Let NCLT first decide if spectrum can be part of insolvency proceeding: SC
The Supreme Court of India has lobbed the ball in the court of the National Company Law Tribunal (NCLT) on the question whether spectrum licenses can be part of the insolvency proceedings as assets of the corporate debtors.
Deciding on the question of whether insolvent telecom operators are liable to pay the Adjusted Gross Revenue (AGR) dues and if triggering insolvency proceedings was a ploy to avoid paying these dues, the Supreme Court raised the basic question whether spectrum can be subjected to proceedings under the Insolvency and Bankruptcy Code (IBC).
Raising several related question on this issue ranging from ownership of spectrum and status of spectrum under Insolvency and Bankruptcy Code (IBC), the apex court asked the NCLT to take a ‘reasoned’ view on all those questions in the ongoing insolvency cases of telecom operators within two months of the passing of the judgment.
It said that since it is a jurisdictional question, the courts must take a view on the issue at this stage only.
In its judgment pronounced on 1 September 2020, the Supreme Court said: “Whether spectrum can be subjected to proceedings under the IBC is a significant question and is required to be gone into. It is required to be examined if the spectrum can be subjected to resolution proceedings which will have the effect of wiping off the dues of the Government, which are more than Rs 40,000 crore”.
It also raised question on whether the Insolvency and Bankruptcy Code (IBC) overrides the provisions contained in the Indian Telegraph Act 1885, Indian Wireless Telegraphy Act 1933, and Telecom Regulatory Authority of India Act, 1997.
It also sought answers on questions raised in earlier cases during past and ongoing insolvency cases of some of these telecom companies. Those questions include whether telecom operators can be said to be the owner of spectrum, whether a license is a contractual agreement, if ownership of spectrum belongs to the government of India, etc.
It is to be mentioned here that total outstanding AGR dues of telecom companies under insolvency is Rs 38,959 crore with Reliance Communication owing Rs 25,139 crore and Aircel owing Rs 12,389 crore.
