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Informist, Thursday, Aug. 20, 2026

 

--SC nixes bks plea on telecom dept invoking INR-8-bln bk guarantee on RComm

--SC asks bks in RComm IBC case to move HC to challenge telecom dept move 

 

NEW DELHI – The Supreme Court Thursday rejected pleas by YES Bank, State Bank of India, Punjab National Bank, and Canara Bank against the Department of Telecommunication's move to invoke their INR-8-billion bank guarantee in the insolvency proceedings of Reliance Communications Ltd. The apex court asked the banks to move the Bombay High Court and argue that the top court's previous verdict on transfer of spectrum couldn't be the basis of invocation of bank guarantees. "We are not inclined to interfere with the petition against invocation of bank guarantee, the petitioners have the liberty to move the high court and contend that this court's judgment cannot be the basis of invoking bank guarantee and the high court will decide the same," said a Bench of Justice P.S. Narasimha and Justice Alok Aradhe.

 

The banks have argued that the invocation of notice by the telecommunication department was illegal, arbitrary, ultra vires and without jurisdiction, and was liable to be quashed. The apex court's earlier judgment only dealt with whether spectrum in the insolvency proceedings had to be treated as an asset, said the banks. As the top court's judgment does not deal with bank guarantees, the verdict is wholly irrelevant to the power sought to be exercised by the telecommunication department, said the banks.

 

The apex court had upheld that spectrum cannot be treated as security interest by lenders, said the banks. The telecommunication department cannot deny the lenders the benefit of the underlying asset of spectrum and simultaneously enforce against the lenders' security furnished for that asset, said the banks.

 

On Feb. 13, the top court had held that spectrum couldn't be transferred or sold by telecom companies in insolvency proceedings. The apex court had said that the Insolvency and Bankruptcy Code, 2016, couldn't be the guiding principle for restructuring the ownership and control of spectrum, which was a material resource, and its control with all its attributes, including benefits, had to be secured for citizens.   

 

In 2019, the Mumbai bench of the National Company Law Tribunal admitted a petition by Ericsson India Pvt. Ltd. to start insolvency proceedings against Reliance Communications and other related companies. Thereafter, the case has witnessed layers of litigation, with the Supreme Court in February ruling on whether spectrum has to be treated as asset. 

 

At 1356 IST, shares of Reliance Communications Ltd. were up 2.5% at INR 0.81 on the National Stock Exchange. Shares of State Bank of India were up 0.1% at INR 1,049.50, those of YES Bank were up 0.4% at INR 22.82, Punjab National Bank's shares were up 0.7% at INR 118.25, and shares of Canara Bank were up 0.8% at INR 130.07.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Avishek Dutta

 

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