears ran into thousands of crores of rupees. In 1999, the then prime minister, Atal Bihari Vajpayee, large heartedly waived the entire licence fee arrears. Further, in the place of the fixed licence fee model, Vajpayee introduced the revenue sharing model. According to this, the private telecom companies have to pay a percentage of their revenue earnings as licence fee. Initially, the licence fee was fixed at 15 per cent of the revenue. Subsequently, it was reduced to 13 per cent and ultimately fixed at 8 per cent.

Utilising the revenue sharing model introduced by the Vajpayee government, the private telecom companies continuously understated their revenue collections, and cheated the government of its licence fee. This has been revealed a number of times. From the scrutiny made by the department of telecommunications, utilising external auditors, it has been proved that the private telecom companies had cheated the government by understating their revenue. Consequent to this, they have been made to pay the due licence fee amount to the government. 

Apart from this, right from the beginning, the private telecom companies were also cheating the government of its due licence fee, by manipulating the AGR (adjusted gross revenue), based on which the licence fee is calculated. They maintain that the revenue from telecom services alone constitutes the AGR. According to them, their other revenues, such as rent, interest, revenue from sale of handsets, scraps, etc, would not come under the scope of the AGR. However, the government took the stand that the AGR includes the above items of revenue also. (Perhaps, the government of the day regrets that such a stand has been taken.) The dispute was lingering on for all these years till the judgement was given by the Supreme Court on October 24, 2020.

Two questions will certainly arise in the mind of any one who comes across the observations made by Justice Arun Mishra on February 14, 2020. The first one is related to the direction issued by the department of telecommunications to the accountant general on January 23, 2020. The attorney general, Tushar Mehta, has informed the court that two desk officers of the department of telecommunications were responsible for issuing such a direction. It is reported that, neither the minister of communications, nor the secretary, telecom, had any knowledge about it. It is certainly beyond the comprehension of any one that, some desk officers sitting in the Sanchar Bhawan, could have issued such a direction, violating the order of the Supreme Court. Here, we are unfailingly reminded of the observation made by Justice Arun Mishra, about the abundant money power.

The second question is that, why the government is not keen to implement the judgement of the Supreme Court, out of which it will get a bonanza of Rs1.47 crore? Especially, at a time when the government is facing a serious financial crunch. The media shed tears that the financial condition of the private telecom companies, especially that of Vodafone Idea, is too fragile, to bear this huge financial burden. But, where has the wealth earned by these companies from the Indian telecom industry gone? Especially, the gargantuan profits earned by these companies from 2007 to 2012, when BSNL was converted into a lame duck by none other than the government itself ? Only the government has to answer these questions.