Liability of past dues rests only with RCom, not Reliance Jio: TDSAT

Telecom appellate tribunal asks DoT to reconsider RCom's plea to issue NoC for spectrum trading

The Telecom Dispute Settlement Appellate Tribunal (TDSAT) on Tuesday said that the liability of past dues related to Spectrum Usage Charges (SUC) rested only with Reliance Communications (RCom) and not the buyer of its 800 MHZ spectrum. The telecom appellate tribunal held that the buyer of RCom’s 800 MHz spectrum, which in the current case is Reliance Jio Infocomm (Jio), cannot be held liable until the spectrum trade had happened. The appellate tribunal on Tuesday also asked the Department of Telecommunications (DoT) to reconsider RCom’s plea for No Objection Certificate (NoC) that would allow the company to sell its spectrum to a buyer.

RCom had approached TDSAT seeking clarification of spectrum trading rules after the DoT had denied it NoC citing that either the company or Reliance Jio Infocomm had to give an undertaking that they would be liable for past dues. In its plea before TDSAT, DoT had claimed that the past dues were not just those related to the spectrum being traded but other dues such as One Time Spectrum Charge (OSTC) also, and other dues as and when they may arise.

In December 2018, Jio had written to the DoT seeking clarification that they would not be held liable for paying spectrum related dues that become payable prior to the sale. The letter had prompted DoT to withhold the required NoC. In its submission before the TDSAT, RCom had maintained that the liability of past dues would be related only to the SUC and not entire licence as claimed by DoT.

“We are hiving off only the 800 MHz spectrum. The licence remains with us. Only the dues related to this very spectrum is to be paid. Any dues recoverable cannot be omnibus,” the counsel appearing for RCom had told TDSAT.

Earlier, the DoT had insisted that the RCom furnish bank guarantees worth Rs 3,000 crore. It had rejected the company’s offer to pledge land to cover the amount. The problem with the corporate guarantee backed by land, DoT officials said, was that it could get into legal issues. A bank guarantee would have been easily encashable, DoT officials had then said.

TDSAT’s Tuesday judgement could possibly mean another chance for RCom to stave off insolvency. The company is likely to now try and push for the pending NoC from the government, which would allow it expedite to sale of its 800 MHz spectrum to Jio and payoff banks’ dues. In December 2017, RCom had signed Rs 25,000-crore deal with Jio. Under the deal, Jio would acquire RCom’s wireless infrastructure assets, including towers and spectrum. The deal, initially supposed to be over by December 2018, was extended till June 28, 2019, after the DoT refused to give the NoC.