Union of India Vs. Association of Unified Telecom Service Providers of India [July 23, 2021]

CITATION	2021 SCC ONLINE SC 483
DATE OF JUDGEMENT	23rd July 2021
COURT	The Supreme Court of India
APPELLANT	Union of India
RESPONDENT	Association of Unified Telecom Service Providers of India
BENCH	L. Nageswara Rao, S. Abdul Nazeer ,M.R. Shah, JJ.

INTRODUCTION

The Supreme Court’s decision in the Adjusted Gross Revenue (AGR) dues issue involving Telecom Service Providers (TSPs) in India is a crucial finding that touches on several areas of law. This lawsuit, which has been ongoing for several years, has far-reaching consequences for the telecoms industry as well as the larger legal landscape regarding administrative decision-making, contractual duties, and bankruptcy processes. 

The AGR dispute came from the definition of ‘gross income’ in the license agreements between the Government of India and the TSPs, which was earlier resolved by the Supreme Court in 2019. The current issue concerns the TSPs’ attempts to seek clarification and rectification of purported computational flaws in the calculation of their AGR dues, which the Court finally rejected in July.

This analysis aims to examine at the significant aspects of the Supreme Court’s decision, as well as the legal concepts and precedents that support the Court’s reasoning. 

FACTS OF THE CASE

1. The case concerns the definition of ‘gross revenue’ in Clause 19.1 of license agreements between the Government of India and Telecom Service Providers (TSPs). 
2. On October 24, 2019, the Supreme Court of India issued a judgment in Civil Appeal Nos. 6328-6399 of 2015 (2020) 3 SCC 525 regarding this definition. 
3. In a subsequent order on July 20, 2020 (M.A. (D) No. 9887 of 2020 in C.A. Nos. 6328-6399 of 2015), the Court: 

• Observed that TSPs were attempting to “wriggle out” of the October 2019 judgment.
• Stated there was no scope for further disputes regarding AGR (Adjusted Gross Revenue) dues.
• Prohibited a new round of litigation.
• Declared the calculations and amounts to be recovered as final, disallowing any recalculation or self-assessment.

4. The July 20, 2020 order mentioned preliminary assessments of amounts recoverable from major TSPs. 
5.  On September 1, 2020, the Court disposed of M.A. (D.) No. 9887 of 2020 in C.A. Nos. 6328-6399 of 2015 (2020) 9 SCC 748, issuing the following key directions: 

• TSPs cannot raise disputes or seek reassessment of AGR dues.
• TSPs must pay 10% of total dues by March 31, 2021.
• Remaining payments to be made in yearly installments from April 1, 2021 to March 31, 2031.
• TSPs to furnish undertakings to make payments within four weeks.
• Existing bank guarantees for spectrum to be kept alive until payment is made.
• Default in annual installments would result in automatic interest, penalties, and potential contempt of court.
• TSPs and Department of Telecom to report compliance annually by April 7.

6. The Miscellaneous Applications in question were filed to modify paragraph 38(i)of the Supreme Court’s judgment dated September 1, 2020, concerning the calculation ofAdjusted Gross Revenue (AGR) dues owed by Telecom Service Providers (TSPs) to 

the Union of India. The applications sought clarification that the judgment does not prevent the Union of India from rectifying clerical or arithmetical errors in the computation of AGR dues.

ISSUES RAISED

1. Whether the Supreme Court’s judgment dated September 1, 2020, allows for the recalculation or reassessment of AGR dues by the TSPs.
2. Whether the Union of India is barred from correcting clerical or arithmetical errors in the computation of these dues.

CONTENTIONS OF APPELLANT

The appellant contended that:

1.The Supreme Court’s judgment dated 01.09.2020 requires clarification, as it appears to prevent even the rectification of calculation errors by the Union of India.

2. The appellants’ main contentions, as presented by their legal counsel, are:

   a. Scrutiny of accounts over several years revealed arithmetical errors in the Department of Telecommunications’ computation of AGR dues, arising from inadvertence.

   b. The appellants do not intend to reopen issues already decided by the Court’s 01.09.2020 judgment.

   c. Specific examples of errors were highlighted:

      – In M.A. No. 115 of 2021, amounts already paid by the appellant were not accounted for in computing outstanding AGR dues.

      – In M.A. No. 83 of 2021, errors arose from double counting of some revenue items, unaccounted payments, and accrued deductions not being applied.

   d. The appellants argue they should not suffer due to calculation errors made by the Union of India.

   e. They interpret paragraph 38(i) of the 01.09.2020 judgment as prohibiting disputes on AGR dues based on the judgment and reassessment, but not prohibiting rectification of inadvertent calculation errors.

   f. The appellants contend it would be unjust if they are not allowed to rectify arithmetical errors in the computation of their AGR dues.

3. They are not seeking any positive direction, but merely permission for the Union of India to verify their accounts and rectify computational defects in AGR dues, if any exist.

JUDGEMENT

The Court dismissed the miscellaneous applications as misconceived. It held that the relief sought would result in recalculation of AGR dues, which was prohibited by previous orders. The Court emphasized that there is no scope for recalculation or re-computation of AGR dues. It reiterated that AGR dues cannot be the subject of future litigation. The Court directed the TSPs to make the payment of 10% of the total AGR dues by March 31, 2021, followed by yearly installments until March 31, 2031. The Court ordered the TSPs to furnish undertakings within four weeks to make the payment of arrears as per the order. The Court stated that in the event of any default in making annual installment payments, interest, penalty, and interest on penalty would become automatically payable, and it would also be punishable for contempt of court. 

ANALYSIS

The Court referred order dated 20-7-2020 2020 SCC OnLine SC 758 and made it clear that there is no scope for any recalculation/re-computation of AGR dues. The perusal of para 46.1 of the judgment dated 1-9-2020 (2020) 9 SCC 748 confirms that this Court will not entertain any application for altering the AGR dues of the TSPs. 

The Court was clear that the AGR dues computations were definitive and that no additional arguments or reassessments would be allowed. The Court’s instructions on the 10% first payment and subsequent yearly installments until 2031 indicate a rigorous approach to ensuring prompt recovery of the dues. The automatic application of interest, fines, and potential contempt of court for default highlights the Court’s seriousness about establishing the payment schedule.
The Court rejected the applicants’ attempts to obtain clarity on any arithmetic flaws in the AGR dues computations. This demonstrates that the Court prioritizes the finality of its past rulings. 

The decision highlights the Court’s attempt to strike a balance between the necessity for finality in a long-running legal case and the possibility of ongoing computing errors. The Court’s approach shows that the overarching goal was to resolve the AGR dues issue, even if it meant limited opportunity to fix any unintended errors. 

The Court’s uncompromising stance on the non-negotiability of the AGR dues computations may have far-reaching consequences for how courts handle complex financial disputes. It emphasizes the contradiction between preserving the sanctity of judicial decisions and maintaining administrative accuracy, which may need to be managed on a case-by-case basis.

CONCLUSION

The Supreme Court’s rejection of the applications reiterates its earlier position on the finality of AGR dues computations. While this brings an end to a protracted legal struggle, it raises worries about the potential permanence of computational errors. The case emphasizes the need of precision in initial estimates in high-stakes financial disputes, as judicial judgments aimed at bringing litigation to a close may limit prospects for further revisions.

REFERENCE

1. https://www.casemine.com/judgement/in/60fc4f551bf6efb0db67ce98
2. https://indiankanoon.org/doc/101583058/

BY: Chukki Anagha C an Intern Under Legal Vidhiya.

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