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Tag: Supreme Court

  • Vodafone Idea Gets Relief as Supreme Court Allows Centre to Reassess Additional AGR Dues

    Following the Supreme Court’s decision to permit the Central government to re-examine the matter of reevaluating the telecom operator’s adjusted gross revenue (AGR) obligations, Vodafone Idea’s stock price surged by more than 9% on Monday. Following the SC’s decision, Vodafone Idea’s stock increased 9.45% to INR 10.53 per share on the BSE. The Supreme Court noted that the question is within the Union government’s policy purview and that it does not perceive any obstacle to the Centre re-examining the issue and reaching a suitable conclusion.

    What SC said in Vodafone’s Case?

    The Supreme Court said that there was no reason to stop the Centre from re-examining the matter, which was a huge relief to the financially troubled telecom operator. The court on 27 October gave the government permission to reevaluate the demand for AGR dues and to resolve the telecom operator’s complaints without involving the courts.

    Solicitor General Tushar Mehta, speaking on behalf of the Union government, requested more time, and the hearing was postponed. B.R. Gavai, the Chief Justice of India, rescheduled the hearing for the fourth time and instructed Mehta to take a firm stance on the issue. Chief Justice B.R. Gavai and Justice K. Vinod Chandran made the observation that the government’s policy discretion would control any decision pertaining to relief for the telecom operator.

    What is AGR and Why Vodafone Challenged DoT’s Demand?

    The Supreme Court postponed hearing Vodafone Idea’s petition in the AGR dues matter until October 27 on October 13. The indebted telecom company has contested the Department of Telecommunications’ (DoT) demand, aiming to settle further AGR claims totalling INR 5,606 crore for the years up to FY2016–17.

    The revenue amount known as AGR is used to determine the spectrum charges and licensing fees that telecom businesses are required to pay to the government. At the request of the telecom company and Solicitor General Tushar Mehta, who was representing the Centre, the top court had previously postponed the hearing on the plea multiple times. The federal government had previously stated that it was working with the corporation to find a solution. According to Mehta, the government had a direct stake in Vodafone Idea’s existence because it owned over 50% of the company.

    Vodafone Idea has requested that the DoT, in accordance with the “Deduction Verification Guidelines” of February 3, 2020, thoroughly reevaluate and reconcile all AGR dues for the period up to FY 2016–17. The supreme court denied telecom companies’ requests to correct alleged flaws in the computation of AGR dues owed by them earlier this year, refusing to reconsider its 2021 judgement.

    The Supreme Court ordered telecom service providers to pay INR 93,520 crore in AGR-related debts within ten years in September 2020. 10% of the total dues, as determined by the DoT, must be paid by March 31, 2021, according to the directive. The rest amount must be paid in yearly instalments between April 1, 2021, and March 31, 2031.

    Quick Shots

    •The Supreme Court allowed the Centre to reassess Vodafone
    Idea’s additional AGR dues.

    •Vodafone Idea’s shares jumped 9.45% to ₹10.53 on the BSE
    following the verdict.

    •The Centre has sought more time to decide on the issue; hearing
    adjourned after Solicitor General Tushar Mehta’s request.

    •The Centre owns over 50% of Vodafone Idea, giving it a direct
    interest in the company’s financial survival.

  • India Mulls Vodafone Dues Resolution to Strengthen UK Relations

    As the government looks to improve relations with the UK, India is thinking of settling its long-standing demand for billions of dollars in past-due fees from Vodafone Group Plc’s struggling local business once and for all, according to people familiar with the situation.

    As per various media reports, a compromise on the principle and a waiver of interest and penalties might resolve the financial issue worth around 2 trillion rupees ($22.5 billion). According to the reports, officials are working on the framework and considering ways to make sure that any agreement won’t lead to legal challenges from other telecom companies that owe money.

    Vodafone Idea Ltd. has been plagued by the arrears and hasn’t posted a quarterly profit since 2016. According to the people, a settlement might open the door for the third-largest telecom provider in India to draw in new investors.

    Free Trade Agreement Between India and UK

    New Delhi will especially profit from strengthening connections between the UK and India, which just inked a free trade agreement, at a time when ties with the US have worsened following President Donald Trump’s return to the White House. The argument for giving priority to already-thriving partnerships is further supported by the fact that attempts to restore relations with neighbouring China are barely getting started.

    Reports further stated that the endeavour is even more urgent because British Prime Minister Keir Starmer is expected to visit India this week. The local branch of the British company and Idea Cellular Ltd., owned by billionaire Kumar Mangalam Birla, merged to establish Vodafone Idea.

    By strengthening the UK’s position as a partner, its revival would benefit India internationally and assist in maintaining competition in the nation’s telecom industry.

    Indian Government’s Strong Support to Vodafone

    Through a debt-to-equity swap this year, the Indian government acquired a 49% stake in Vodafone Idea and has openly recognised the need for a solution. Last month, a government lawyer informed the Supreme Court that since public funds are already invested in the carrier, “some solution may be required.”

    India’s yearly adjusted gross revenue (AGR), of which a portion is paid in licence and spectrum fees, is the subject of the dispute. Even though telecom companies have been contesting the approach for years, if the government changes its position, the court might be more accommodating this time.

    Since the Tata Group’s wireless carrier and Sunil Mittal’s Bharti Airtel Ltd. have also been requesting relief, officials will undoubtedly need to make sure that all telecom operators receive equitable treatment during the AGR relief process. To ensure that Vodafone Idea isn’t given an unfair edge over competitors, one idea being discussed is to ask all operators to offer revival plans in exchange for any concessions.

    Quick Shots

    •India considers settling Vodafone
    dues dispute worth ₹2 trillion ($22.5 billion) to strengthen ties with the
    UK.

    •Possible settlement could include
    waiver of interest and penalties to resolve the long-standing AGR issue.

    •Vodafone Idea, India’s
    third-largest telecom operator, hasn’t posted a profit since 2016.

    •Move comes ahead of UK PM Keir
    Starmer’s visit to India this week.

  • Supreme Court Rejects Telcos’ Plea for AGR Dues Waiver

    The petitions filed by Vodafone Idea (Vi), Bharti Airtel, and Tata Teleservices asking for a waiver of their long-standing adjusted gross revenue (AGR) obligations were denied by the Supreme Court on 20 May.

    As part of their AGR obligations, the telcos sought relief from the payment of interest, penalties, and interest on penalty components. A bench of Justices J B Pardiwala and R Mahadevan referred to the plea as “misconceived” and stated that the court will not block the Centre’s decision to provide relief to these corporations. “We will not stand in your way if the government wishes to assist you,” Pardiwala stated.

    Bad News for Vodafone Idea

    According to experts, the recent decision may have serious repercussions for Vodafone Idea (Vi), which is already having difficulties. The telco has stated that without assistance, it will not be able to continue operating into FY26. Analysts speculated that it might even be on the verge of going bankrupt.

     Department of Telecommunications (DoT) officials noted that it was doubtful that the government would acquire any additional share in Vi, citing the court’s ruling on government assistance. The Bench stated that the petitions “really shocked” it. “Very uneasy. An international corporation is not expected to do that. We’ll ignore it,” the Bench noted.

     Vi, who is expected to be most affected, informed the court via senior advocate Mukul Rohatgi that the Centre is unable to save the company because of earlier rulings from the Supreme Court. “You know, all we are saying is that the government is now 50% owner of my company,” Rohatgi said to the Bench.

    However, they replied that because of the decision, we are powerless to assist. Their response is based on the Supreme Court’s ruling rather than saying, “We won’t look at your representation.”

    Government not Keen on Expanding its Stake in Vi

    Solicitor General Tushar Mehta, who represented the Centre, stated, “What we have said is that, in view of the judgement of the Lordships, we cannot examine (the relief sought).” According to DoT officials, the government is not interested in increasing its holding beyond what it now has because doing so would essentially make the carrier a public sector organisation.

     According to another DoT official, Vi has already asked the DoT for relief in a number of ways, including asking it to recalculate the AGR. “But the matter has been resolved by previous rulings,” he stated.

     In a letter dated April 29, DoT most recently denied the telco’s request, claiming that the 2020 Supreme Court ruling precluded further concessions on AGR obligations. Earlier this month, Vi exchanged INR 36,950 crore in unpaid spectrum auction debt into government equity shares.

    Consequently, the Centre’s ownership stake in the telco rose from 22.6% to 48.9%. In order to retain governance and management powers, Vi modified the shareholders’ agreement earlier in May to lower the qualification criteria for promoter groups, including the UK-based Vodafone and the Aditya Birla Group.

  • SC Questions NCLAT Ruling on Approving Byju’s INR 158.9 Crore BCCI Settlements

    On 25 September 2024, the Supreme Court questioned Byju’s choice to pay off the Board of Control for Cricket in India (BCCI) for INR 158 crore, while leaving behind significant amounts owed to other creditors, such as US lender Glas Trust Co LLC, totaling INR 15,000 crore.

    Chief Justice DY Chandrachud headed a bench that questioned why BCCI was the only organization chosen to pay off its debts. But what about other people? Can a creditor simply walk away and claim that a single promoter is prepared to pay them when the amount of the debt is so substantial? Was it derived from your assets? The CJI stated, “You have a debt of INR 15,000 crore today.”

    The trustee for lenders owing $1.2 billion, GLAS Trust, is appealing the settlement reached between the Edutech company and BCCI, claiming that the funds paid by Byju Raveendran’s brother Riju Ravindran were tainted. The top court is currently considering these arguments.

    The NCLAT’s order, which had authorized an INR 158.9 crore dues settlement deal between the BCCI and Think & Learn Pvt Ltd, the parent firm of BYJU’s, an Edutech major, was stayed by the bench last month.

    BCCI Raising Concerns Over NCLAT’s Order

    The National Company Law Appellate Tribunal’s ruling to set aside the July 16 judgment that started Think & Learn’s insolvency procedures was questioned by the top court as well, even though the decision was made in only one paragraph and without “applying its mind at all.” Examine the logic in the NCLAT sequence. It is merely a paragraph. This demonstrates absolutely no application of the mind. The CJI added, “Let the tribunal apply its mind once more and see where the money is coming from.”

    Speaking on behalf of the BCCI, Solicitor General Tushar Mehta pleaded with the top court to take into account the ramifications if the appeal (of Glas Trust) is granted and to refrain from overturning the NCLAT’s decision. In support of Glas Trust, senior attorney Shyam Divan argued that the NCLAT had incorrectly approved the settlement despite clear objections that the settlement’s funding source was questionable. This was done by relying solely on a vague commitment provided by Riju Ravindran. NK Kaul and AM Singhvi, Byjus’ senior counsel, opposed the Glas Trust’s appeal and its actions, which included allegations that Byju and Riju Raveendran were absconding.

    Byju Raveendran, the founder of Byju’s, is involved in multiple legal proceedings. These include a payment dispute of INR 158 crore with the Indian cricket board and a dispute involving a $1.2 billion term loan with US lenders. Their problems are made worse by the fact that the Enforcement Directorate of India is looking into claims of INR 9,362.35 crore in Foreign Exchange Management Act violations.

    BYJU’S Faces Legal Challenges: BCCI’s Insolvency Petition Accepted by NCLT
    Explore the latest developments as the country’s education tech giant BYJU’s encounters significant financial and legal issues.
    StartupTalkyNitin Konde

  • SpiceJet’s Petition Is Rejected, Leased Engines Grounded by Supreme Court

    The appeal that SpiceJet filed against an order issued by the Delhi High Court, which forced the cash-strapped airline to ground three engines that were leased from Team France 01 SAS and Sunbird France 02 SAS due to unpaid dues, was denied by the Supreme Court on 20 September 2024.

    SpiceJet violated a consent order with the lessors, as determined by a three-judge bench headed by Chief Justice DY Chandrachud, which upheld the high court’s orders. The court stated that it was unwilling to interfere and that it believed the judgment handed down by the high court to be correct.

    Supreme Court Remained Firm on Its Rejection

    In response to a motion from SpiceJet’s senior lawyer Amit Sibal for further time to comply with the grounding order, the Supreme Court declined to grant the request. Sibal stated that the airline had previously paid the lessors more than eight million dollars, and that negotiations for a resolution were taking place in Singapore about the matter. He asked for respite until an agreement could be made, but the court declined to have any involvement in the matter.

    In addition, Sibal stated to the court that although two of the three engines had previously been grounded, SpiceJet required specialised stands in order to properly ground the engines before releasing them to the lessors. He also asked for additional time. As a reaction, the Supreme Court strongly suggested that SpiceJet contact the Delhi High Court in order to provide an explanation for its situation.

    While SpiceJet was still operating the engines, senior attorney Abhishek Manu Singhvi, who was representing the lessors, argued that the company had repeatedly breached the consent order. This was despite the fact that SpiceJet had made 18 court appearances and was facing two orders from the high court. In accordance with the consent order, Singhvi pointed out that SpiceJet was obligated to return the engines within a period of fifteen days in the event that it failed to make payments.

    What Next?

    Since the airline has used all of its legal options to prevent this from happening, it is now required to ground the engines. In light of the most recent judgment, the financially struggling airline is under even more pressure. The airline SpiceJet stated in court that it maintains a fleet of 21 aircraft and that if the engines were grounded, it would result in the grounding of two flights, which would impair the airline’s operations.

    SpiceJet, on the other hand, has issued a statement stating that it is now in negotiations with the aircraft lessor in order to negotiate a mutually agreeable settlement. Additionally, it is essential to take notice that two of the three engines in question have already been grounded, and that its activities continue to go in a manner that is fully normal and unaffected.

    SpiceJet Under ‘Enhanced Surveillance’ Due to ‘Certain Deficiencies’ Found in DGCA Audit
    SpiceJet faces ‘enhanced surveillance’ from the DGCA after a special audit revealed deficiencies. The airline’s operational safety is under scrutiny due to financial and operational issues.
    StartupTalkyNitin Konde

  • The Supreme Court Has Temporarily Halted the Appeals Tribunal’s Decision Over the BYJU’S-BCCI Settlement

    On Wednesday, the Supreme Court issued a stay of the NCLAT ruling that had set aside the insolvency proceedings against the ed-tech major. This effectively enabled Byju Raveendran, the owner of the company, to regain control of the business.

    The ruling of the NCLAT that approved the settlement of Byju’s dues with the BCCI amounts to INR 158.9 crore, but the highest court has placed that verdict on hold. This decision has put a strong blow on Byju’s.

    The order was issued in response to a pleading by Glas Trust Company LLC, a creditor situated in the United States, against the verdict of the NCLAT. Glas Trust Company LLC asserts that they are owed one billion dollars by Byju’s.

    Additionally, a panel that was led by Chief Justice DY Chandrachud ordered the Board of Control for Cricket in India (BCCI) to maintain a separate account for the INR 158.9 crore that it had received from Byju’s as a result of a settlement.

    Insolvency proceedings against BYJU’S were halted on August 2 after the National Company Law Appellate Tribunal (NCLAT) gave its approval to the settlement of INR 158.9 crore in dues with the BCCI.

    How This Decision Can Bring More Trouble for BYJU’S

    Following the decision of the Supreme Court, the insolvency proceedings against BYJU’S will resume. This will result in the ed-tech major, which was previously valued at USD 22 Billion, being placed under the control of an insolvency administrator chosen by the court.

    At the beginning of this month, Byju Raveendran was able to restore control of the company after the National Company Law Appellate Tribunal (NCLAT) dismissed the insolvency procedures that were being brought against the startup.

    The cricket regulating body of India filed a complaint, stating that the company had not been paid its sponsorship dues, which resulted in the company being placed in the process of going bankrupt. After some time, the two parties reached a settlement on the issue, and an appeals tribunal put a stop to the insolvency procedures.

    Why BYJU’S Is Going Through a Financial Crunch?

    The fast growth and forceful strategy of acquisitions employed by BYJU’S have put a heavy burden on its financial resources. Many are worried about the company’s long-term viability because of its substantial need for outside finance, despite the fact that it has raised billions in cash.

    Despite the initial boost to online education caused by the COVID-19 pandemic, the market became saturated, which affected Byju’s growth trajectory.

    Misleading advertising, unauthorised charges, and trouble getting your money back are just a few of the customer service issues that have plagued Byju’s. Not only have these problems damaged the company’s image, but they have also prompted lawsuits.

    Members of the Enforcement Directorate and the Ministry of Corporate Affairs (MCA) are among the regulatory agencies that are constantly monitoring the operations of the company.

    Investigations have been initiated due to allegations of financial irregularities, such as disparities in revenue recognition and possible violations of the Foreign Exchange Management Act (FEMA).

    At the heart of both the company’s success and its present problems has been Byju Raveendran, founder and CEO of Byju’s. Now that stakeholders and investors are demanding answers about the company’s performance, his leadership is under scrutiny.

    BYJU’S Faces Legal Challenges: BCCI’s Insolvency Petition Accepted by NCLT
    Explore the latest developments as the country’s education tech giant BYJU’s encounters significant financial and legal issues.
    StartupTalkyNitin Konde