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Informist, Friday, Feb. 13, 2026

 

--SC says spectrum of telecom companies cannot be transferred in IBC cases

--CONTEXT: SC on whether spectrum of telecom cos can be transferred in IBC 

--SC: IBC can't be guiding principle for restructuring ownership of spectrum

 

NEW DELHI – In relief to the Department of Telecommunication, the Supreme Court Friday held that spectrum cannot be transferred or sold by telecom companies in insolvency proceedings. The apex court said that the Insolvency and Bankruptcy Code, 2016, cannot be the guiding principle for restructuring the ownership and control of spectrum, which is a material resource, and its control with all its attributes, including benefits, have to be secured for citizens.  

 

Allowing the plea of the Department of Telecommunication, the top court rejected appeals by the State Bank of India-led committee of creditors of Aircel Ltd., and others against a verdict by the National Company Law Appellate Tribunal. The appellate tribunal had ruled in 2021 that spectrum couldbe transferred by a telecom company only if the government's dues with respect to the asset were cleared.

 

The Mumbai bench of the National Company Law Tribunal had, in 2020, approved a INR 66.30-billion resolution plan for Aircel by UV Asset Reconstruction Co. Ltd. After the appellate tribunal's ruling, UV Asset and lenders to the debt-ridden company moved the top court. The lenders wanted the spectrum of telecom companies to be transferred to the successful resolution applicant. However, the telecom department said the spectrum should be returned to the government. 

 

The lenders have argued that spectrum should be treated as part of the insolvency process and sold to recover dues. Spectrum is an intangible asset that can be monetised to recover dues, the lenders said. 

 

The government, however, said spectrum is a valuable, scarce natural resource that belongs to the people, but the state legally owns it as a trustee on their behalf. The government said spectrum and its 'right to use' are national assets, and that they have been granted by the Department of Telecommunications to telecom companies, subject to various terms and conditions. The right to use spectrum cannot be treated as an asset of the corporate debtor, since it has been given in trust in exchange for continued monetary payments and compliance, the government said.

 

The resolution professional of Aircel entities argued that the right to use spectrum and telecom licences is a valuable intangible asset of the companies. If assets are excluded from the ambit of the insolvency proceedings only because of their intangible nature, it would adversely affect various companies undergoing the bankruptcy process that have been granted licences by statutory bodies, the resolution professional said. 

 

In an earlier hearing, a former resolution professional of the Aircel entities had sought the Supreme Court's approval to sell the company's spectrum as an interim measure to prevent further erosion in its value. In the best interest of all stakeholders and to preserve the value of the spectrum of Aircel entities and avoid further loss to national interest, the apex court should as an interim measure allow the sale of spectrum, subject to proceeds of the sale being kept in an interest-bearing escrow account, to be utilised in accordance with its final directions, the resolution professional had said. The telecom department had opposed the proposal. 

 

At 1058 IST, shares of State Bank of India were up 0.2% at INR 1,194.60 on the National Stock Exchange.  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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