Justice Arun Mishra headed the bench, heard the matter from senior advocate Mukul Rohatgi, appearing for Vodafone and refused to accept the proposal.
However, Rohatgi said they are willing to pay Rs 2,500 crore today and Rs 1,000 crore on Friday but no stringent action be taken against the company. He said Vodafone's bank guarantee deposited with the government should also not be encashed.
Since the media distressed Indian telecom operators agaisnt AGR, shares of loss-making Vodafone Idea (VODA.NS) rose as much as 12%.
Also Read: Supreme Court chides telecom chiefs over non-payment of AGR
On Friday, after the Supreme Court thundered on the companies and officials with contempt for failing to implement an earlier ruling, India ordered mobile carriers to immediately pay nearly $13 billion agaisnt dues.
On Saturday, the local arm of British telecom giant Vodafone Plc (VOD.L) said it proposed making a payment in the next few days. After Friday's ruling, the shares of the company which fell more than 24% percent recovered on Monday to trade up 15% by mid-morning.
Siddhartha Khemka, head of research at Motilal Oswal Financial Services in Mumabi said though Vodafone possesses weak condition still there is a little slim hope that they will get through.
Khemka further added, the Supreme Court major contention was that there was no intent by telcos to pay the dues. It was only after Saturday when the company prepared a self-assessment report and made an announcement and we had the reports later.
However, the media said Vodafone Idea would pay off part of the dues owed in licensing and spectrum fees on Monday. The company and the Department of Telecommunications (DoT) did not immediately respond to emails seeking comment.
On Monday, Rival Bharti Airtel Ltd (BRTI.NS) said it had made a payment of 100 billion rupees towards the dues.
If Vodafone Idea shuts down, the market would shape as a duopoly of rivals Airtel and Reliance Jio, which many analysts and executives see as bad for the industry.