AGR Case: Supreme Court Committed 'Serious' Jurisdiction Errors, Says Vodafone Idea

Vodafone Idea Ltd. and Bharti Airtel Ltd. moved the Supreme Court on Monday, seeking a limited reconsideration of the judgement that held India’s telecom operators will have to include non-core revenues to calculate their adjusted gross revenue.

Adjusted gross revenue is the basis for a revenue sharing mechanism between the government and the telecom operators.

Under this mechanism, the operators have to pay a certain licencing fee and spectrum usage fee to the Department of Telecommunications. The fee is calculated as a percentage of the AGR.

However, the definition of what constitutes AGR has been under dispute since 2005.

Before various judicial forums, the telecom operators had claimed that the definition should include only their core revenues, whereas the DoT claimed that all the revenues, including revenues from non-telecom services, must be factored into the definition.

In October 2019, the Supreme Court ruled that non-core revenue must be included while calculating the AGR, ending a 14-year-long legal battle between mobile operators and the government on the definition of AGR.

Appearing for one of the telecom companies on Monday, Senior Advocate KK Venugopal said that the prejudice caused by arithmetical errors in the calculation of AGR is so great that the reconsideration would require a hearing in open court.

BQ Prime has reviewed a copy of the petition filed by Vodafone Idea before the apex court.

Vodafone Idea has argued in its plea that its challenge to the 2019 ruling is restricted to two issues that have caused it manifest injustice.

Firstly, it has been stated that the top court has committed a serious jurisdictional error in holding that the demand for AGR dues made by the DoT would be final and that even manifest arithmetical errors in the computation of dues could not be rectified.

There were several inadvertent clerical and arithmetical errors in the demands, such as double counting of payments that have already been made. A demand to pay once again a sum already paid would be unjust enrichment, the plea said.

Besides this, it has been said that there was a mutual acceptance of the fact that amounts were tentative and needed to be verified and corrected.

Secondly, the plea said that the court has exceeded its jurisdiction in finding that the telecom operators would be liable to pay a penalty of 50% of the entire amount of short-payment, along with interest on the said penalty, at a rate that will be 2% above the prime lending rate of the State Bank of India.

It said that the court's reasoning for imposing the penalty—that the parties did not have a bona fide intention while contesting the definition of AGR dues—was completely incorrect.

The plea goes on to show various instances where the issue of quantification of the amount was marred in a plethora of disputes before the AGR judgement was delivered in 2019, and specifies that it contested the matter in exercise of its legal right to avail statutory remedies.

It states that the court gave no reason while imposing such a draconian penalty for exercising legitimate fundamental and constitutional rights to contest the issue.

"The components of penalty and interest on penalty have reached such a gigantic proportion that it threatens the very existence of Vodafone Idea," the petition said.

The 2019 judgement dealt a crippling blow to the bruised industry that stared at dues and penalties worth thousands of crores. It had increased the liabilities of Bharti Airtel and Vodafone Idea to more than Rs 90,000 crore.

Soon after, the companies approached the court, seeking more time for payment of their dues. In September 2020, the apex court allowed for the payment of dues over 10 years.

In a separate plea in 2021, the top court dismissed the applications filed by telecom companies that sought permission to approach the DoT on the calculation of the dues in the case, claiming arithmetic errors in the department's calculation of the dues.

In the aftermath of the AGR judgement, the government owns a 33% stake in Vodafone Idea. The shares were allocated to the government in lieu of the conversion of interest dues arising from the deferment of adjusted gross revenue and spectrum auction payments.