Holding

Spectrum, being a government‑licensed natural resource, is not an asset of the corporate debtor and cannot be subjected to insolvency proceedings; shared operators are not liable for the original licensee’s past AGR dues, and liability in spectrum trading is governed by the 2015 guidelines, with TSPs directed to pay AGR dues in instalments.

Summary

The Supreme Court considered the Union of India's demand that telecom service providers (TSPs) pay Adjusted Gross Revenue (AGR) dues as determined in earlier judgments, while several TSPs were under insolvency proceedings. The Court examined whether spectrum, a natural resource licensed under the Indian Telegraph Act, could be treated as an asset in insolvency proceedings, and whether shared or traded spectrum affected liability for past AGR dues. It held that spectrum cannot be subjected to the Insolvency and Bankruptcy Code because it is not owned by the corporate debtor but licensed by the Government. Consequently, a shared operator is not liable for the original licensee’s past AGR dues, and liability in spectrum trading follows the 2015 Spectrum Trading Guidelines. The Court modified the earlier order, directing TSPs to pay 10% of total dues by 31‑03‑2021 and the balance in equal yearly instalments over a period not exceeding ten years, with interest and penalties for defaults. The decision also withdrew non‑telecom public sector undertakings’ licence‑fee demands and kept existing bank guarantees alive.

Issues considered

Whether spectrum can be subjected to proceedings under the Insolvency and Bankruptcy Code, 2016
Whether the liability of a shared telecom service provider for past AGR dues of the original licensee arises
How liability of seller and buyer is determined in spectrum trading under the 2015 Spectrum Trading Guidelines
Whether AGR dues constitute operational debt under the IBC
Whether the licence to use spectrum is an asset of the corporate debtor

Legislation cited

Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016
Indian Telegraph Act, 1885s. 3(10), s. 4
Indian Wireless Telegraphy Act, 1933
Insolvency and Bankruptcy Code, 2016s. 14, s. 18, s. 31, s. 3(27), s. 5(20), s. 5(21), s. 53
Passports Act, 1967
Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002
Telecom Regulatory Authority of India Act, 1997

Subjects

Adjusted Gross RevenueAGRSpectrum sharingSpectrum tradingInsolvency and Bankruptcy CodeTelecom service providersOperational creditorDepartment of TelecommunicationsPayment instalmentsNatural resource

Judgment

[2020] 11 S.C.R. 541 541

UNION OF INDIA A
v.
ASSOCIATION OF UNIFIED TELECOM SERVICE
PROVIDERS OF INDIA ETC. ETC.
(M.A. (D) No. 9887 of 2020) B
In
(Civil Appeal No. 6328-6399 of 2015)
SEPTEMBER 01, 2020
[ARUN MISHRA, S. ABDUL NAZEER AND C
M. R. SHAH, JJ.]
Indian Telegraph Act, 1885 – Definition of Adjusted Gross
Revenue (AGR) and dues to be paid thereunder, decided by Supreme
Court in Union of India v. Association of Unified Telecom Service
Providers of India reported as [2019] 16 SCR 672 – Payment of – D
Representation by telecom service providers and Indian Banks’
Association – Period of 20 years fixed by Union of India – Held:
There shall not be any dispute/re-assessment by any of the Telecom
Operators for the demand raised by Department of Telecom (DoT)
w.r.t the AGR dues based on the judgment of this Court – However,
period of 20 years fixed for payment is excessive – At first instance, E
Telecom Operators to make payment of 10% of the total dues as
demanded by DoT by 31.03.2021 – Telecom Service Provider (TSPs)
to make payment in yearly instalments commencing from 01.04.2021
up to 31.03.2031 payable by 31 st March of every succeeding
financial year – Any default in payment to attract interest as per F
agreement with penalty and interest on penalty – Directions issued
– Insolvency and Bankruptcy Code, 2016 – Indian Wireless
Telegraphy Act, 1933 – Telecom Regulatory Authority of India Act,
1997.
Insolvency and Bankruptcy Code, 2016 – Payment of Adjusted G
Gross Revenue (AGR) dues – Telecom Service Providers resorted to
insolvency proceedings – Bona fide of – Held: Said question along
with several other questions like if spectrum licence can be subjected
to such proceedings; dues under the licence can be said to be
operational dues etc., being a jurisdictional one requires to be gone
H
541
542 SUPREME COURT REPORTS [2020] 11 S.C.R.

A into at this stage itself – To be examined by National Company Law
Tribunal (NCLT) – Indian Telegraph Act, 1885.
Telecommunication – Spectrum sharing – Past AGR dues of
licensee – Liability of – Held: Shared operator Telecom Service
Provider (TSPs) cannot be saddled with the liability to pay the past
B dues of AGR of licensee, that have shared the spectrum with the
original licensees.
Issuing directions, the Court
HELD: 1. The following three questions arise for
consideration:
C
(1) Whether spectrum can be subjected to proceedings
under the Code? (2) In the case of sharing, how the payment is
to be made by the Telecom Service Provider (‘TSP’)? and (3) In
the case of trading, how the liability of the seller and buyer is to
be determined? [Para 10][555-F]
D
2.1 In Re. Whether spectrum can be subjected to
proceedings under the Code?
Whether spectrum can be subjected to proceedings under
the Code is a significant question and is required to be gone into.
It is a natural resource, and under Section 4 of the Indian
E
Telegraph Act, 1885, the Government has the sovereign right.
Section 3(10) of The Insolvency and Bankruptcy Code,
2016defines ‘creditor’. The term ‘debt is defined in Section 3(11).
The expression ‘property’ is defined in Section 3(27). ‘Operational
creditor’ is defined in Section 5(20) in Part II under the head
F Insolvency Resolution and Liquidation for Corporate Persons.
Section 5(21) defines ‘operational debt’. A question has been
raised concerning ownership. Whether TSPs can be said to be
the owner based on the right to use the spectrum under licence
granted to them? Whether a licence is a contractual arrangement?
Whether ownership belongs to the Government of India?
G
Whether spectrum being under contract can be subjected to
proceedings under Section 18 of the Code? The question also
arises whether the spectrum can be said to be in possession,
which arises from ownership. What is the distinction between
possession and occupation? Whether possession correlates with
H the ownership right? A question also arises concerning the
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 543
SERVICE PROVIDERS OF INDIA ETC. ETC.

difference between trading and insolvency proceedings. Whether A
a licence can be transferred under the insolvency proceedings,
particularly when the trading is subjected to clearance of dues by
seller or buyer, as the case may be, as provided in Guideline
Nos.10 and 11; whereas in insolvency proceedings dues are wiped
off. Guideline No.12 is also assumed to be of significance in case
B
spectrum is subjected to insolvency proceedings, which must be
considered. It is also required to be examined that when
Government has declined the permission to trade and has not
issued NOC for trading on the ground of non-fulfilment of the
conditions as stipulated in the Licence Agreement, the spectrum
can be subjected to resolution proceedings which will have the C
effect of wiping off the dues of the Government, which are more
than Rs.40,000 crores.Whereas the dues of the Banks are much
less. Whether obtaining the DoT’s permission and its approval
to the resolution plan would be a substitute for Trading Guideline
Nos.10, 11, and 12? [Paras 16-19][562-C; 564-C-H; 565-A]
D
2.2 A question also arises of bona fide nature of the
proceedings under the Code. In the backdrop facts of the cases,
question also arises whether spectrum licence subjected to
proceedings under the Code, and it overrides the provisions
contained in the Indian Telegraph Act, 1885, Indian Wireless
Telegraphy Act, 1933, and Telecom Regulatory Authority of India E
Act, 1997. In view of the fact that the licence contained an
agreement between the licensor, licensee, and the lenders,
whether on the basis of that, spectrum can be treated as a security
interest and what is the mode of its enforcement. Whether the
Banks can enforce it in the proceedings under the Code or by F
the procedure as per the law of enforcement of security interest
under the Securitisation and Reconstruction of Financial Assets
and Enforcement of Securities Interest Act, 2002 (SARFAESI
Act) or under any other law. A question of seminal significance
also arises whether the spectrum is a natural resource, the
Government is holding the same as cestuique trust. In view of the G
nature of the resource, it can be subjected to insolvency/liquidation
proceedings. Earlier licence was obtained on the payment of fees
in advance that was not beneficial to the TSPs, as such a new
revenue sharing regime was devised in 1999, and the Central
Government has an exclusive right under section 4 of the H
544 SUPREME COURT REPORTS [2020] 11 S.C.R.

A Telegraph Act, 1885 in use of spectrum, it can part with on certain
statutory guidelines, its use is not permissible without the
payment of requisite fee. Whether dues under the licence can be
said to be operational dues? It is also to be examined whether
deferred/default payment instalment/s of spectrum acquisition
cost can be termed to be operational dues besides AGR dues.
B
Whether as per the revenue sharing regime and the provisions
of the Indian Telegraph Act, 1885, the dues can be said to be
operational dues? Whether natural resource would be available
to use without payment of requisite dues, whether such dues can
be wiped off by resorting to the proceedings under the Code and
C comparative dues of Government, and secured creditors and bona
fides of proceedings are also the questions to be considered.
The aforesaid various questions should first be considered by
the NCLT. Let the NCLT consider the aforesaid aspects and pass
a reasoned order after hearing all the parties. It being a
jurisdictional question, it requires to be gone into at this stage
D
itself. It is made clear that the Court has not observed on the
merits of the case, and all the questions are kept open to be
examined by the NCLT. [Paras 20-23][565-B-H; 566-A-B]
3. In Re. Sharing Coming to the question as to the liability
of sharing operator, who is sharing the spectrum of the original
E licensee of the past AGR dues of the original licensee is
concerned, that spectrum sharing is permitted and approved by
the Sharing Guidelines dated 24.09.2015. The Parliament has
approved spectrum sharing as part of “National Telecom Policy,
2012”. However, DOT issued and approved the final guidelines
F in the year 2015. Spectrum sharing is a policy that permits the
sharing of radio access network equipment of operators. On going
through the entire Sharing Guidelines, it does not stipulate
anything about the past dues of the sharing operators. According
to DoT, in case of sharing of spectrum, there is an increment of
0.5% in SUC rate, and both TSPs pay this incremental SUC on
G their respective AGRs if they are sharing spectrum. Both the
TSPs (sharers) are required to pay this SUC on their respective
AGRs.Even in the case of sharing spectrum, the liability of the
said operator would be to the extent of using the said spectrum
only, and the liability of the sharing operator would be to the extent
H
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 545
SERVICE PROVIDERS OF INDIA ETC. ETC.

of the remaining spectrum used by it. Therefore, there shall not A
be any liability of the said operator with respect to payment of
the past dues (post shared) of the sharing operator– licensee.
That in the present case, only part of the spectrum of the licensee
has been shared with the case of some of TSPs., which has been
approved by the DoT under the Sharing Guidelines, 2015, and
B
there is no provision for the liability of the past dues on the shared
operator. Even otherwise, the past dues of sharing operator/
licensee covers AGR for the spectrum used by holder of licence,
certain TSPs. such as Reliance came into existence later on, the
liability of such operator of the AGR, would only be to the extent
it has used the said spectrum. Shared operator TSPs. cannot be C
saddled with the liability to pay the past dues of AGR of licensee,
that have shared the spectrum with the original licensees.
[Paras 24-26][566-C; 569-F; 573-C-E, G-H; 574-A-B]
4. In Re. Trading Spectrum trading is governed by the
Spectrum Trading Guidelines dated 12.10.2015 and under the D
said Trading Guidelines, part of the spectrum of the telecom
company facing insolvency – the other telecom company is using
original licensee. The purchaser and buyer’s liability shall be as
per para 11 of the Spectrum Trading Guidelines dated 12.10.2015.
Para 11 of the Spectrum Trading Guidelines was further clarified
vide O.M. dated 12.05.2016. Thus, as per para 11 of the Spectrum E
Trading Guidelines dated 12.10.2015, read with the clarification
vide O.M. dated 12.05.2016, in case of a part of the spectrum is
under sale, the liability of the purchaser/buyer with respect to
past dues of the seller shall not arise. In a case where the entire
spectrum is under sale, in that case, the past dues of the seller F
shall be the liability of the buyer except the amount/dues, if any,
found recoverable after the effective date of the trade, which was
not known to the parties at the time of the effective date of trade
and in such a situation the liability of such dues of the buyer and
seller would be jointly or severally and the government at its
discretion is entitled to recover such amount. In the present case, G
it is not in dispute that in some cases only part spectrum was
traded, and the remaining spectrum continued with the seller. At
the time of agreement for spectrum trading, the AGR dues of the
seller were also known. Therefore, on a joint reading of para 11
of the Spectrum Trading Guidelines dated 12.10.2015 read with H
546 SUPREME COURT REPORTS [2020] 11 S.C.R.

A O.M. dated 12.05.2016, the seller’s dues prior to the concluding
of the agreement/spectrum trading shall not be upon the buyer.It
is clear that in the case, which was decided by this Court relating
to AGR dues, respondents were the parties, and they were
litigating with respect to the definition of AGR in the second round
of appeal filed in 215 before this Court. It is apparent that it was
B
known to the parties that AGR dues to be finalised as per the
decision of this Court in a pending matter, and lis was pending for
the last 20 years. The liability cannot be escaped as specified in
the Trading Guidelines to the extent that the seller or buyer is
liable. They have to pay the AGR as per the judgment rendered
C by this Court. The purchasers who are not seller or buyer, shall
have to pay the dues to the extent they are liable under the
Guidelines. It was stated that they have paid dues as per the self-
assessment or, in some cases, demands have not been raised.
DoT to complete the assessment in such cases of trade and raise
demand if it has not been raised and to examine the correctness
D
of self-assessment and raise demand, if necessary, after due
verification. [Paras 27-29][574-C; 575-G; 576-A-B, C-E]
5. Payment of dues of AGR The Union of India, after
envisaging the larger interest, economic consequences on the
nation and to ensure that the order of this Court is complied with
E in its letter and spirit, has taken a conscious decision and sought
approval of this Court to a formula for recovery of past dues from
the telecom service providers. The formula is placed for approval
of this Court, which is arrived at after detailed and long drawn
deliberations at various levels in the administrative hierarchy,
F including the Cabinet, and keeping in view the vital issues related
to financial health and viability of the telecom sector, need for
ensuring competition and a level-playing field in the interest of
consumers. The decision of the Cabinet is based on the various
factors, and in the interest of the economy and the consumers.
The decision is taken after extensive deliberations and
G consultations, and till the date of judgment, the dues have been
worked out as per the decision rendered by this Court. Only for
the subsequent period, some relaxation has been given as to the
rate of interest, penalty, and interest on penalty, which is
permissible. The arrears have accumulated for the last 20 years.
H Some of the companies are under insolvency proceedings, validity
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 547
SERVICE PROVIDERS OF INDIA ETC. ETC.

of which is to be examined, and they were having huge arrears of A
AGR dues against them. For protecting the telecom sector, a
decision has been taken on various considerations mentioned
above, which cannot be objected to. However, the period of 20
years fixed for payment is excessive. It is a revenue sharing
regime, and it is grant of sovereign right to the TSPs. under the
B
Telecom Policy. Some reasonable time is to be granted,
considering the financial stress and the banking sector’s
involvement. It is deemed appropriate to grant facility of time to
make payment of dues in equal yearly instalments. Rest of the
decision, taken by the Cabinet, shall stand except the
modifications concerning the time schedule for making payment C
of arrears. Further, DoT has decided to withdrawthe demands
raised for licence fee based on non-telecom revenue from the
non-telecom public sector undertakings, which are
M/s. Powergrid, GAIL, Oil India Ltd., DMRC, which constitutes
about 96% of the demand regarding non-telecom PSUs.
D
[Paras 33, 35, 36, 37][578-G; 579-H; 580-A-D, H; 581-A]
6. Following directions inter alia are issued: (i) That for the
demand raised by the Department of Telecom 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 re-assessment. (ii) That, at the first instance, E
the respective Telecom Operators shall make the payment of
10% of the total dues as demanded by DoT by 31.3.2021.
(iii) TSPs. have to make payment in yearly instalments
commencing from 1.4.2021 up to 31.3.2031 payable by 31 st March
of every succeeding financial year. (iv) The existing bank F
guarantees that have been submitted regarding the spectrum shall
be kept alive by TSPs. until the payment is made. (v) 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. G
[Para 38][581-B-F]
Union of India v. Association of Unified Telecom Service
Providers of India (2020) 3 SCC 525 : [2019] 16 SCR
672; Union of India & Anr. v. Association of Unified
H
548 SUPREME COURT REPORTS [2020] 11 S.C.R.

A Telecom Service Providers of India & Ors. (2011) 10
SCC 543 : [2011] 14 SCR 657; Centre for Public
Interest Litigation and Ors. v. Union of India and Ors.
(2012) 3 SCC 1 : [2012] 3 SCR 147; M/s. Embassy
Property Development Pvt. Ltd. v. State of
Karnataka 2019 (17) SCALE 37; Ram Dass v. Davinder
B
(2004) 3 SCC 684 : [2004] 3 SCR 518; Committee of
Creditors of Essar Steel India Limited v. Satish Kumar
Gupta and Ors. (2019) SCC OnLine SC 1478 –
referred to.
Case Law Reference
C
[2019] 16 SCR 672 referred to Para 1
[2011] 14 SCR 657 referred to Para 2
[2012] 3 SCR 147 referred to Para 11 (ix)

D [2004] 3 SCR 518 referred to Para 11 (xi)
CIVIL APPELLATE JURISDICTION: M.A. (D) No. 9887 of
2020 in Civil Appeal No. 6328-6399 of 2015.
From the Judgment and Order dated 23.04.2015 of the Telecom
Disputes Settlement and Appellate Tribunal in Petition No. 7 of 2003, P
E No. 82 of 2005; P. No. 57 of 2006; P. Nos. 284, 289, 290, 291, 292 of
2007; P. Nos. 33, 34, 42, 249, 256 of 2008; P. Nos. 69, 151, 201, 233, 234,
235, 244 of 2009; P. No. 106 of 2010; P. Nos. 388, 474, 475, 476, 477,
478, 480 of 2011; P. Nos. 43, 97, 98, 99, 100, 101, 102, 103, 104, 105, 106,
107, 108, 109, 110, 111, 112, 113, 114, 115, 116, 117, 118, 150, 170, 171,
172, 173, 174, 175, 176, 177, 178, 179, 180, 181, 198, 199, 200, 201, 202,
F
203, 204, 205 of 2012]
With
Diary No(s). 2450, 2458, 2461, 2476, 2578 of 2020
W.P.(C) No. 238/2020,SMC(C) No. 1/2020, MA 725-796/2020 in
G C.A. No. 6328-6399/2015, MA No. 1464/2020.
Tushar Mehta, SG, Ramji Srinivasan, Kapil Sibal, Ritin Rai, Shyam
Divan, Ravi Kadam, Harish Salve, K.V. Vishwanathan, Maninder Singh,
Ranjit Kumar, Sandeep Sethi, Niraj Kishan Kaul, Sr.Advs., Gurmeet
Singh Makker, Ms. Binu Tamta, Rajat Nair, Ms. Swati Ghildiyal, Kanu
H Agarwal, Ashok Panigrahi, Dhruv Tamta, Ms. Manali Singhal, Mansoor
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 549
SERVICE PROVIDERS OF INDIA ETC. ETC.

Ali Shoket, Santosh Sachin, Deepak S Rawat, Ms Aanchal Kapoor, Nitin A
Kala, Kunal Singh, Ms. Ranjeeta Rohatgi, Harsh Kaushik, Vijayendra
Pratap Singh, Nizam Pasha, Faisal Sherwani, Gurpreet Singh Kahlon,
Mahesh Agarwal, Ms. Shally Bhasin, Victor Das, Ms. Saloni Mahajan,
E.C. Agrawala, Manjul Bajpai, Nitin Kala, Pukhrambam Ramesh Kumar,
Kunal Singh, Ms. Anupama Nagangom, Karun Sharma, Anil Kumar
B
Mishra, Sriram Parakkat, Anoop Rawat, Ms. Smarika Singh, Ms. Shreya
Sircar, Chaitanaya Safaya, Anuj Berry, Rishabh Sharma, Saurav Panda,
Zeeshan Khan, Ms. Salonee Kulkarni, Rishabh Jaisani, Ms. Kriti Kalyani,
Shardul S. Shroff, K.R. Sasiprabhu, Raghav Shankar, Bhavuk Agarwal,
Vishnu Sharma,Tushar Bhardwaj, Ms. Vibha Dhawan, Ms. Alvia Ahmed,
Akshat Jain, Karun Sharma, Amit Dhingra, Rohit Mahajan, Swetank C
Shantanu, Ravi S Chauhan, Ankit Kumar, Ms. Shikha Sarin, Rahul
Narayan, Sameer Abhyankar, Amish Tandon, Ayush Beotra, Sanjay
Kapur, Ms. Megha Karnwal, V. M. Kannan, Sambit Panja, Harshal
Narayan, Abhay Chattopadhyay, Ms. Nikita Chitale, Atul Menon, Advs.
for the appearing parties.
D
The following Judgment of the Court was delivered:
JUDGMENT
1. This Court passed judgment and order in C.A. Nos.6328-6399
of 2015 – Union of India v. Association of Unified Telecom Service
Providers of India and other civil appeals decided by a common E
judgment and order dated 24.10.2019. The Court decided regarding the
definition of the ‘AGR’ and dues to be paid thereunder.
2. The concept of AGR arose in the light of the provisions contained
in the policy framed by the Government of India and the provisions of
the Indian Telegraph Act. Under section 4(1) of the Telegraph Act, the
Central Government has the exclusive privilege of establishing, F
maintaining, and working telegraphs. Section 4 of the Telegraph Act
enables the Central Government to part with the exclusive privilege in
favour of any other person by granting a licence on such conditions and
considering such terms as it thinks fit. The licence issued under section
4(1) becomes a contract between a licensor and a licensee. This Court G
considered the provisions of the Telegraph Act in AUSPI (I) matter –
(2011) 10 SCC 543 in this very case, thus:
“37. A bare perusal of sub-section (1) of Section 4 of the
Telegraph Act shows that the Central Government has the
exclusive privilege of establishing, maintaining and working
H
550 SUPREME COURT REPORTS [2020] 11 S.C.R.

A telegraphs. This would mean that only the Central Government,
and no other person, has the right to carry on telecommunication
activities.
xxx
39. The proviso to sub-section (1) of Section 4 of the Telegraph
B
Act, however, enables the Central Government to part with this
exclusive privilege in favour of any other person by granting a
licence in his favour on such conditions and in consideration of
such payments as it thinks fit. As the Central Government owns
the exclusive privilege of carrying on telecommunication activities
C and as the Central Government alone has the right to part with
this privilege in favour of any person by granting a licence in his
favour on such conditions and in consideration of such terms as it
thinks fit, a licence granted under the proviso to sub-section
(1) of Section 4 of the Telegraph Act is in the nature of a
contract between the Central Government and the licensee.
D
40. A Constitution Bench of this Court in State of Punjab v.
Devans Modern Breweries Ltd., (2004) 11 SCC 26, relying on
Har Shankar case, (1975) 1 SCC 737 and Panna Lal v. State
of Rajasthan, (1975) 2 SCC 633, has held in para 121 at p. 106
that issuance of liquor licence constitutes a contract between the
E
parties. Thus, once a licence is issued under the proviso to sub-
section (1) of Section 4 of the Telegraph Act, the licence becomes
a contract between the licensor and the licensee. Consequently,
the terms and conditions of the licence including the definition of
adjusted gross revenue in the licence agreement are part of a
F contract between the licensor and the licensee. We have to,
however, consider whether the enactment of the TRAI Act in
1997 has in any way affected the exclusive privilege of the Central
Government in respect of the telecommunication activities and
altered the contractual nature of the licence granted to the licensee
under the proviso to sub-section (1) of Section 4 of the Telegraph
G
Act.
41. Section 2(e) of the TRAI Act quoted above defines “licensee”
to mean any person licensed under sub-section (1) of Section 4 of
the Telegraph Act for providing specified public telecommunication
H
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 551
SERVICE PROVIDERS OF INDIA ETC. ETC.

services and Section 2(ea) defines “licensor” to mean the Central A
Government or the telegraph authority who grants a licence under
Section 4 of the Telegraph Act. Sub-section 2(k) defines
“telecommunication service” very widely so as to include all kinds
of telecommunication activities. These provisions under the TRAI
Act do not affect the exclusive privilege of the Central Government
B
to carry on telecommunication activities nor do they alter the
contractual nature of the licence granted under the proviso to
sub-section (1) of Section 4 of the Telegraph Act.”
(emphasis supplied)
3. During consideration of the matter, concerning the M.A. filed
C
by the Union of India for extension of time to make the payment, it was
pointed out that several telecom service providers were under insolvency
proceedings under The Insolvency and Bankruptcy Code, 2016 (for short
“the Code”). This Court passed an order on 20.7.2020, and the same is
extracted hereunder:
D
“We have heard the learned counsel appearing for the parties at
length with respect to the prayer made by the Central Government
and the time frame for making the payment as per the order passed
by this Court. During course of hearing, again an attempt was
made to wriggle out of our judgment and orders, which were
passed by this Court under the guise of reassessment and E
recalculation. That is not at all permissible. In view of decision,
there is no scope of raising any further dispute with respect to
any item or to raise fresh dispute. No dispute can be raised with
respect to dues and they have to be paid. New round of litigation
is prohibited. In the second inning, we have heard the same after
F
remand of the issues to the TDSAT. Thereafter, there is no question
of entertaining any kind of dispute with respect to the payment
and dues worked out. No dispute shall be entertained. The
calculations which have been given and the amount to be recovered
at pages 180-181 of M.A.D. No. 9887 of 2020 (application for
modification) in C.A. No. 6328-6399 of 2015 are taken to be as G
final amount and there can be no dispute raised about it. No
recalculation and self-assessment can be undertaken. The
calculations are as under :-

H
552 SUPREME COURT REPORTS [2020] 11 S.C.R.

A “AMOUNTS RECOVERABLE FROM MAJOR TSPs AS PER
PRILIMINARY ASSESSMENTS
S. Name of the Company Total Demand Self Assessment Payment Received Balance Due
No. of DoT by Licensee till 06.03.2020 (Rs. (Rs. Cr.)
incorporating pursuant to the Cr.)
C&AG and Hon’ble SC
B Special Audit Judgment (Rs. Cr.)
as on October
2019 (Rs. Cr.)
(LF+SUC)
A B C D
Operational TSPs party to the litigation
1. BHARTI AIRTEL GROUP
C 13004.00 18,004.00
2. TELENOR INDIA
43980.00 25976.00
PRIVATE LIMITED
BHARTI GROUP 43980.00 13004.00 18004.00
3. IDEA CELLULAR LTD.
58254.00 21533 (LF 14453 54,754.00
4. VODAFONE GROUP OF 3,500.00
+ SUC7080)
COMPANIES
D
58254.00 21533.00 3500.00 54754.00
VODAFONE IDEA

5. TATA GROUP OF
COMPANIES 2197 (LF 1720 +
16798.00 4,197.00 12,601.00
SUC 477)

E 6. QUADRANT
TELEVENTURES 189.91 25.28 0.69 189.22
LIMITED
7. RELIANCE JIO 70.53 194.79 (LF
INFOCOMM LTD. 148.03+SUC 195.18 -
46.76)
Sub-total (1-7) 119292.44 36954.07 25,896.87 93520.22
F TSPs under Insolvency
8. AIRCEL GROUP OF 12389.00 - 12389.00
COMPANIES
9. RELIANCE
COMMUNICATION/ 3.96
RELIANCE TELECOM
LIMITED 25199.27
25194.58
G
10. SISTEMA SHYAM 222.1 (LF 0.73
TELESERVICES LTD. 166.1+SUC 56)
11. VIDEOCON
TELECOMMUNICATIONS 1376.00 - 1376.00
LTD.
Sub-total (8-10) 38964.27 - 4.69 38959.58

H TSPs which were not party to the litigation
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 553
SERVICE PROVIDERS OF INDIA ETC. ETC.

12. LOOP TELECOM PVT. A
LTD.
13. ETISALAT DB TELECOM 604.00 - 604.00
PRIVATE LIMITED
14. S TEL PVT. LTD.
15. BHARAT SANCHAR 5835.85 - - 5835.85
NIGAM LIMITED
16. MAHANAGAR B
TELEPHONE NIGAM 4352.09 - 4352.09
LIMITED
Sub-total (11-16) 10791.94 222.1 0.00 10791.94

TOTAL 169048.65 37176.17 25901.56 143271.74

C
Note :
1. Total Demands are inclusive of Principal, Interest, Penalty
and Interest on Penalty.
2. Total Demands have been calculated generally up to FY
2016-17. On these outstanding amounts, Interest/Penalty/ D
Interest on Penalty is calculated up to October, 2019.
3. All dues are subject to further revisions due to departmental
assessments, CAG audits, Special Audits, Court Cases etc.”
However, when we consider the dues of Telecom Service
Providers under insolvency, we find that there are several E
companies which have dues to the extent of Rs. 38,964.27 crores,
which have gone under liquidation. Since the dues are huge, we
propose to examine the bonafides of the initiation of the
proceedings under the IBC. Let all the documents of the companies
viz. Aircel Group of Companies, Reliance Communication/Reliance F
Telecom Limited, Sistema Shyam Teleservices Ltd. and Videocon
Telecommunications Ltd. relating to liquidation and orders passed
in proceedings be placed on record within 10 days from today.
We have closed the matter with respect to the prayer made
for making the payment in installments and the offer made by the G
Government, the time frame thereto and how to secure the amount.
The order is reserved on that aspect.
However, we will hear the matter separately with respect
to the companies under liquidation and test the bonafides of their
action and how to ensure that the amount is recovered. Let all the H
554 SUPREME COURT REPORTS [2020] 11 S.C.R.

A documents be placed on record within 10 days from today and
the matter be listed for hearing about these companies on the
above aspect on 10.08.2020.
Written submissions and the reply, if any, be filed on or
before 07.08.2020.”
B This Court wanted to examine the bona fides of the telecom service
providers who have resorted to the process of insolvency, hence, invited
them to file their response. Before the initiation of insolvency proceedings,
most of the telecom service providers who are under the insolvency
proceedings had applied to the Department of Telecommunications to
C grant permission for trading of licence. The Central Government objected
on the ground that it would not be possible for it to grant permission. It
declined the permission. There were huge arrears concerning the
spectrum licence, which were required to be paid, as a pre-condition to
such permission. Various sharing arrangements made inter se telecom
service providers with respect to the spectrum also came to the fore.
D
4. The Union of India, Department of Telecommunications’ stand
is that the spectrum cannot be the subject-matter of the IBC proceedings
in view of the provisions in sections 14 and 18. The dues under the
licence towards the spectrum’s use cannot be put in the category of
operational dues. In contrast, the Department of Commerce holds the
E opinion that the dues under the licence are operational dues, and the
provisions of the IBC are applicable. The Department of
Telecommunications also pointed out that as per guideline Nos.10, 11,
and 12 of the Guidelines relating to the trading of 2015, it is a pre-condition
of trading licence that the seller pays dues of licence arrears. After that,
F the purchaser has to pay arrears as provided in paras 10, 11, and 12 of
the guidelines.
5. The telecom service providers’ stand is that the proceedings of
insolvency under the Code have been triggered bona fide. This Court
can examine the limited question in these proceedings whether the
G proceedings are resorted to as a subterfuge to avoid payment of AGR
dues, and it is for the NCLT to decide whether the licence/spectrum can
be transferred and be a part of the resolution process initiated under the
provisions of the Code. Whether spectrum/licence can be subjected to
resolution process as an asset belonging to the telecom service providers,
and whether the AGR dues are operational dues and have to be dealt
H
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 555
SERVICE PROVIDERS OF INDIA ETC. ETC.

with under the provisions of the IBC by NCLT. With respect to the A
trading and sharing arrangement to the extent of spectrum traded or
shared by different service providers under the sharing arrangement,
the liability as per the guidelines, has to be borne by the respective telecom
service providers.
6. As per the statutory guidelines issued by the Department of B
Telecommunications in 2015, spectrum sharing allows the operators to
pool their respective spectrum for usage in a specific geographical area.
The Central Government framed spectrum sharing guidelines on
24.9.2015.
7. The details of sharing arrangement between different telecom C
service providers have been given.
8. The “spectrum trading” allows parties to transfer their rights
and obligations to another party. In the case of “spectrum sharing”, the
right to use spectrum remains with the respective telecom service
providers, whereas in the case of spectrum trading, the right to use gets D
transferred from the buyer to the seller. Under spectrum trading
guidelines, details of transactions which have taken place, are given.
9. Another aspect is that how much time is to be provided to the
telecom service providers to pay AGR dues. The Union of India on the
representation made by the telecom service providers and Indian Banks’ E
Association, has decided to provide the facility of making payment in
instalments within 20 years.
10. The following three questions arise for consideration:
(1) Whether spectrum can be subjected to proceedings under
the Code? F
(2) In the case of sharing, how the payment is to be made by
the Telecom Service Provider (for short, ‘TSP’)? and
(3) In the case of trading, how the liability of the seller and
buyer is to be determined?
G
In Re. Whether spectrum can be subjected to proceedings
under the Code?
11. Shri Tushar Mehta, learned Solicitor General of India on behalf
of Government of India, argued as under:
H
556 SUPREME COURT REPORTS [2020] 11 S.C.R.

A (i) Section 4 of the Indian Telegraph Act, 1885, provides that the
Central Government has the exclusive privilege of establishing,
maintaining, and working telegraphs. The DoT grants licences which
are in the form of contractual arrangements. The TSPs are bound by
the terms and conditions contained therein. As per the contractual terms,
the licence is strictly contingent upon fulfilment of the terms and conditions,
B
the payment being first and foremost. On failure of payment, the licensor
is entitled to take action under the Licence Agreement, including
revocation and termination.
(ii) The spectrum is a scarce recognised natural resource, and
this Court in 2G judgment [C.A.No.423 of 2010] held that the natural
C resources belong to the people and cannot be subjected to proceedings
under the Code. The State acts as a guardian and trustee of the natural
resources.
(iii) The licensee does not own the spectrum and has merely been
granted a right to use, which is based on fulfilment of the conditions of
D the contract in the form of a Licence Agreement. Thus, the spectrum
cannot be subjected to transfer in proceedings under the Code as the
licensee is not the owner. Section 18(f), along with its Explanation (a),
mandates that only the corporate debtor’s assets can be taken into control
and custody by the resolution professionals, which is in the ownership of
E the corporate debtor. Explanation to Section 18 provides that assets
owned by a third party in possession of the corporate debtor or held
under contractual arrangements are not included in the term ‘assets’ for
the purpose of Section 18. It is not an asset for Section 18. The spectrum
held under a contractual arrangement is not an asset of the corporate
debtor. The spectrum cannot be a subject matter of proceedings under
F the Code. The resolution professional has no jurisdiction to prepare a
resolution plan as per Guidelines for Trading of Access Spectrum by
Access Services Providers (for short, ‘the Guidelines of 2015’) issued
on 12.10.2015.
(iv) Guideline No.10 provides that for trading of right to use the
G spectrum, both the licensees shall give an undertaking that they are in
compliance with the terms and conditions of the Guidelines for spectrum
trading that is seller and buyer both. In case terms and conditions for
spectrum trading are not fulfilled, the Government will have the right to
take appropriate action including annulment of trading arrangement.
H
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 557
SERVICE PROVIDERS OF INDIA ETC. ETC.

(v) As per Guideline Nos. 11 and 12 of the Guidelines of 2015, the A
seller has to clear the dues. After the trading date, the Government has
the discretion to recover the amount from the seller or buyer, jointly or
severally.
(vi) The permission was sought to trade the licence; however, the
Government of India, DoT, declined it because arrears have to be paid, B
and other conditions were not fulfilled. After that, insolvency proceedings
were initiated, which were not permissible concerning the spectrum given
provisions contained in Section 18 of the Code.
(vii) National Company Law Tribunal (for short, ‘the NCLT’),
Mumbai vide order dated 27.11.2019, held that licence is an asset of C
State over which the corporate debtor has no right of ownership. The
above argument of the State Government was accepted; however, in
view of the provisions contained in Section 14 on moratorium being
created, the licence could not be revoked. An appeal was filed before
the National Company Law Appellate Tribunal (for short, ‘the NCLAT’)
against the order mentioned above, which was dismissed on the ground D
of limitation. An appeal has been filed in relation to the revocation of
licence, which is pending in this Court registered as Diary No.15564 of
2020.
(viii) The licence under Section 4 of the Indian Telegraph Act,
1885, was granted on certain terms and conditions. The spectrum did E
not construe property as defined in Section 3(27) of the Code.
(ix) Concerning public trust doctrine, reliance has been placed on
Centre for Public Interest Litigation and Ors. v. Union of India and
Ors. (2012) 3 SCC 1, in which it was held that natural resources must
always be used in the country’s interests, not private interests. The F
corporate debtor can never be said to be in occupation of either the
licence or spectrum as per Section 14(1)(d) of the Code. Any dispute is
to be settled under the provisions of Telecom Regulatory Authority of
India Act, 1997 by the Telecom Disputes Settlement and Appellant
Tribunal. G
(x) Reliance has been placed on M/s. Embassy Property
Development Pvt. Ltd. v. State of Karnataka [C.A.No.9170 of 2019],
in which this Court held that the Code would not apply to right to mine as
exclusive possession had not been granted to the corporate debtor and
grant was limited to right to mine, excavate and recover iron ore and red
H
558 SUPREME COURT REPORTS [2020] 11 S.C.R.

A oxide for a specified period. It was further held that the right not to be
dispossessed found in Section 14(1)(d) of the Code would have nothing
to do with the rights conferred by a mining lease, especially on a
Government land.
(xi) In Ram Dass v. Davinder, (2004) 3 SCC 684, it was held that
B possession amounts to holding property as an owner, while occupy is to
keep possession by being present in it. Spectrum is not capable of being
in possession of licensee neither in the eye of law they can be said to be
in possession.
(xii) As per Regulation 32 of the Insolvency and Bankruptcy Board
C of India (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016, the spectrum agreement cannot be held to be essential
goods or services under Section 14(2) of the Code. Similarly, it cannot
be subjected to proceedings under Section 18 of the Code. In the
resolution plan, selling the right to use the spectrum to some other
company could not have been made. A corporate debtor cannot create
D any third party right in any manner whatsoever. Against the order dated
9.6.2020 passed by the NCLT approving the resolution plan of UVARC,
DoT has filed a petition before the NCLAT relating to Aircel Group.
Guidelines are statutory and binding.Aircel Licensee has defaulted in
making payment of Deferred Spectrum Auction.
E (xiii) In the case of RCOM, W.P. (C) No.845 of 2018 was filed
under Article 32 of the Constitution of India for closure/quashing of the
CIRP initiated against it. After that, payment was made to M/s. Ericsson
India Pvt. Ltd, who initiated the proceedings under the Code. RCOM
has sought NOC to trade Reliance Jio Infocomm Limited (for short,
F ‘RJIL’). DoT informed it on 14.12.2018 that the Government couldn’t
give the NOC for trading. This Court decided the proceedings on
24.4.2019. Thereafter, the Board of Directors of RCOM decided to
continue with the proceeding under the Code and, decided to withdraw
the appeal from NCLAT. RCL/RTL defaulted in payment of various
deferred spectrum auction instalments.
G
(xiv) The matters of AGR being C.A. Nos.6328-6399 of 2015
were sub judice before the commencement of CIRP. A demand was
raised to RCL/RTL. AGR dues amount of RCL/RTL is Rs.25,199.27
crores.

H
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 559
SERVICE PROVIDERS OF INDIA ETC. ETC.

(xv) In the case of Videocon, DoT was not the party. DoT was A
not invited to the Committee of Creditors’ meetings, in complete violation
of the provisions of the Code. The resolution professional applied before
NCLT to restrain DoT from encashing certain bank guarantees submitted
by Videocon, in which interim injunction has been granted.
12. Shri Harish Salve, learned senior counsel argued as under: B
(i) The NCLT should decide the question of whether the spectrum
can be sold or not. After that, there is a provision for an appeal to NCLAT,
and then this Court can look into the matter.
(ii) Under Section 18, the spectrum can be subjected to insolvency
proceedings. This Court examined the question of recoverability of AGR C
dues in preference to the dues of secured creditors on the basis that the
use of spectrum would rank in priority higher than that of secured creditors.
Leasing of the spectrum is not permissible as per the Guidelines. The
RJIL is also not proposing to buy any spectrum from the resolution
applicant of RCOM or any other company. Only sharing and trading is D
permissible subject to the conditions specified in the Guidelines. The
assets of RCOM are comprised primarily of the spectrum, real estate,
and active assets. Even if this Court permitted the sale of such a spectrum,
RJIL is not intending to acquire the same.
(iii) RJIL has paid Rs.195 crores on a self-assessment basis and E
shall pay a further sum demanded by DoT.
13. Shri Shyam Divan and Shri Ravi Kadam, learned senior counsel
on behalf of Committee of Creditors of RCOM, Aircel Limited, and
Dishnet Wireless Limited, argued:
(i) the spectrum and telecom licences are assets of the telecom F
company. Section 18(f) of the Code mandates that resolution professional
would take control and custody of any asset over which the corporate
debtor has ownership rights as recorded in the balance sheet of the
corporate debtor. Section18(f)(iv) includes intangible assets. The telecom
licence and right to use the spectrum form a part of the intangible assets.
G
The right to use is a valuable right. In the financial statement, telecom
licence and the right to use the spectrum had been shown as an intangible
asset. Without telecom licences and spectrum, there would be no hope
of reviving Aircel entities.

H
560 SUPREME COURT REPORTS [2020] 11 S.C.R.

A (ii) Clause 6 of the Licence Agreement deals with the restrictions
of transfer of licence by either directly or indirectly without the prior
written consent of the licensor. It can be transferred on fulfilment of
certain conditions.
(iii) Reliance has been placed on Consultation Paper dated 7.3.2012.
B Its licence/spectrum is considered an intangible asset, and in the Guidelines
for the Reporting System on Accounting Separation Regulations, 2016,
the right to use spectrum is again shown as an intangible asset. The
Indian Accounting Standards-38 has also been referred to indicate that
an asset is a resource controlled by the entity for further economic
benefits. The spectrum and licence being assets of the telecom company
C are not assets owned by a third party under a trust.
(iv) The licence and spectrum of Aircel Entities are held in security
by the lenders in terms of the TPAs to which the DoT is also a party. In
the resolution plans, DoT acted as an operational creditor. The NCLT
asked to take the approval of the DoT for the transacting spectrum.
D Thus, it is for the DoT to give permission. Dot has to approve the
implementation of the resolution plan.
(v) The Code provides that the resolution plan is to be approved
by the Committee of Creditors, and the adjudicating authority of the
NCLT in terms of Section 31 of the Code and liquidation is to be made in
E terms of the priority set out in Section 53 of the Code. Section 5(20)
defines ‘operational creditor’. Section 5(21) defines ‘operational debt’
to include dues payable to the Government. Thus, claims of DoT for
unpaid dues are operational debts, and DoT is an operational creditor.
(vi) Reliance has been placed upon Section 31 of the Code. The
F resolution plan shall be binding on the corporate debtors, including the
Central Government, any State Government to whom a debt in respect
of the payment of dues arising under any law for the time being in force.
Reliance has also been placed on Committee of Creditors of Essar
Steel India Limited v. Satish Kumar Gupta and Ors., (2019) SCC
G OnLine SC 1478.
(vii) The proceedings under the Code cannot be nullified to realise
AGR and other dues of DoT.
14. Shri Ranjit Kumar, learned senior counsel, on behalf of
Committee of Creditors of Aircel Limited, Aircel Cellular Limited and
H Dishnet Wireless Limited argued that:
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 561
SERVICE PROVIDERS OF INDIA ETC. ETC.

(i) under the Code, UV Asset Reconstruction Company Limited A
has submitted a resolution plan, which has been approved by the NCLT
on 9.6.2020. Aircel Entities are holders of telecom licences. The licences
issued by DoT contain the format for the execution of the Tripartite
Agreement between the licensor, licensee, and the lenders. He has relied
upon the following paragraph:
B
“With a view to help and facilitate the financing of the Project to
be set up by the LICENSEE pursuant to the LICENCE referred
to above, the parties hereto are desirous of recording the terms
and conditions to provide transfer/assignment of LICENCE as
hereinafter provided in this AGREEMENT to protect and secure
the Lender’s interest arising out of grant of financial assistance to C
the LICENSEE.”
(ii) Aircel Entities have offered lenders spectrum as a security
against the loans advanced by the lenders to Aircel Entities. Thus, the
DoT claim over the spectrum will be subservient to the claims of the
lenders as per the Code, and DoT has to be treated as an operational D
creditor.
(iii) The Banks are in the business of lending money for the
betterment of the national economy, in the same manner, the Government
is in the business of spectrum. As per Clause 6.3 of the Licence
Agreement, licence can be transferred subject to fulfilment of the E
conditions agreed between the licensor, licensee, and the lenders.
(iv) The right to use spectrum is an asset of the corporate debtor.
Paras 8.4 and 8.5 of the Insolvency Law Committee Report have been
referred to. Revocation of Licences, permission-based on past dues, is
prohibited under Section 14 after the moratorium is created. Current F
dues have to be paid during the moratorium period. He has referred to
Sections 3(27) and 14(1).
(v) The provisions of the Code have to prevail. The Government
has entered into a pure business transaction by granting a licence and
taking fees against the grant. The spectrum is a raw material for telecom G
companies. If the spectrum’s licence is terminated, the resolution
professional will find it difficult to run the company as a going concern.
DoT is an operational creditor. AGR dues are contractual dues and cannot
have precedence over the dues of secured creditors. He has referred to
Section 53 to contend that the operational creditor is protected in a manner
H
562 SUPREME COURT REPORTS [2020] 11 S.C.R.

A provided in the Code. Section 238 of the Code contains a non-obstante
clause to the effect that anything inconsistent therewith contained in any
other law for the time being in force, the Code shall prevail. As such, the
Code overrides the provisions of the Indian Telegraph Act, 1885, Indian
Wireless Telegraphy Act, 1933, and Telecom Regulatory Authority of
India Act, 1997.
B
15. In the case of RCOM, the resolution plan is pending
consideration of the adjudicating authority under Section 31 of the Code.
16. Whether spectrum can be subjected to proceedings under the
Code is a significant question and is required to be gone into. It is a
C natural resource, and under Section 4 of the Indian Telegraph Act, 1885,
the Government has the sovereign right. Section 4 of the Indian Telegraph
Act, 1885 is extracted hereunder:
“4. Exclusive privilege in respect of telegraphs, and power
to grant licences.— (1) Within India, the Central Government
D shall have the exclusive privilege of establishing, maintaining and
working telegraphs:
Provided that the Central Government may grant a license,
on such conditions and in consideration of such payments as it
thinks fit, to any person to establish, maintain, or work a telegraph
E within any part of India:
Provided further that the Central Government may, by rules
made under this Act and published in the Official Gazette, permit,
subject to such restrictions and conditions as it thinks fit, the
establishment, maintenance and working—
F (a) of wireless telegraphs on ships within Indian territorial
waters and on aircrafts within or above India, or Indian territorial
waters, and
(b) of telegraphs other than wireless telegraphs within any part
of India.
G Explanation.—The payments made for the grant of a licence
under this sub-section shall include such sum attributable to the
Universal Service Obligation as may be determined by the Central
Government after considering the recommendation made in this
behalf by the Telecom Regulatory Authority of India established
H under sub-section (1) of Section 3 of the Telecom Regulatory
Authority of India Act, 1997 (24 of 1997).
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 563
SERVICE PROVIDERS OF INDIA ETC. ETC.

(2) The Central Government may, by notification in the Official A
Gazette, delegate to the telegraph authority all or any of its powers
under the first proviso to sub-section (1).
The exercise by the telegraph authority of any power so
delegated shall be subject to such restrictions and conditions as
the Central Government may, by the notification, think fit to impose. B
(3) Any person who is granted a license under the first proviso to
sub-section (1) to establish, maintain or work a telegraph within
any part of India, shall identify any person to whom it provides its
services by—
(a) authentication under the Aadhaar (Targeted Delivery of C
Financial and Other Subsidies, Benefits and Services) Act, 2016
(18 of 2016); or
(b) offline verification under the Aadhaar (Targeted Delivery of
Financial and Other Subsidies, Benefits and Services) Act, 2016
(18 of 2016); or D
(c) use of passport issued under Section 4 of the Passports Act,
1967 (15 of 1967); or
(d) use of any other officially valid document or modes of
identification as may be notified by the Central Government in
E
this behalf.
(4) If any person who is granted a license under the first proviso
to sub-section (1) to establish, maintain or work a telegraph within
any part of India is using authentication under clause (a) of sub-
section (3) to identify any person to whom it provides its services,
F
it shall make the other modes of identification under clauses (b) to
(d) of sub-section (3) also available to such person.
(5) The use of modes of identification under sub-section (3) shall
be a voluntary choice of the person who is sought to be identified
and no person shall be denied any service for not having an Aadhaar
number. G

(6) If, for identification of a person, authentication under clause
(a) of sub-section (3) is used, neither his core biometric information
nor the Aadhaar number of the person shall be stored.

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564 SUPREME COURT REPORTS [2020] 11 S.C.R.

A (7) Nothing contained in sub-sections (3), (4) and (5) shall prevent
the Central Government from specifying further safeguards and
conditions for compliance by any person who is granted a license
under the first proviso to sub-section (1) in respect of identification
of person to whom it provides its services.
B Explanation.—The expressions “Aadhaar number” and “core
biometric information” shall have the same meanings as are
respectively assigned to them in clauses (a) and (j) of Section 2 of
the Aadhaar (Targeted Delivery of Financial and Other Subsidies,
Benefits and Services) Act, 2016 (18 of 2016).”
C 17. Section 3(10) defines ‘creditor’. The term ‘debt is defined in
Section 3(11). The expression ‘property’ is defined in Section 3(27).
‘Operational creditor’ is defined in Section 5(20) in Part II under the
head Insolvency Resolution and Liquidation for Corporate Persons.
Section 5(21) defines ‘operational debt’.
D 18. A question has been raised concerning ownership. Whether
TSPs can be said to be the owner based on the right to use the spectrum
under licence granted to them? Whether a licence is a contractual
arrangement? Whether ownership belongs to the Government of India?
Whether spectrum being under contract can be subjected to proceedings
under Section 18 of the Code? The question also arises whether the
E spectrum can be said to be in possession, which arises from ownership.
What is the distinction between possession and occupation? Whether
possession correlates with the ownership right? A question also arises
concerning the difference between trading and insolvency proceedings.
Whether a licence can be transferred under the insolvency proceedings,
F particularly when the trading is subjected to clearance of dues by seller
or buyer, as the case may be, as provided in Guideline Nos.10 and 11;
whereas in insolvency proceedings dues are wiped off. Guideline No.12
is also assumed to be of significance in case spectrum is subjected to
insolvency proceedings, which must be considered.

G 19. It is also required to be examined that when Government has
declined the permission to trade and has not issued NOC for trading on
the ground of non-fulfilment of the conditions as stipulated in the Licence
Agreement, the spectrum can be subjected to resolution proceedings
which will have the effect of wiping off the dues of the Government,
which are more than Rs.40,000 crores. Whereas the dues of the Banks
H are much less. Whether obtaining the DoT’s permission and its approval
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 565
SERVICE PROVIDERS OF INDIA ETC. ETC.

to the resolution plan would be a substitute for Trading Guideline Nos.10, A
11, and 12 ?
20. A question also arises of bona fide nature of the proceedings
under the Code. In the backdrop facts of the cases, question also arises
whether spectrum licence subjected to proceedings under the Code, and
it overrides the provisions contained in the Indian Telegraph Act, 1885, B
Indian Wireless Telegraphy Act, 1933, and Telecom Regulatory Authority
of India Act, 1997.
21. In view of the fact that the licence contained an agreement
between the licensor, licensee, and the lenders, whether on the basis of
that, spectrum can be treated as a security interest and what is the mode C
of its enforcement. Whether the Banks can enforce it in the proceedings
under the Code or by the procedure as per the law of enforcement of
security interest under theSecuritisation and Reconstruction of Financial
Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI
Act) or under any other law.
D
22. A question of seminal significance also arises whether the
spectrum is a natural resource, the Government is holding the same as
cestuique trust. In view of the nature of the resource, it can be subjected
to insolvency/liquidation proceedings. Earlier licence was obtained on
the payment of fees in advance that was not beneficial to the TSPs, as
such a new revenue sharing regime was devised in 1999, and the Central E
Government has an exclusive right under section 4 of the Telegraph Act,
1885 in use of spectrum, it can part with on certain statutory guidelines,
its use is not permissible without the payment of requisite fee.
Whether dues under the licence can be said to be operational
dues? It is also to be examined whether deferred/default payment F
instalment/s of spectrum acquisition cost can be termed to be operational
dues besides AGR dues. Whether as per the revenue sharing regime
and the provisions of the Indian Telegraph Act, 1885, the dues can be
said to be operational dues? Whether natural resource would be available
to use without payment of requisite dues, whether such dues can be G
wiped off by resorting to the proceedings under the Code and
comparative dues of Government, and secured creditors and bona fides
of proceedings are also the questions to be considered.
23. We consider it appropriate that the aforesaid various questions
should first be considered by the NCLT. Let the NCLT consider the
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566 SUPREME COURT REPORTS [2020] 11 S.C.R.

A aforesaid aspects and pass a reasoned order after hearing all the parties.
We make it clear that it being a jurisdictional question, it requires to be
gone into at this stage itself. Let the question be decided within the outer
limits of two months. We also make it clear that we have not observed
on the merits of the case, and we have kept all the questions open to be
examined by the NCLT.
B
In Re. Sharing
24. Coming to the question as to the liability of sharing operator,
who is sharing the spectrum of the original licensee of the past AGR
dues of the original licensee is concerned, that spectrum sharing is
C permitted and approved by the Sharing Guidelines dated 24.09.2015.
The Parliament has approved spectrum sharing as part of “National
Telecom Policy, 2012”. However, DOT issued and approved the final
guidelines in the year 2015. Spectrum sharing is a policy that permits the
sharing of radio access network equipment of operators. Single radio
network equipment is used to provide services by two operators using
D both the entities’ spectrum. As per Spectrum Sharing Guidelines of DoT,
(i) it is a prerequisite that both operators sharing spectrum need to have
spectrum in the same band and the same licenced area; (ii) it is also
necessary that both operators have a network in the same geographical
area; and (iii) leasing of the spectrum is not permitted under the policy.
E By sharing the radio network equipment, two operators use their spectrum
and create their respective businesses’ capacity. Liability to pay necessary
AGR and licence fee remains with the respective companies. Even the
DoT in its affidavit and compliance of the order dated 14.08.2020, stated
as under so far as the spectrum sharing is concerned:

F “4. It is respectfully submitted that as per the Guidelines issued by
DoT in 2015, “Spectrum sharing” allows operators to pool their
respective spectrum for usage in a specific geographical area
(LSA) thus complementing each other’s spectrum needs and
facilitating more efficient utilization of the spectrum. The rationale
is to facilitate optimization of resources and to create a conducive
G environment for telecom growth. During the past period of 20
years or more, some operators have been able to acquire
subscribers and grow at a faster rate as compared to other
operators. This results in the spectrum lying unutilized with some
of the players while other operators face spectrum crunch as
H spectrum is a scare resource.
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 567
SERVICE PROVIDERS OF INDIA ETC. ETC.

Thus, on the one hand spectrum, which is a limited natural A
resource, may remain unutilized for some Telecom Service
Providers (TSPs), while on the other hand, consumers suffer due
to poor quality of services on account of spectrum crunch with
other TSPs. Moreover, spectrum is allocated to a service provider
for a service area which is a large geographical area, normally
B
co-terminus with the state boundaries. In different cities and rural
areas, the TSPs may have varying spectrum needs depending
upon their customer profile.
Spectrum sharing allows operators to pool their respective
spectrum for usage in a specific geographical area within an LSA.
The pooling of the spectrum increases the capacity of Telecom C
Service Providers to carry telecom traffic and may help in
enhancing the quality of service.
5. It is submitted that the objective of spectrum sharing was to
provide an opportunity to the Telecom Service Providers to pool
their spectrum holdings and thereby improve spectral efficiency. D
It is submitted that sharing can also provide additional network
capacities in places where there is network congestion due to
shortage of spectrum. It is submitted that these aspects were
considered by the Central Government while approving the
Guidelines for Spectrum Sharing. It is submitted that Telecom E
Regulatory Authority of India (TRAI) made recommendations on
‘Guidelines on Spectrum Sharing’ on July 21, 2014, which was
considered and approved by the Telecom Commission (TC) in its
meeting held on 11.06.1025 and subsequently approved by the
Central Government. A copy of Spectrum Sharing Guidelines dated
24.09.2015 is attached herewith and marked as ANNEXURE – F
T2.
6. In case of sharing of spectrum both the service providers
[sharers] must be in the same band and in the same service area.
To illustrate “it may be pointed out that if there are two service
providers holding 100 units of spectrum each in the same band G
and in the same service area they can share spectrum of each
other mutually. The Spectrum Usage Charges [SUC] will be
considered for 100 units for each of the TSPs and both will have
to pay SUC for their entire spectrum holding (100 units each) in
that band and in that service area. H
568 SUPREME COURT REPORTS [2020] 11 S.C.R.

A 7. With regard to AGR dues for two TSPs sharing spectrum, the
following scenario emerges:
i. In case of sharing, the Spectrum does not change hands. Both
TSPs simultaneously use and have access to the spectrum held
by each.
B ii. As per the sharing arrangement, each of the TSPs will continue
to make payment of AGR dues arising for the spectrum that each
holds.
iii. However, due to the additional spectrum which each TSP gets
to use, the AGR based dues (SUC) are assessed at a higher rate
C for each of the TSPs. There is an addition/increase by 0.5% in
the Spectrum Usage Charge rate, applied separately on both TSPs.
Thus if SUC rate of each TSP prior to sharing was 3%, then this
will increase to 3.5% for both of them.
iv. The use of each others spectrum by means of sharing should
D normally lead to increase in AGR for both TSPs. This would lead
to increased licensed fee and SUC to the Government as these
are based on share of AGR.
v. TSPs who share spectrum, continue to pay and are duty bound
to pay, their AGR based dues arising from the use of spectrum.
E
8. So far as the present case is concerned, in accordance with the
spectrum sharing guidelines dated 24.09.2015, the requests of the
following TSPs for sharing of access spectrum have been taken
on record:
i. For Reliance Jio Infocomm Limited (RJIL) and Reliance
F
Communications Limited (RCL), spectrum in 800 MHz band in
21 LSAs (all except Jammu and Kashmir LSA) as per the
quantum mentioned in the annexure
ii. For Bharti Airtel Limited and Tata Teleservices Limited/Tata
Teleservices (Maharashtra) Limited, spectrum in 1800 MHz band
G in 3 LSAs (Andhra Pradesh, Maharashtra and Mumbai LSAs) as
per the quantum mentioned in the annexure.
iii. For, Bharti Airtel Limited and Tata Teleservices Limited/Tata
Teleservices (Maharashtra) Limited, spectrum in 2100 MHz band
in 2 LSAs (Gujarat, Haryana, Karnataka, Kerala, Madhya
H
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 569
SERVICE PROVIDERS OF INDIA ETC. ETC.

Pradesh, Maharashtra and Uttar Pradesh (West) LSAs) as per A
the quantum mentioned in the annexure.
iv. For Bharti Hexacom Limited and Tata Teleservices Limited,
spectrum in Rajasthan LSA as per the quantum mentioned in the
annexure.
12. It is respectfully submitted that the difference between B
Spectrum Sharing and Spectrum Trading, can therefore be culled
out as under:
i. Spectrum sharing allows operators to pool their respective
spectrum for usage in a specific geographical area and thus
complementing each other’s needs for more efficient utilization C
of the spectrum. This facilitates optimization of resources as also
creates conducive environment for the telecom growth.
ii. Spectrum trading allows parties to transfer their spectrum rights
and obligations to another party. This allows better spectrum usages
as the idle spectrum from the hands of one service provider gets D
transferred to the other service provider who may be facing
spectrum crunch.
iii. In the case of spectrum sharing, the right to use spectrum as
granted by the DoT remains with the respective TSPs, whereas
in the case of spectrum trading, the right to use gets transferred E
from the buyer to the seller.”
On going through the entire Sharing Guidelines, it does not stipulate
anything about the past dues of the sharing operators. In the case of
sharing spectrum usage charges, the rate of each of the licensees post
sharing shall increase by 0.5% of adjusted gross revenue. Sharing F
Guidelines dated 24.09.2015 read as under:
“No. L-14006/04/2015-NTG
Government of India
Ministry of Communications & IT G
Department of Telecommunications
WPC Wing, 6th floor, Sanchar Bhawan, New Delhi
Dated: the 24th September, 2015
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570 SUPREME COURT REPORTS [2020] 11 S.C.R.

A Subject: Guidelines for sharing of Access Spectrum by
Access Service Providers.
National Telecom Policy, 2012 envisage to move at the
earliest towards liberalization of spectrum to enable use of spectrum
in any band to provide any service in any technology as well as to
B permit spectrum pooling, sharing and later, trading to enable optimal
utilization of spectrum through appropriate regulatory framework.
After considering the recommendations of TRAI on spectrum
sharing, the Government has decided to allow sharing of access
spectrum as per guidelines given below:
C (1). Spectrum sharing shall be allowed only for the access service
providers holding Cellular Mobile Telephone Service (CMTS)/
Unified Access Service License (UASL)/Unified License (Access
Services)(UL(AS)/Unified License (UL) with authorization of
Access Service in a Licensed Service Area (LSA), where both
the licensees are having spectrum in the same band.
D
(2). Spectrum sharing is permitted between two Telecom Service
Providers utilizing the spectrum in the same band.
(3). Spectrum sharing is not permitted when both the licensees
are having spectrum in different bands. Leasing of spectrum is
E not permitted.
(4). All access spectrum including traded spectrum shall be
shareable provided that both the licensees are having spectrum in
the same band. Further, if more bands such as 700 MHz are added
for allocation of spectrum to Access Service Providers through
F auction process, the sharing of spectrum shall also be permitted in
that band.
(5). The right to share the spectrum shall be subject to the
fulfillment of the relevant license conditions and nay other
conditions that may be specified by the licensor/Government from
time to time.
G
(6) Both the licensees shall ensure that they fulfil the specified
roll-out obligations and specified QoS norms.
(7) A licensee shall not be eligible to share its spectrum if it has
been established that it is in breach of terms and conditions of the
H
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 571
SERVICE PROVIDERS OF INDIA ETC. ETC.

licence and the licensor has ordered for revocation/termination of A
its licence.
(8) Sharing is permitted in the following scenarios:
(i). For the spectrum where both the Licensees who plan to share,
possess the spectrum for which market price has been paid.
Further, in respect of spectrum in 800 MHz acquired in the auction B
held in March 2013, sharing of spectrum shall be permitted only if
the differential of the latest auction price and the March 2013
auction price on pro-rate basis on the balance period of right to
use the spectrum is paid.
(ii) In case both the Licensees who plan to share spectrum are C
having the administratively allotted spectrum in that band, the
sharing of spectrum is permitted only when both the licensees
have paid One time Spectrum Charges (OTSC) for their respective
spectrum holdings, above 4.4 MHz (GSM) / 2.5 MHz (CDMA)
based on reserve price/auction determined price. However if the D
said amount is not paid due to judicial intervention in judicial forums
barring any coercive action, in the interim, sharing of spectrum in
such cases will also be permitted subject to submission of a bank
guarantee for an amount equal to the demand raised by the
department for one time spectrum charge pending final outcome
of the court case. E

(iii) In case of proposed sharing where one Licensee has spectrum
acquired through auction/trading or liberalized spectrum and the
other has spectrum allotted administratively, sharing is permitted
only after the spectrum charges for liberalizing the administratively
allocated spectrum are paid. Further, in case of spectrum acquired F
in auction held in March 2013, differential amount as indicated in
para 7(i) above shall be payable in respect of 800 MHz band.
(9) The use of technology shall be governed by the terms and
conditions of respective Notice Inviting Application (NIA)/license.
G
(10). Both the licensees will be individually and collectively
responsible for complying with the sharing guidelines, including
interference norms.
(11). Spectrum sharing will be restricted to sharing by only two
licensees subject to the condition that there will be at least two
independent networks provided in the same band. H
572 SUPREME COURT REPORTS [2020] 11 S.C.R.

A (12). For the purpose of charging Spectrum Usage Charges (SUC),
it shall be considered that the licensees are sharing their entire
spectrum holding in the particular band in the entire LSA.
(13). Spectrum Usage Charges (SUC) rate of each of the licensees
post-sharing shall increase 0.5% of Adjusted Gross Revenue
B (AGR). The sharing of spectrum for part of a month, full one
month period shall be counted for the purpose of levying SUC.
(14). The prescribed limits for spectrum cap shall be applicable
for both the licensees individually. Further, the spectrum holding
of any licensee post-sharing shall be counted after adding 50% of
C the spectrum held by the other licensee in the band being shared
being added as the additional spectrum to the original spectrum
held by the licensee in the band.
(15). Spectrum sharing shall be available for upto the balance
period of the licence or upto the period of right to use spectrum,
D whichever is earlier.
(16). Both the licensees sharing the spectrum shall jointly give a
prior intimation for sharing the right to use the spectrum at least
45 days before the proposed effective date of the sharing.
Application format is attached along with these guidelines as
E Annexure-I.
(17). Both the licensees shall also give an undertaking that they
are in compliance with all the terms and conditions of guidelines
for spectrum sharing and the licence conditions and will agree
that in the event, it is established at any stage in future that either
F of the licensee was not in conformance with the terms and
conditions of the guidelines for spectrum sharing or/and of the
licence at the time of giving intimation for sharing of right to use
the spectrum, the Government will have the right to take appropriate
action which inter-alia may include annulment of sharing
arrangement. Appropriate modifications will be made in their
G respective Service License and Wireless Operating License
(WOL) to facilitate the spectrum sharing.
(18). A non refundable processing fee, as prescribed from time to
time, shall be payable individually by each licensee for each service
area at the time of intimation to WPC Wing. At present, processing
H fee of Rs.50,000/- is to be paid. The payment is to be made by
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 573
SERVICE PROVIDERS OF INDIA ETC. ETC.

draft in favor of Pay & Accounts Officer (HQ), DOT payable at A
New Delhi.
(19). Licensor/Government reserves the right to modify the
guidelines from time to time as it may deem fit.
Sd/-
B
(P S M Tripathi)
Assistant Wireless Adviser
for and on behalf of President of India.”
25. According to the DoT and so stated in the affidavit in compliance
C
of order/directions dated 21.08.2020, AGR is not calculated bandwise,
but from the total revenue earned by the TSP using the entire spectrum
(both shared and not shared). According to DoT, in case of sharing of
spectrum, there is an increment of 0.5% in SUC rate, and both TSPs
pay this incremental SUC on their respective AGRs if they are sharing
spectrum. Both the TSPs (sharers) are required to pay this SUC on D
their respective AGRs. Even in the case of sharing spectrum, the liability
of the said operator would be to the extent of using the said spectrum
only, and the liability of the sharing operator would be to the extent of the
remaining spectrum used by it. Therefore, there shall not be any liability
of the said operator with respect to payment of the past dues (post
E
shared) of the sharing operator – licensee. Even according to DoT also,
both the TSPs (sharers) are required to pay the SUC on their respective
AGRs. Learned counsel appearing on behalf of the Reliance Jio (shared
operator), which has entered into the sharing between RCom/RTL has
stated at the Bar that Reliance Jio has paid the AGR post sharing including
the difference of AGR as per the decision of this Court on their own and F
based on self-assessment. It is stated at the Bar that still anything is
further held to be due and payable and AGR for the period post sharing
of the said spectrum originally allotted to RCom on the assessment being
done, they will make the said payment. Similar is the ground of counsel
for other TSPs. as to sharing arrangement.
G
26. That in the present case, only part of the spectrum of the
licensee has been shared with the case of some of TSPs., which has
been approved by the DoT under the Sharing Guidelines, 2015, and there
is no provision for the liability of the past dues on the shared operator.
Even otherwise, the past dues of sharing operator/licensee covers AGR
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574 SUPREME COURT REPORTS [2020] 11 S.C.R.

A for the spectrum used by holder of licence, certain TSPs. such as Reliance
came into existence later on, and as observed hereinabove, the liability
of such operator of the AGR, would only be to the extent it has used the
said spectrum. Shared operator TSPs. cannot be saddled with the liability
to pay the past dues of AGR of licensee, that have shared the spectrum
with the original licensees.
B
In Re. Trading:
27. Coming to the question of liability of the telecom companies
which are using spectrum under the Trading Guidelines with respect to
the AGR dues of the telecom company, Spectrum trading is governed by
C the Spectrum Trading Guidelines dated 12.10.2015 and under the said
Trading Guidelines, part of the spectrum of the telecom company facing
insolvency – the other telecom company is using original licensee. The
purchaser and buyer’s liability shall be as per para 11 of the Spectrum
Trading Guidelines dated 12.10.2015, which reads as under:
D “(10). Both the licensees shall also give an undertaking that they
are in compliance with all the terms and conditions of the guidelines
for spectrum trading and the license conditions and will agree that
in the event, it is established at any stage in future that either of
the licensee was not in conformance with the terms and conditions
of the guidelines for spectrum trading or/and of the license at the
E time of giving intimation for trading of right to use the spectrum,
the Government will have the right to take appropriate action which
inter-alia may include annulment of trading arrangement.
(11). The seller shall clear all its dues prior to concluding any
agreement for spectrum trading. Thereafter, any dues recoverable
F up to the effective date of trade shall be the liability of the buyer.
The Government shall, at its discretion, be entitled to recover the
amount, if any, found recoverable subsequent to the effective date
of the trade, which was not known to the parties at the time of the
effective date of trade, from the buyer or seller, jointly or severally.
G The demands, if any, relating to licenses of seller, stayed by the
Court of Law, shall be subject to outcome of decision of such
litigation.
(12). Where an issue, pertaining to the spectrum proposed to be
transferred is pending adjudication before any court of law, the
seller shall ensure that its rights and liabilities are transferred to
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the buyer as per the procedure prescribed under the law and any A
such transfer of spectrum will be permitted only after the interest
of the Licensor has been secured.”
Para 11 of the Spectrum Trading Guidelines was further clarified
vide O.M. dated 12.05.2016. Certain telecom operators raised specific
questions on the Trading Guidelines dated 12.10.2015. Question No.2 in B
respect of para 11, seeks a clarification as to whether the transfer of
spectrum is for a specific area and reference to the dues relate to only
the spectrum being traded in the concerned area, and seeks clarification
whether the buyer will be jointly or severally liable for only those dues if
found recoverable after the effective date of trading, which were not
known to the seller at the time of the effective trade date. C

28. To the aforesaid questions, vide O.M. dated 12.05.2016, there
was a clarification or the answer relating to para 11 of the Guidelines,
which reads as under:
“The Clarification or the answer relating to para 11 of the D
Guidelines states as follows:
“As per para 11 of the Guidelines, the seller must clear all its dues
pertaining to the LSA where trading is intended including OTSC
dues for that band. In case where entire spectrum holding of the
TSP in all LSAs is intended to be traded, the seller will have to E
clear all its pending dues including past dues. DoT will indicate
status of Dues. However, the Buyer may perform due diligence.
Further, the Government shall, as its own discretion, be entitled to
recover the amount, if any, found recoverable subsequent to the
effective date of the trade, which was not known to the parties at
the time of the effective date of trade, from the buyer or seller, F
jointly or severally.”
Thus, as per para 11 of the Spectrum Trading Guidelines dated
12.10.2015, read with the clarification vide O.M. dated 12.05.2016, in
case of a part of the spectrum is under sale, the liability of the purchaser/
buyer with respect to past dues of the seller shall not arise. In a case G
where the entire spectrum is under sale, in that case, the past dues of
the seller shall be the liability of the buyer except the amount/dues, if
any, found recoverable after the effective date of the trade, which was
not known to the parties at the time of the effective date of trade and in
such a situation the liability of such dues of the buyer and seller would be
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576 SUPREME COURT REPORTS [2020] 11 S.C.R.

A jointly or severally and the government at its discretion is entitled to
recover such amount. In the present case, it is not in dispute that in some
cases only part spectrum was traded, and the remaining spectrum
continued with the seller. At the time of agreement for spectrum trading,
the AGR dues of the seller were also known. Therefore, on a joint reading
of para 11 of the Spectrum Trading Guidelines dated 12.10.2015 read
B
with O.M. dated 12.05.2016, the seller’s dues prior to the concluding of
the agreement/spectrum trading shall not be upon the buyer.
29. It is clear that in the case, which was decided by this Court
relating to AGR dues, respondents were the parties, and they were
litigating with respect to the definition of AGR in the second round of
C appeal filed in 215 before this Court. Each of them was aware that the
dispute as to the definition of AGR was pending in this Court. Thus, it is
apparent that it was known to the parties that AGR dues to be finalised
as per the decision of this Court in a pending matter, and lis was pending
for the last 20 years. The liability cannot be escaped as specified in the
D Trading Guidelines to the extent that the seller or buyer is liable. They
have to pay the AGR as per the judgment rendered by this Court. The
purchasers who are not seller or buyer, shall have to pay the dues to the
extent they are liable under the Guidelines, as discussed above. It was
stated that they have paid dues as per the self-assessment or, in some
cases, demands have not been raised. We direct DoT to complete the
E assessment in such cases of trade and raise demand if it has not been
raised and to examine the correctness of self-assessment and raise
demand, if necessary, after due verification. In case demand notice has
not been issued, let DoT raise the demand within six weeks from today.
Payment of dues of AGR :
F
30. The Union of India has filed an application through the
Department of Telecommunications (DoT) to modify the order
dated 24.10.2019 passed in C.A. Nos.6328-6399/2015 and a separate
order of even date passed in the abovesaid civil appeals. M.A. No.266/
2020 was filed by the TSPs./licensees in which order dated 14.2.2020
G was passed, and the contempt proceedings against the Desk Officer
were drawn. In view of the communication dated 23.1.2020, it was
withdrawn on 14.2.2020.
31. It is averred in the application that the sector of TSPs. has its
varied features. The TSPs. who are required to make payment, are
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catering to the services of crores of consumers throughout India, and A
India’s Government has examined the issue in great detail. It has shown
prompt alacrity to the sector’s market economy. The definition of ‘AGR’
has been settled after about 20 years, as such, there are huge arrears. In
the event, it is found that any major service provider is impacted resulting
into drastic consequences of such service providers facing proceedings
B
under the Code. The following would be the inevitable adverse impact:
(a) Impact on telecom services for a large proportion of customers.
(i) Mobile Number Portability (MNP) process has capacity
limitations; this may lead to delays in porting numbers from
non-operational to operational TSP, and consequent disruption C
of services for customers.
(ii) TSPs. porting in customers from TSPs not able to provide
services will also need additional access (and backhaul)
spectrum to maintain Quality of Service (QoS), Access
spectrum is acquired through auction. D
(b) Adverse impact on competition in the Telecom Sector with
adverse consequences for the consumers;
(c) Adverse impact on Quality of Service in the telecom sector.
The closure of one or more TSPs and the gap being filled in by
other remaining TSPs will not be seamless. E
(d) Implications for the banking sector:
- A letter dated 15.2.2020 was received from the Indian Banks
Association on the subject of distress in the Telecom Sector
and Ease of Business. The letter highlighted the issues affecting
F
the Telecom Sector and resultant implications on the banks
lending to the Telecom Sector along with suggestions for
consideration.
(e) Disruption of tax and non-tax revenue on account of licence
fee (LF), spectrum usage charges (SUC) and Goods and Services
Tax (GST) and loss of revenue on account of spectrum deferred G
instalments;
(f) Locking up of valuable spectrum in Corporate Insolvency
Resolution Process (CIRP);
(g) Major loss of direct and indirect employment; H
578 SUPREME COURT REPORTS [2020] 11 S.C.R.

A (h) Cascading negative impact on other sectors of the economy;
(i) Foreign Direct Investment (FDI) sentiment will be adversely
affected;
(j) The closure of one or more TSPs also adversely impacts the
digital connectivity in the country. E-commerce, e-banking,
B e-health, etc., all part of e-governance are affected;
(k) This will have an adverse impact in rural areas, particularly
Aspirational Districts, and the spread of digitization in backward
regions of India.

C 32. In this regard, a letter dated 15.2.2020 had been written by
the Indian Banks Association, adumbrating the aforesaid aspects of the
distressed telecom sector. The issues affecting the telecom industry and
companies and the resultant stress on bank lending in this sector were
pointed out, culminating into a high incidence of tax and heavy burden,
subdued operating matrix due to a steep fall in average revenue per
D customer. The telecom services remained subdued due to the price war
triggered by a new entrant. There was a decline in revenue. The drastic
cut in data tariffs has led to a spike in data usage for the last one year,
primarily on the 4G network. The vicious circle would adversely affect
the capex spending of the service providers and, in turn, impact the
E revenue earning capabilities. Banks’ approach to 5G financing was also
mentioned for which significant additional investment is required for 5G
related infrastructure with the current leveraged financial position. The
total outstanding exposure to the telecom industry from the Indian Banks
is huge. The modification in the bank guarantee mechanism pertaining
to onerous clauses was also pointed out. Various other difficulties of the
F telecom sector were also highlighted.
33. The Union of India, after envisaging the larger interest,
economic consequences on the nation and to ensure that the order of
this Court is complied with in its letter and spirit, has taken a conscious
decision and sought approval of this Court to a formula for recovery of
G past dues from the telecom service providers. The formula is placed for
approval of this Court, which is arrived at after detailed and long drawn
deliberations at various levels in the administrative hierarchy, including
the Cabinet, and keeping in view the vital issues related to financial
health and viability of the telecom sector, need for ensuring competition
and a level-playing field in the interest of consumers. The following
H
decision has been taken with respect to the mode of recovery:
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 579
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‘THE MODE OF RECOVERY FOR CONSIDERATION OF A
THIS HON’BLE COURT
“1.1 All licensees impacted by the judgment of the Hon’ble Supreme
Court be allowed to pay the unpaid or remaining to be paid amount
of past DoT assessed/calculated dues in annual instalments over
20 years (or less if they so opt), duly protecting the net present B
value of the said dues using a discount rate of 8% (based on One
Year Marginal Cost of Lending Rate of SBI which is currently
7.75%). Interest on the unpaid amount, penalty, and interest on
penalty in relation to the past dues as on the date of the judgment
of the Hon’ble Supreme Court (arising due to the said judgment C
of the Supreme Court) will not be levied beyond the date of the
said judgment, and the NPV will be protected using the discount
rate. However, the TSPs shall continue to be liable for interest,
penalty, and interest on penalty for unpaid dues of LF and SUC
which arise prospectively after the date of judgment of the Hon’ble
Supreme Court (24.10.2019). D

1.2 Change in amount of past dues arising from the AGR judgment
(24.10.2019), if any, determined after reconciliation between TSPs’
self-assessment and DoT’s assessment/calculation, be added to/
adjusted against the payable instalment amounts of the TSP on
the same basis as given in paragraph 1.1 above.” E

34. A prayer has also been made to pay the remaining dues through
annual installments spanning over 20 years. For any lapse, a provision
has been made to protect the net present value as per the order passed
by this Court up to the date of judgment and the dues thereafter, to be
realised using the discounted rate of 8%, which is based on one marginal F
MCLR rate of SBI which is currently at 7.75%. The interest, penalty,
and interest on penalty on the arrears as per agreement not to be levied
beyond the date of judgment, and the NPV will be protected. However,
for prospective arrears, if any, the TSPs. shall be liable to interest, penalty,
and interest on penalty for unpaid dues as per agreement after the date G
of judgment of this Court.
35. Considering the various factors taken into account and the
letters written by the Indian Banks Association, we are of the opinion
that the decision of the Cabinet is based on the various factors, and in
the interest of the economy and the consumers. The decision is taken
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580 SUPREME COURT REPORTS [2020] 11 S.C.R.

A after extensive deliberations and consultations, and till the date of
judgment, the dues have been worked out as per the decision rendered
by this Court. Only for the subsequent period, some relaxation has been
given as to the rate of interest, penalty, and interest on penalty, which is
permissible. The arrears have accumulated for the last 20 years. It is
also to be noted that some of the companies are under insolvency
B
proceedings, validity of which is to be examined, and they were having
huge arrears of AGR dues against them. For protecting the telecom
sector, a decision has been taken on various considerations mentioned
above, which cannot be objected to.
36. However, we consider that the period of 20 years fixed for
C payment is excessive. We feel that it is a revenue sharing regime, and it
is grant of sovereign right to the TSPs. under the Telecom Policy. We
feel that some reasonable time is to be granted, considering the financial
stress and the banking sector’s involvement. We deem it appropriate to
grant facility of time to make payment of dues in equal yearly instalments.
D Rest of the decision quoted above, taken by the Cabinet, shall stand
except the modifications concerning the time schedule for making
payment of arrears. But, at the same time, it is to be ensured that the
dues are paid in toto. The concession is granted only on the condition
that the dues shall be paid punctually within the time stipulated by this
Court. Even a single default will attract the dues along with interest,
E penalty and interest on penalty at the rate specified in the agreement.
37. We also place on record that the demand of AGR was raised
as against non-telecom PSUs. on the strength of the judgment passed
by this Court. Pursuant to the Court’s directions, the matter has been
re-examined and considering the representations filed by PSUs. It is
F stated in the affidavit dated 18.6.2020 that non- telecom public sector
undertakings are non-telecom entities involved in providing services such
as power transmission, oil and gas exploration, and refining, Metrorail
service, etc., and that they are not into the business of providing mobile
services to the general public. They are not holding Access Service
G Licence (ASL). The revenue received by non-telecom public sector
undertakings under the head of ‘telecom services’ forms a very negligible
and a small portion and does not form part of the total revenue, e.g.,
0.0002% for GAIL, 0.00028% for DMRC and 0.001% for Oil India,
etc. DoT has decided to withdraw the demands raised for licence fee
based on non-telecom revenue from the non-telecom public sector
H
UNION OF INDIA v. ASSOCIATION OF UNIFIED TELECOM 581
SERVICE PROVIDERS OF INDIA ETC. ETC.

undertakings, which are M/s. Powergrid, GAIL, Oil India Ltd., DMRC, A
which constitutes about 96% of the demand regarding non-telecom PSUs.
In this regard orders have been issued on 13.7.2020 and 14.7.2020.
38. Resultantly, we issue following directions:
(i) That for the demand raised by the Department of Telecom in
respect of the AGR dues based on the judgment of this Court, B
there shall not be any dispute raised by any of the Telecom
Operators and that there shall not be any re-assessment.
(ii) That, at the first instance, the respective Telecom Operators
shall make the payment of 10% of the total dues as demanded by
DoT by 31.3.2021. C

(iii) 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.
(iv) Various companies through Managing Director/Chairman or D
other authorised officer, to furnish an undertaking within four weeks,
to make payment of arrears as per the order.
(v) The existing bank guarantees that have been submitted
regarding the spectrum shall be kept alive by TSPs. until the
payment is made.
E
(vi) 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.
F
(vii) Let compliance of order be reported by all TSPs. and DoT
every year by 7th April of each succeeding year.
In the Suo Motu Contempt Petition, in view of the reply filed and
compliance reported, and an unconditional apology tendered, which we
accept, we discharge notice issued to Shri Mandar Deshpande and drop G
the proceedings.
Before parting with the proceedings, we place on record our
appreciation for the fair and able assistance provided by Shri Tushar
Mehta, Solicitor General, and the respective senior counsel appearing
on behalf of respective parties. H
582 SUPREME COURT REPORTS [2020] 11 S.C.R.

A Accordingly, the pending interlocutory applications are disposed
of in terms of the aforesaid order/directions.
All the previous orders stand modified accordingly.

B Divya Pandey Directions issued.

C

D

E

F

G

H