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SC rejects DoT plea against TDSAT order on RCom's past liabilities

TDSAT had held liability of past dues only with RCom and not buyer of 800 MHZ spectrum

Aashish Aryan  |  New Delhi 

Supreme Court of India
Supreme Court of India

The Supreme Court on Tuesday rejected the Department of Telecommunications' (DoT) plea against an order of the Telecom Dispute Settlement Appellate Tribunal (TDSAT) which had held that the liability of past dues of Reliance Communications Limited (RCom) rested only with it and not Reliance Jio Infocomm, which was at the time looking to buy company's spectrum.

The TDSAT had on February 26 held that 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. It had also said that the buyer of RCom’s 800 MHz spectrum, which then was RJio, could not be held liable until the spectrum trade had happened.

Tuesday’s verdict against DoT’s appeal is likely to have little impact on the spectrum sale of RCom as the company is already under insolvency for failing to repay debts worth close to Rs 46,000 crore. It could, however, mean that the bidder for the company would have cough up money for the unpaid SUC also.

Earlier, RCom had approached TDSAT seeking clarification of spectrum trading rules after the DoT had denied it a No Objection Certificate saying that either the company, or the buyer of its spectrum would have to give an undertaking that they would be liable for past dues.

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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 like 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.

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.

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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 this year after the DoT refused to give the NoC.

First Published: Tue, July 02 2019. 18:38 IST