NEW DELHI: The Supreme Court on Friday ruled that telecom spectrum cannot be treated as a regular corporate asset during insolvency proceedings under the Insolvency and Bankruptcy Code (IBC).
The decision came in the long-running insolvency case of defunct telecom operator Aircel and its subsidiaries, Aircel Cellular and Dishnet Wireless. The dispute centred on whether spectrum held by telecom companies undergoing insolvency could be transferred to a successful bidder under a resolution plan.
The companies had voluntarily entered insolvency under Section 10 of the IBC. They were granted telecom licences in 2006 under Unified Access Service Licence (UASL) agreements and later acquired spectrum through government auctions.
A bench of Justice PS Narasimha and Justice Atul Chandurkar ruled in favour of the Department of Telecommunications (DoT). The court said spectrum is a limited and valuable public resource and described it as a “material resource of the community.” It stressed that the spectrum belongs to the public and must remain under government control.
The court also clarified that the IBC cannot be used to change the ownership or control of spectrum. It added that while companies may hold the right to use spectrum under a licence, the resource itself remains with the government.
The ruling sets aside a 2021 order of the National Company Law Appellate Tribunal (NCLAT), which had allowed transfer of spectrum after clearing government dues. That order was challenged by the Centre and lenders, including an SBI-led committee of creditors.
Rejecting lenders’ arguments that spectrum usage rights are transferable assets, the court held that insolvency law cannot override telecom regulations governing spectrum allocation and control.