Supreme Court rejects adjusted gross revenue relief to telcos

The Supreme Court on Monday dismissed petitions filed by Vodafone Idea Ltd (Vi), Bharti Airtel Ltd, and Tata Teleservices seeking relief from payments related to their adjusted gross revenue (AGR) liabilities such as interest, penalties, and interest on penalties.

Calling the petitions “misconceived”, a bench of justices J.B. Pardiwala and R. Mahadevan reiterated the court’s earlier stance on AGR dues remaining binding and final.

“Really disturbed. It is not expected of a multinational company. We will dismiss it,” the bench concluded.

The telecom companies, facing financial stress, had invoked Article 14 of the Constitution, calling for equal treatment and a level playing field in the sector.

They sought a waiver of over Rs40,000 crore, maintaining that the relief was required for the survival of companies like Vi.

Senior advocate Mukul Rohatgi, representing Vi, told the apex court, “You know, all we are saying is that the government is today 50% owner in my company. But they said we can’t help because of the judgment. Their answer is not in the sense that ‘we won’t look at your representation,’ but because of the judgment of the Supreme Court.”

Solicitor general Tushar Mehta, appearing for the Centre, noted, “What we have said is that, in view of the judgment of the Lordships, we cannot examine (the relief sought).”

The bench, however, stated that the court would not interfere if the government chose to help the financially distressed companies.

“If the government wants to help you, we are not coming in the way,” justice Pardiwala said.

Vi is potentially to be the most affected by the ruling, and the company last week cautioned that it may not survive beyond FY26 without relief.

The company had converted spectrum auction dues worth Rs36,950 crore into equity earlier this month, raising the government’s shareholding to 48.9%.

Even after this, Department of Telecommunications (DoT) officials reportedly said the government is unlikely to increase its stake further, as doing so could turn the company into a public sector entity.

The issue of AGR stems from a disagreement over whether non-telecom revenues should be included in the revenue base used to calculate dues.

On 24 October 2019, the Supreme Court ruled in favor of DoT, stating that all revenues, including those that are not related to telecom operations, must be included in AGR.

The telecom companies attempted to challenge that ruling, but in vain.

In July 2020, the court declared that no further disputes on AGR dues, including claims of arithmetic errors, would be entertained.

It reaffirmed this stance in February and again last September, when curative petitions from the telcos were dismissed.

The Centre, in a separate move to ease financial pressure on the sector, has introduced several policy measures.

These include allowing 100% foreign direct investment through the automatic route and offering companies a 10-year period to pay their dues in installments.

Meanwhile, Vi has amended its shareholder agreement to reduce the qualifying threshold for its promoter groups—Aditya Birla Group and UK-based Vodafone—to retain governance and management control.

The court’s latest dismissal leaves the telcos with no legal recourse on the AGR matter.