Supreme Court allows Centre to reconsider Vodafone Idea's AGR dues issue

SC says offering relief is within Union government's policy domain

The Supreme Court on Monday allowed the Centre to reassess Vodafone Idea’s (Vi’s) adjusted gross revenue (AGR) dues, holding that any relief to the struggling telecom operator lay within the government’s policy domain. A Bench comprising Chief Justice of India B R Gavai and Justices K Vinod Chandran and Vipul M Pancholi accepted the government’s submission that the move was driven by consumer interest and the Centre’s substantial equity in India’s third-largest telecom provider.

 

Solicitor General Tushar Mehta, appearing for the government, told the court that the Centre now holds a 49 per cent stake in Vi. The review, he said, had been prompted by concerns about the firm’s large user base. As of September 2025, Vi had 202.8 million subscribers, according to data from the Trai released on Monday. “We clarify that this falls within the Union’s policy domain, and there is no reason to prevent the government from proceeding accordingly,” observed the Bench, disposing of the matter. 

 

Senior advocate Mukul Rohatgi, representing Vi, expressed satisfaction with the government’s approach.

 

Taking note of the government’s equity infusion and the potential impact on millions of users, the court said: “Taking into consideration the status of the case now, the government has infused substantial equity into the company, and further, that the issue involved is likely to have a direct bearing on the interests of 20 crore customers, we see no issue in the Union reconsidering the issue and taking an appropriate decision.” 

 

The Bench stressed that its order was confined to the specific facts of the case, particularly the central government’s stake in the company and its stated aim of protecting consumer interests. A detailed order is awaited.

 

Vi described the decision that allowed the government to address the company's grievances as a “positive development”, saying it would work with the government to resolve the AGR issues.

 

“…This is an impetus to the Digital India vision and ambition of our Honourable Prime Minister…,” the company said in a statement.

 

Vi’s stock surged as much as 9.3 per cent during the day to a 52-week high of ₹10.52 per share, the biggest intraday rise since October 7. The stock later pared gains and closed at ₹10.02 on the NSE, up 4.16 per cent. The Nifty 50 gained 0.66 per cent on Monday.

 

Legal and industry experts said the ruling marks a turning point for both the company and India’s telecom sector, offering the government greater flexibility to address financial stress in the industry while maintaining regulatory credibility and market stability.

 

“For Vi, this opens a critical window to negotiate relief -- through recalibration of dues or extended payment timelines -- though it does not imply any automatic waiver,” said Smita Paliwal, partner at King Stubb & Kasiva, Advocates and Attorneys. “The court’s emphasis on bringing ‘finality’ ensures that past liabilities cannot be endlessly reopened, creating much-needed regulatory certainty.”

 

Paliwal added that while other telecom operators may now seek discussions with the Department of Telecommunications (DoT), any relief would depend on individual circumstances and the government’s overall policy stance. Rival Bharti Airtel had earlier sought the government’s intervention to convert more than ₹40,000 crore of AGR dues into equity. Vi and Bharti Airtel are among the key telecom companies owing AGR-related dues to the government.

 

“The court’s acknowledgement of the government’s policy-domain role gives a pathway for the dispute to be resolved without further protracted litigation,” said Ashish Bhan, partner at law firm Trilegal. “This may reduce regulatory overhang, provide clarity for stakeholders, and support industry stability. It’s a very constructive step for the telecom sector.”

 

The case

 

 The apex court’s decision followed a plea filed by Vi in September seeking a comprehensive reassessment of its AGR dues for periods up to 2016-17, as well as a recalculation of liabilities after the DoT raised additional demands for periods already settled by the Supreme Court’s 2020 judgment.

 

The company also sought a waiver of interest and penalties, arguing that since the principal amount had not been finalised, there could not have been a default, and thus no penalties should apply.

 

In 2020, the Supreme Court had locked Vi’s AGR dues up to 2016-17 based on DoT calculations, ruling that there would be no further recalculation. The company’s liabilities were set at ₹58,254 crore at that time, a figure that has since risen to ₹83,400 crore. According to Vi’s latest petition, the DoT has raised an additional demand of ₹9,450 crore, of which ₹5,606 crore relates to 2016-17. The company is required to begin annual payments of ₹18,000 crore from March 2026.

 

Former chief executive Akshaya Moondra said in August that resolving the AGR issue was essential for securing bank funding. Vi, which raised ₹18,000 crore through a follow-on public offer in 2024, has been seeking further capital from non-banking financial institutions and has outlined a capital expenditure plan of ₹50,000–55,000 crore over three to five years.

 

During hearings, the court questioned whether it could entertain a fresh plea on AGR dues, given that a similar petition had previously been dismissed. Mehta argued, however, that circumstances had since changed, while Rohatgi maintained that the new petition was based on distinct facts.

 

Earlier this year, in May, a Bench of Justices J B Pardiwala and R Mahadevan rejected writ petitions by Vi and other telecom companies seeking waiver of interest, penalties, and interest-on-penalty components.

 

At the time, the Bench had emphasised that the AGR litigation had reached finality, with even curative petitions dismissed. “There has to be some finality to the proceedings,” CJI Gavai had observed.

 

Rohatgi also explained the core of the AGR dispute to the court: “The mobile company has to pay a licence fee to the government. It is calculated based on gross revenue. An issue arose -- if Vi owns a hotel, can you add the revenue of the hotel to the revenue of telecom? The answer is obviously no. But the DoT said, we will add.”