New Delhi, Oct 31 (SocialNews.XYZ) Legal expert Manoj Kumar has said that waiving of government dues for private telecom operators would be against the Supreme Court order.
Manoj Kumar, Founder and Managing Partner, Hammurabi & Solomon Partners in an article said that the "Government should be well advised not fall into vortex and enforce the law of the land to protect the tax payers and exchequers' money and in compliance of Supreme Court judgment, Central Government must recover its dues within the time specified by Supreme Court."
Recently the Supreme Court on October 24, upheld the stand taken by the Department of Telecommunications in a long protracted legal battle for payment of dues to the government in terms of "License Fee (LF) & Spectrum Usage Charge (SUC)".
Kumar said the liability till 2016-17 comes to around Rs 50,000 crore for Airtel and Rs 40,000 crore for Vodafone-Idea Ltd with more liability of erstwhile Vodafone group of companies. In case of Airtel around Rs 13,000 crore are liability of Tatas and Telenor which is covered by a back to back agreement with them at the time of merger. There must be similar agreement of Vodafone group of companies with Idea.
He said that neither the TSPs had paid any outstanding LF and SUC amount to the DoT and nor they created any provisions in their books of accounts for past and future payment of LF and SUC on the basis of law laid down by Supreme Court. In the given circumstances, TSPs should have created a contingent liability in their books of accounts.
"Non-disclosure of known contingent liability and outstanding dues pertaining to LF and SUC in the statement of accounts and balance sheet is an economic offence. TSPs have risked to being accused of playing fraud upon the investors and shareholders by continuously not disclosing the actual liabilities in their books of accounts. SEBI may well find it difficult to refrain from intervening and initiating investigation, and thereafter, taking necessary action against such TSPs," he added.
The legal expert raised the question that with the TSPs being perceived as having dishonestly used the legal process to delay payment of government revenue share, could the government have any justification to provide any support at all now?
After the recent judgement, TSPs have started thumping their chests claiming that they do not have money to pay. It was their considered and commercial decision not to pay the demands raised by the government when due and litigate to avoid or delay payments, he said.
"In a market driven economy, is there any place for the government to intervene to help individual operators by changing certain rules and disturb the level playing field? The major demand of outstanding dues is only on two operators and not the entire sector. Can the government be then involved in this matter risking to be seen as favouritism?" Kumar asked.
These TSPs are backed by strong promoters and thus have capacity and capability to raise funds to pay these long standing government dues.
While one i.e Bharti has been running profitable telecom business in 18 other countries as well with a market cap of over Rs 2.5 lakh crore, another i.e Aditya Birla entity has a market cap of is around Rs 2.3 lakh crore and Vodafone itself, the other Principal of VIL has a market cap of $54.88 billion.
Kumar asked, "Should the 'Principals' not step in to make payment, in line with the repeated assertions of such a principle by the Supreme Court in many recent cases? Can the promoters shirk their responsibilities from payment of dues or non-disclosure in balance sheet which in itself is a serious offence?"
The market caps of the promoters' equity holdings in some cases is much higher than the dues, and thus the promoters can well have dilution of equity or arrange loans for payment of the dues, he added.
Elaborating further, with such strong 'Principals', is there any case at all for the government to intervene for non-implementation of Supreme Court judgement.
Kumar said the government should be well advised to follow precedents of non-intervention as in the case of Aircel and Reliance Communications merger when their outstanding demands were actively pursued.
"In fact, not only in the Telecom sector, in other sectors too, the government does not intervene to help an individual operator. The Civil Aviation Ministry watched the downfall of Jet, one of India's largest airlines, from a distance," he added.
Source: IANS
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