CIVIL APPEAL NO. 6328-6399/2015

Provisions Involved

Section 4 of the telegraph act


  • In this particular case, the Court has decided to matter about the calculation of Average Gross Revenue (AGR) of telecom operators and its payment thereof. This is an appeal by the government of India on the representation made by the association of telecom service providers about extending the time limit for payment of the dues.
  • As the concept of AGR arose from the policy of Government of India and the Telegraph Act. Section 4 of the telegraph act says that the government has sole privilege regarding providing communication service. Still, there is also a provision by which the government can part with this privilege and enable another party to provide service. There will be a contractual relationship between the government and the other that of licensor and licensee.
  • When an appeal is filed the government stated that a number of the service provider are under insolvency proceedings under Insolvency and Bankruptcy Code, based on which the government passed an order for providing Court with all documents and submission about to ensure that proceedings are right and are not initiated not to pay dues.
  • There was certain respect to the government for permitting the trading of license from the company who is in insolvency proceedings. Still, the government rejected them by stating that numbers of pre-conditions are to be fulfilled to get such permission. From this point, certain spectrum license trading also came in the picture to be dealt with.

Submissions of the defendants

Various telecom service providers said that the Court could check only insolvency proceedings whether they are bonafide or not and can't check to decide upon whether the license can be traded or not.


 There are the following three issues before the Court which are to be decided: 

  • Whether spectrum can be subjected to proceedings under the Code?
  • In the case of sharing, how is the payment to be made by the Telecom Service Provider?
  • In the case of trading, how the liability of the seller and buyer is to be determined?


Observations by Court for first issues are:

  • Based on the contention of both sides, the court has said that spectrum is a natural resource and this issue must be dealt with by the National Company Law Tribunal and answer to several questions about ownership, contract, payment of dues and number of questions to find out. This matter must be dealt concerning it being a jurisdictional question.

Observations about the second issue are:

  • That sharing of the spectrum is allowed under guidelines of the Department of Telecommunication in 2015, and there are certain pre-conditions for such sharing which are to be there. Still, it does not provide leasing of the spectrum. Concerning the liability to pay AGR and other payment it remains with the respective companies only and going through the guidelines also there is no mention in respect to payment of past due to sharing companies. It just mentions an increase in 0.5% of AGR of sharing partners.
  • Next observation is that AGR is not calculated bandwise but from total revenue earning including spectrum and there is no as such clause for payment of past due by sharing partners in case of post-payment of their respective AGR and 0.5% increase in it. 
  • The Court also holds that companies are liable to pay only that much dues which they have used and are not to be burdened by past dues of someone else.

Observations about third issues are:

  • Guidelines related to the trading are given in guideline dated12/10/2015, and it talks about the situation in case a partner of sharing in under insolvency proceedings another is using it. There was certain confusion regarding it which was later cleared by another notification based on which we can see that in case part of the spectrum is under sale past dues are not going to be transferred as a liability. Still, in case the whole spectrum is under sale then dues are going to be transferred to the buyer unless they are not known to the party on the date of sale.
  • In this particular case, a part of the spectrum is under sale and companies purchasing it are fully aware of it so they can't escape the liability of paying the dues.

The observation regarding payment of AGR

  • Hon'ble Court has gone through the number of reasons for providing extended time limit to Telecom Service Provider (TSP) for payment of dues as there are a lot of things which are too focused upon a problem to the customer, economy, banking system and another number of problems.
  • Government has also provided the Court with a scheme with the help of which it is possible to allow payment in instalments and extended period can be given.
  • Keeping all these factors in mind and observing representation form an association of banks and government Hon'ble Supreme Court has provided several directions that are to be followed and fulfilled in totality.


The direction given by the Court are: 

  1. That for the demand raised by the Department of Telecom (DOT) in respect of the AGR dues based on the judgment of this Court, there shall not be any dispute raised by any of the Telecom Operators and that there shall not be any reassessment.
  2. That, at the first instance, the respective Telecom Operators shall make the payment of 10% of the total dues as demanded by DoT by 31.03.2021.
  3. TSPs. have to make payment in yearly instalments commencing from 1.4.2021 up to 31.3.2031 payable by 31st March of every succeeding financial year.
  4. Various companies through Managing Director/Chairman or other authorized officer, to furnish an undertaking within four weeks, to make payment of arrears as per the order.
  5. The existing bank guarantees that have been submitted regarding the spectrum shall be kept alive by TSPs until the payment is made.
  6. In the event of any default in making payment of annual instalments, interest would become payable as per the agreement along with penalty and interest on penalty automatically without reference to Court. Besides, it would be punishable for Contempt of Court. 
  7. Let all TSPs report compliance of the order. And DoT every year by 7th April of each succeeding year.