The Supreme Court on Monday rejected Vodafone Idea’s proposal to pay part of their adjusted gross revenue dues and direct government not to take any coercive action against it. Senior advocate Mukul Rohatgi appearing for Vodafone Idea said they are willing to pay Rs 2,500 crore today and another 1,000 crore by Friday, and the government shouldn’t pursue any forcible action against them. He also urged that the bank guarantees deposited by the company not be encashed as part of AGR recovery. A bench headed by Justice Arun Mishra, however, turned down the proposal giving a huge blow to the telco which owes around Rs 53,000 crore to the telecom department.
Vodafone Idea On the Brink of Collapse
Vodafone Idea said the judgement leaves them in a precarious position and any move to encash the guarantees will prove fatal. “…if the bank guarantees get encashed tomorrow, then the company will have to close,” Vodafone Idea’s counsel Mukul Rohatgi said. “I hope good sense prevails over the government, that if you encash the guarantees, the banks will pay, but the company will go down.”
Meanwhile, the telecom department officials are seeking an opinion from the law ministry on whether the bank guarantees can be encashed before March 17, the next hearing date of the matter.
DoT to Meet Today to Make a Decision on Encashing Bank Guarantees
The telecom department officials will meet today to make a decision on whether or not to encash the bank guarantees, as none of the telcos have made the full payment. Sources speaking to Financial Times said the option to encash the guarantees is being considered and “nothing is off the table”. A decision on the same will be taken by the end of the day, added the report.
The move comes after the Supreme Court rapped the telecom department on Friday for “scuttling” its order by issuing a directive to not take any corrective action against firms for not depositing the AGR dues by January 23 deadline.
Last week’s Supreme Court decision has plunged the telecom industry into a crisis as telcos scrambled to pay their AGR dues. Bharti Airtel has paid Rs 10,000 crore, Tata Teleservices made Rs 2,197 crore and Vodafone Idea Rs 2,500 crore as part of their adjusted gross revenue dues.