At the hearing of the Adjusted Gross Revenues (AGR) dues in the Supreme Court, Vodafone Idea's counsel Mukul Rohtagi argued that the company was in an extremely precarious position financially, and the only way it could clear the dues was by making staggered payments over 20 years

Rohtagi said the company was in no position to give any fresh bank guarantee and that its over Rs 10,000 crore of bank guarantees lying with the Department of Telecommunications (DoT) should be considered as security.

He said the company had not made any profit for the past so many quarters, and was making losses after servicing debt of Rs 1 lakh crore.

Working, earning, and repaying was the only way the company could hope to repay the AGR dues, Rohtagi said, adding that most assets have been pledged as security with banks to secure loans.

He said the company would fold up if it was asked to pay up by tomorrow, and that would affect its 11,000-odd employees.

Rohtagi said the company would deposit all documents to show that it was not making money.

The bench asked what would happen if the company went into insolvency during the 20-year period. Also, it wanted to know how the company made provisions of Rs 52,000 crore of contingent liabilities if it was not making money.

The bench also pointed out the company's argument about its foreign roots and asked what if it chose to walk away leaving its assets behind. The bench suggested that the directors make personal guarantees.

Rohtagi said the dues claimed by the government were over Rs 50,000 crore and it was not possible for directors to guarantee that large a sum.

The bench said the company would have to make a 'reasonable' downpayment to be allowed to make staggered payments for the remaining amount, and asked the company to come up with some offer. The bench made it clear that it would not pass any order for staggered payment unless there was a reasonable upfront payment.

The bench pointed out that telecom was the only sector that had done business during the lockdown, and said telecom companies should clear their dues as the government needed funds for public welfare.

Rohtagi has sought two weeks from the court to come back with an offer.

First Published:Jun 18, 2020 1:05 PM IST